[Federal Register Volume 70, Number 171 (Tuesday, September 6, 2005)]
[Proposed Rules]
[Pages 52949-52952]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-17588]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 416

RIN 0960-AG13


Changes to the Income and Resources Provisions for Supplemental 
Security Income (SSI) Based on Sections 430, 435, and 436 of the Social 
Security Protection Act (SSPA) of 2004

AGENCY: Social Security Administration (SSA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: We propose to revise our regulations on how we determine an 
individual's income and resources under the SSI program based on the 
SSPA of 2004, enacted on March 2, 2004. Some of the provisions of the 
SSPA make a number of changes in the way we determine income and 
resources including: how we calculate infrequent and irregular income; 
what interest and dividend income we exclude; how we count cash 
military compensation; and when we exclude gifts for tuition or 
educational expenses from income or resources. We are also proposing to 
apply the exclusions required by the SSPA when determining the 
countable income and resources of an ineligible spouse or ineligible 
parent.

DATES: To be sure that we consider your comments, we must receive them 
by November 7, 2005.

ADDRESSES: You may give us your comments: by using our Internet site 
facility (i.e., Social Security Online) at http://policy.ssa.gov/erm/rules.nsf/Rules+Open+To+Comment or the Federal eRulemaking Portal at 
http://www.regulations.gov; by e-mail to [email protected]; by 
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, 100 Altmeyer Building, 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 at http://www.gpoaccess.gov/fr/index.html.

FOR FURTHER INFORMATION CONTACT: Barbara E. Snyder, Social Insurance 
Specialist, Social Security Administration, Office of Income Security 
Programs, 252 Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 
21235-6401, (410) 965-5655 or TTY 1-800-966-5906, for information about 
this notice. For information on 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 site, Social Security Online, at http://www.socialsecurity.gov.

SUPPLEMENTARY INFORMATION:

Background

    The basic purpose of the SSI program (title XVI of the Social 
Security Act (the Act)) is to ensure a minimum level of income to 
people who are age 65 or older, or blind or disabled, and who have 
limited income and resources. Section 1611 of the Act provides that SSI 
payments can be made only to people who have income and resources below 
specified amounts. Therefore, the amount of income and resources a 
person has is a major factor in deciding whether the person can receive 
SSI benefits and in computing the amount of the benefits.
    Public Law 108-203, the SSPA of 2004, was enacted on March 2, 2004. 
Sections 430, 435, and 436 of this law affect how income and resources 
are determined in the SSI program.

Section 430

    Section 430 of Public Law 108-203 amended section 1612(b) of the 
Act as follows:

[[Page 52950]]

Change the Calculation of Infrequent and Irregular Income From a 
Monthly to a Quarterly Basis

    Prior to the SSPA of 2004, we did not count up to $10 of your 
earned income in a month or $20 of unearned income in a month if it was 
infrequent or irregular; that is, if you received it only once in a 
calendar quarter from a single source or if you could not reasonably 
have expected it. If the total amount of your infrequent or irregular 
income for a month exceeded $10 of earned income or $20 of unearned 
income, we could not use this exclusion. Based on section 430 of the 
SSPA of 2004, we now exclude the first $30 per calendar quarter of 
earned income and the first $60 per calendar quarter of unearned income 
if you receive it infrequently or irregularly. This provision applies 
to benefits payable on or after July 1, 2004.
    Consistent with the provision in section 1612(b)(3) of the Act (as 
amended by section 430(a) of the SSPA) which provides that this 
exclusion is ``determined in accordance with criteria prescribed by the 
Commissioner of Social Security'', we are also proposing to revise the 
definition of infrequent income. We propose that we will consider 
income to be received infrequently if you receive it only once during a 
calendar quarter from a single source and you did not receive it in the 
month immediately preceding that month or in the month immediately 
subsequent to that month, regardless of whether or not these payments 
occur in different calendar quarters. We consider income to be received 
irregularly if you cannot reasonably expect to receive it.

Exclude From Income All Interest and Dividend Income Earned on 
Countable Resources

    Prior to the SSPA of 2004, there was no specific exclusion for 
interest and dividend income you earned on countable and certain 
excludable resources. Based on section 430 of the SSPA of 2004, we will 
exclude from your income determination interest or dividend income you 
earn on resources which are countable under section 1613(a) of the Act. 
Also, based on section 430, we will not count interest or dividend 
income on resources that are excluded based on a Federal statute other 
than section 1613(a) of the Act. These amendments apply to benefits 
payable on or after July 1, 2004.

Section 435

    Prior to the SSPA of 2004, we did not count as unearned income any 
portion of a grant, scholarship, or fellowship you used to pay tuition, 
fees, or other necessary educational expenses. However, we did count 
any portion you set aside or actually used for food, clothing, or 
shelter as income in the month you received it and, to the extent any 
portion of it was retained, as a resource the month following the month 
you received it. Under these proposed rules, any portion set aside or 
used for food, clothing, or shelter will continue to count as income in 
the month received or as a resource if retained.
    Section 435 of the SSPA of 2004 amended section 1612(b)(7) of the 
Act to provide that we will exclude a gift (or portion of a gift) you 
use to pay the cost of tuition and fees at any educational (including 
technical or vocational education) institution when we determine your 
income (and the income of your eligible spouse). Additionally, section 
435 of the SSPA of 2004 amended section 1613(a) of the Act to provide 
that we will exclude from resources for 9 months after the month in 
which it is received, any grant, scholarship, fellowship, or gift (or 
portion of a gift) you use to pay the cost of tuition and fees at an 
educational (including technical or vocational education) institution. 
These amendments apply to benefits payable on or after June 1, 2004.
    We also plan to extend this resource exclusion to any portion of a 
grant, scholarship, or fellowship retained after the month of receipt. 
Prior to the SSPA of 2004, section 1612(b)(7) had excluded ``any 
portion'' of a grant, scholarship, or fellowship from income. When the 
resource exclusion was added by the SSPA, the exclusion covered grants, 
scholarships, and fellowships, but only specifically referenced 
portions with respect to gifts. In order to have consistent policy on 
exclusions related to tuition and educational expenses, we are 
proposing to exclude from resources for 9 months any portion of a 
grant, scholarship, fellowship, or gift used to pay necessary 
educational expenses. In addition, we are providing in these proposed 
rules that any portion of a grant, scholarship, fellowship, or gift 
intended to be used for tuition, fees, or other necessary educational 
expenses that is used for another purpose during the 9-month resource 
exclusion period will be counted as income in the month it is used for 
another purpose.

Section 436

    Under our current rules, your income is counted in the month you 
receive it rather than in the month you earn it. We count wages and 
unearned income at the earliest of the following points:
     When you receive them,
     When they are credited to your account, or
     When they are set aside for your use.
    Members of a uniformed service (as defined in 20 CFR 404.1330) are 
paid twice per month, and receive one Leave and Earnings Statement 
(LES) at the beginning of the month, which reflects their earnings for 
services performed in the prior month. The earnings shown on the 
monthly LES consist of the money actually paid in the second payment 
from the previous month and the payment received at the beginning of 
the current month. The payment received at the beginning of the current 
month is actually for services performed in the last half of the 
previous month. Thus, both payments reflected on the LES represent 
services performed in the previous month. Because wages are counted 
when paid, the portion of the money that was paid in the previous month 
must be considered as received in the previous month, not the current 
month, and the portion paid at the beginning of the current month must 
be considered in the current month. Prior to the SSPA of 2004, we had 
to apply a complex formula to the information on the LES for 2 
consecutive months to determine one month's wages and unearned income.
    Section 436 of the SSPA amended section 1611(c) of the Act to 
provide that remuneration you receive for services performed as a 
member of a uniformed service may be treated as received in the month 
in which you earned it, if the Commissioner of Social Security (the 
Commissioner) determines that this method would promote the economical 
and efficient administration of the SSI program. This method of 
counting allows us to count the money shown on the LES for any month as 
received in that month, thereby eliminating the need to apply a complex 
formula to determine monthly earnings. Instead, we can determine 
monthly earnings by simply adding the amounts shown on the LES issued 
for that month.

Extending Exclusions in Section 430, 435, and 436 to the Deeming 
Process

    Section 1614(f) of the Act requires that, when we determine an 
individual's eligibility for SSI benefits, we must consider the income 
and resources of an ineligible spouse living in the same household, or, 
in the case of a child under the age of 18, the income and resources of 
an ineligible parent living in the same household. We use the term 
``deeming'' to identify this process of considering part of an 
ineligible spouse's or parent's income and

[[Page 52951]]

resources to be the individual's own income and resources. Section 
1614(f) also grants the Commissioner the discretion to waive the 
deeming of income and resources from an ineligible spouse or parent to 
an eligible individual when the Commissioner determines that deeming 
would be inequitable under the circumstances.
    In addition to adding to our regulations the changes in how we 
determine an eligible individual's income and resources required by the 
SSPA, we propose to apply these changes when determining the countable 
income and resources of an ineligible spouse or ineligible parent. 
These changes are:
     Change the calculation of infrequent and irregular income 
from a monthly to a quarterly basis, and revise the definition of 
infrequent income.
     Exclude from income interest or dividends earned on 
countable resources and resources excluded under other Federal 
statutes.
     Exclude from income gifts used to pay tuition, fees, or 
other necessary educational expenses at any educational institution, 
including vocational and technical institutions.
     Exclude from resources gifts used to pay tuition, fees, or 
other necessary educational expenses at an educational institution 
(including vocational or technical institution) for 9 months beginning 
the month after the month the educational assistance was received.
     Consider wages and unearned income from a uniformed 
service to be received in the month in which such compensation is 
earned.
    Extending these changes to the deeming process is consistent with 
the SSI program's longstanding treatment of income and resources of 
spouses and parents, as authorized by section 1614(f) of the Act. This 
treatment avoids using assistance programs that benefit spouses and 
parents to indirectly support SSI recipients and provides consistent 
treatment of income and resources throughout the program.

Explanation of Proposed Changes

    We propose to make the following changes to our rules on 
determining income and resources under the SSI program to implement the 
provisions of the SSPA:
     We propose to revise Sec.  416.1112(c)(2) and Sec.  
416.1124(c)(6) to reflect the provision of section 430 that changes the 
calculation of infrequent and irregular income from a monthly to a 
quarterly basis, and to revise the definition of infrequent income.
     We also propose to add a new Sec.  416.1124(c)(22) to 
reflect the provision of section 430 that excludes from income interest 
or dividends earned on countable resources and resources excluded under 
other Federal statutes.
     We propose to amend Sec.  416.1124(c)(3) to reflect the 
provision in section 435 that states that gifts (or portions of gifts) 
used to pay tuition and fees at any educational institution, including 
vocational and technical institutions, are excluded from income.
     Additionally, we propose to add a new Sec.  416.1210(u) 
and a new Sec.  416.1250 to reflect the provision in section 435 that 
excludes from resources any grants, scholarships, fellowships, or gifts 
used to pay tuition and fees at an educational institution (including 
vocational or technical institution) for 9 months beginning the month 
after the month the educational assistance was received.
     We propose to amend Sec.  416.1111(a) and Sec.  
416.1123(a), and add a new Sec.  416.1123(f) to reflect section 436 
that states that we may consider wages and unearned income from a 
uniformed service to be received in the month in which such 
compensation is earned. We also propose a technical amendment to add a 
cross-reference in Sec.  416.1123(a) to Sec.  416.1123(e).
     Finally, we propose to amend Sec.  416.1161 by revising 
paragraph (a)(4) and adding a new paragraph (a)(26) to exclude certain 
interest and dividends and gifts used to pay educational expenses from 
the income of an ineligible spouse and ineligible parent for deeming 
purposes.

Clarity of These Regulations

    Executive Order 12866, as amended by Executive Order 13258, 
requires each agency to write all rules in plain language. In addition 
to comments you may have on these proposed rules, we also invite your 
comments on how to make these rules easier to understand. For example:
     Have we organized the material to suit your needs?
     Are the requirements in the rules clearly stated?
     Do the rules contain technical language or jargon that is 
unclear?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the rules easier to understand?
     Would more (but shorter) sections be better?
     Could we improve clarity by adding tables, lists, or 
diagrams?
     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 rules meet the criteria for a 
significant regulatory action under Executive Order 12866, as amended 
by Executive Order 13258. Thus, they were reviewed by OMB.

Regulatory Flexibility Act

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

Paperwork Reduction Act

    These proposed rules impose no reporting or recordkeeping 
requirements subject to OMB clearance.

(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: August 22, 2005.
Jo Anne B. Barnhart,
Commissioner of Social Security.

    For the reasons set forth in the preamble, we propose to amend 
subparts K and L of 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); secs. 211, 
Pub. L. 93-66, 87 Stat. 154 (42 U.S.C. 1382 note).

    2. Section 416.1111, paragraph (a), is amended by adding a sentence 
at the end to read as follows:


Sec.  416.1111  How we count earned income.

    (a) * * * We count wages from a uniformed service (as defined in

[[Page 52952]]

Sec.  404.1330 of this chapter) as received in the month in which they 
are earned.
* * * * *
    3. Section 416.1112 is amended by revising paragraph (c)(2) to read 
as follows:


Sec.  416.1112  Earned income we do not count.

* * * * *
    (c) * * *
    (2) The first $30 of earned income received in a calendar quarter 
if you receive it infrequently or irregularly. We consider income to be 
received infrequently if you receive it only once during a calendar 
quarter from a single source and you did not receive it in the month 
immediately preceding that month or in the month immediately subsequent 
to that month. We consider income to be received irregularly if you 
cannot reasonably expect to receive it.
* * * * *
    4. Section 416.1123 is amended by revising paragraph (a) and adding 
a new paragraph (f) to read as follows:


Sec.  416.1123  How we count unearned income.

    (a) When we count unearned income. We count unearned income at the 
earliest of the following points: when you receive it or when it is 
credited to your account or set aside for your use. We determine your 
unearned income for each month. We describe exceptions to the rule on 
how we count unearned income in paragraphs (d), (e) and (f) of this 
section.
* * * * *
    (f) Uniformed service compensation. We count compensation from a 
uniformed service (as defined in Sec.  404.1330 of this chapter) as 
received in the month in which it is earned.
    5. Section 416.1124 is amended by revising the first sentence in 
paragraph (c)(3), by revising paragraph (c)(6), by removing the word 
``and'' at the end of paragraph (c)(20), by removing the period at the 
end of paragraph (c)(21) and adding a semicolon in its place followed 
by the word ``and'', and by adding paragraph (c)(22) to read as 
follows:


Sec.  416.1124  Unearned income we do not count.

* * * * *
    (c) * * *
    (3) Any portion of a grant, scholarship, fellowship, or gift used 
or set aside for paying tuition, fees, or other necessary educational 
expenses. * * *
* * * * *
    (6) The first $60 of unearned income received in a calendar quarter 
if you receive it infrequently or irregularly. We consider income to be 
received infrequently if you receive it only once during a calendar 
quarter from a single source and you did not receive it in the month 
immediately preceding that month or in the month immediately subsequent 
to that month. We consider income to be received irregularly if you 
cannot reasonably expect to receive it.
* * * * *
    (22) Interest and dividend income from a countable resource or from 
a resource excluded under a Federal statute other than section 1613(a) 
of the Social Security Act.
    6. Section 416.1161 is amended by revising paragraph (a)(4), by 
removing the word ``and'' at the end of paragraph (a)(24), by removing 
the period at the end of paragraph (a)(25) and adding a semicolon in 
its place followed by the word ``and'', and by adding a new paragraph 
(a)(26) to read as follows:


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

* * * * *
    (a) * * *
    (4) Any portion of a grant, scholarship, fellowship, or gift used 
or set aside to pay tuition, fees or other necessary educational 
expenses;
* * * * *
    (26) Interest and dividend income from a countable resource or from 
a resource excluded under a Federal statute other than section 1613(a) 
of the Social Security Act.
* * * * *

Subpart L--[Amended]

    7. The authority citation for subpart L 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).

    8. Section 416.1210 is amended by removing the word ``and'' at the 
end of paragraph (s), by removing the period at the end of paragraph 
(t) and adding a semicolon in its place followed by the word ``and'', 
and by adding a new paragraph (u) to read as follows:


Sec.  416.1210  Exclusions from resources; general.

* * * * *
    (u) Any portion of a grant, scholarship, fellowship, or gift used 
or set aside for paying tuition, fees, or other necessary educational 
expenses as provided in Sec.  416.1250.
    9. Section 416.1250 is added to read as follows:


Sec.  416.1250  How we count grants, scholarships, fellowships or 
gifts.

    (a) When we determine your resources (or your spouse's, if any), we 
will exclude for 9 months any portion of any grant, scholarship, 
fellowship, or gift that you use or set aside to pay the cost of 
tuition, fees, or other necessary educational expenses at any 
educational institution, including vocational or technical 
institutions. The 9 months begin the month after the month you receive 
the educational assistance.
    (b) We will count as a resource any portion of a grant, 
scholarship, fellowship, or gift you (or your spouse, if any) did not 
use or set aside to pay tuition, fees, or other necessary educational 
expenses. We will count such portion of a grant, scholarship, 
fellowship or gift as a resource in the month following the month of 
receipt. If you use funds that were set aside for tuition, fees, or 
other necessary educational expenses for another purpose, or if the 
funds are no longer set aside for paying tuition, fees, or other 
necessary educational expenses within the 9-month exclusion period, we 
will count the funds as income in the month you use them for another 
purpose, or in the month when they are no longer set aside for paying 
tuition, fees, or other necessary educational expenses, whichever 
occurs first. We will consider any remaining funds as a resource in the 
month following the month we count them as income. We will count any 
portion of grants, scholarships, fellowships, or gifts remaining 
unspent after the 9-month exclusion period as a resource beginning with 
the 10th month after you received the educational assistance.

[FR Doc. 05-17588 Filed 9-2-05; 8:45 am]
BILLING CODE 4191-02-P