[Federal Register Volume 76, Number 3 (Wednesday, January 5, 2011)]
[Rules and Regulations]
[Pages 446-454]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-33272]
=======================================================================
-----------------------------------------------------------------------
SOCIAL SECURITY ADMINISTRATION
20 CFR Part 416
[Docket No. SSA-2008-0050]
RIN 0960-AE59
Supplemental Security Income (SSI) for the Aged, Blind, and
Disabled; Dedicated Accounts and Installment Payments for Certain Past-
Due SSI Benefits
AGENCY: Social Security Administration (SSA).
ACTION: Final rules.
-----------------------------------------------------------------------
SUMMARY: These final rules adopt, with some minor changes, the interim
final rules with request for comment we published in the Federal
Register on December 20, 1996. 61 FR 67203. The interim final rules
concerned dedicated accounts and installment payments for certain past-
due SSI benefits and reflected amendments to the Social Security Act
(Act) made by sections 213 and 221 of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 (PRWORA). These final rules
reflect these provisions, as well as subsequent changes to these
provisions made by the Balanced Budget Act of 1997 (BBA), the Social
Security Protection Act of 2004 (SSPA), and the Deficit Reduction Act
of 2005 (DRA). The changes we are making in these final rules will
ensure that our rules accurately reflect the statutory provisions on
which they are based.
DATES: These final rules are effective February 4, 2011.
FOR FURTHER INFORMATION CONTACT: Brian Rudick, Office of Regulations,
Social Security Administration, 6401 Security Boulevard, Baltimore, MD
21235-6401, (410) 965-7102. 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:
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.
Background
The interim final rules reflected the dedicated account
requirements that were added by section 213 of the PRWORA. Public Law
104-193. Congress enacted the PRWORA on August 22, 1996. Section 213 of
the PRWORA added a new section 1631(a)(2)(F) of the Act for payments
made after August 22, 1996. Under section 1631(a)(2)(F) of the Act, the
representative payee of an eligible person under age 18 must establish
in certain situations ``an account in a financial institution,'' which
we refer to as a ``dedicated account.'' Specifically, the
representative payee must establish a dedicated account if the person
is eligible for past-due monthly SSI benefits, including any federally
administered State supplementary payments, that exceed 6 times the
maximum ``monthly benefit payable'' under title XVI, which we call the
Federal benefit rate (FBR), after any withholding for interim
assistance reimbursement (IAR) to a State(s) and after payment of
attorney fees. Under section 1631(a)(2)(F) of the Act, the past-due
benefits in a dedicated account may only be used for certain allowable
expenses.
Sections 213(b) and (c) of the PRWORA also amended sections 1613(a)
and 1612(b) of the Act, respectively, to provide that funds in a
dedicated account, established and maintained in accordance with
section 1631(a)(2)(F) of the Act, including accrued interest or other
earnings, are excluded from resources and from income.
Since we published the interim final rules, Congress has enacted
three other laws that made additional changes to the dedicated account
requirements. We are including these statutory changes in the final
rules without requesting public comment because the changes are
required by statute and we are making no discretionary policy changes.
The BBA made one clarification and one revision to section
1631(a)(2)(F) of the Act. Public Law 105-33. Section 5522(b)(2) of the
BBA amended section 1631(a)(2)(F)(iii) of the Act by clarifying which
subsequent past-due benefits a representative payee may deposit in an
established dedicated account. Congress made this technical change to
the statute because the PRWORA used the two different terms
``underpayment'' and ``past-due benefits'' to describe funds that could
be deposited in these accounts. This terminology caused confusion.
Section 5522(b)(2) of the BBA corrected this technical issue, and we
are including this change in these final rules. As amended by section
5522(b)(2) of the BBA, section 1631(a)(2)(F)(iii) of the Act states
that the representative payee may deposit into an established dedicated
account any other funds representing past-due benefits under title XVI
of the Act which equal or exceed the maximum monthly FBR, including any
federally
[[Page 447]]
administered State supplementary payments. While not required, the
representative payee may deposit these past-due benefits into the
dedicated account.
Section 5522(b)(1) of the BBA revised section
1631(a)(2)(F)(ii)(III)(bb) of the Act and required us to reduce
``future benefits payable'' to a recipient (or to a recipient and his
or her spouse), who is his or her own payee and who knowingly
misapplies benefits from a dedicated account. We must reduce the
``future benefits payable'' by an amount equal to the amount of
benefits that were misapplied.
The interim final rules also reflected the installment payment
requirements that were added to section 1631(a) of the Act by section
221 of the PRWORA. Under section 1631(a)(10) of the Act, past-due
benefits paid on or after December 1, 1996, had to be paid in
installments if the amount due equaled or exceeded 12 times the maximum
FBR, after any withholding for IAR to a State(s). Section 1631(a)(10)
of the Act provides limitations on the size of the installment
payments, as well as exceptions to those limitations and exceptions to
the installment payment requirement.
In 2004, Congress enacted the SSPA. Public Law 108-203. Section
302(b)(1) of the SSPA amended section 1631(a)(2)(F)(i)(II) of the Act
to specify that the past-due monthly benefits for dedicated account
purposes are those that remain after any withholding for payment of
attorney fees.
Section 302(b)(2) of the SSPA amended section 1631(a)(10)(A) of the
Act to specify that the past-due monthly benefits for installment
payment purposes are those remaining after any withholding for payment
of attorney fees. Also, section 7502 of the DRA amended section
1631(a)(10)(A)(i) of the Act to change the threshold amount for
determining whether past-due payments will be made in installments.
Public Law 109-171. Under section 1631(a)(10) of the Act, as amended by
section 7502 of the DRA, effective May 8, 2006, past-due benefits must
be paid in installments if the amount due equals or exceeds 3 times the
maximum FBR after any withholding for IAR to a State(s) and payment of
attorney fees.
These final rules reflect the statutory requirement that past-due
benefits, including any federally administered State supplementary
payments, generally be made in installments if the amount due, after
any reimbursement for IAR and any withholding of attorney fees, equals
or exceeds 3 times the maximum FBR. We pay these past-due benefits in
not more than 3 installments, with the first and second installments
not to exceed 3 times the FBR plus any federally administered State
supplementation. We make the installment payments at 6-month intervals.
These final rules also reflect the statutory exceptions to the
installment payment requirements and the exception to the limit on the
amount of the first and second installment payments, when the recipient
has certain outstanding debts or current or anticipated expenses.
In these final rules, we have clarified our rules on dedicated
accounts and installment payments as a result of the public comments we
received. We also have clarified the rules governing receipt of
installment payments when a recipient subsequently becomes eligible for
additional benefit amounts while the recipient is already receiving
installment payments.
Public Comments
On December 20, 1996, we published an interim final rule with
request for comments in the Federal Register and provided a 60-day
comment period. 61 FR 67203. We received 29 letters, most of which were
from attorneys and advocacy groups. We carefully considered all of the
comments in publishing these final rules, and we have adopted several
recommendations made by the commenters.
We have summarized the commenters' views and have responded to the
significant issues raised by the commenters that are within the scope
of the interim final rules. For ease of reference, we have organized
the comments and responses as follows: First, we address general
comments, i.e., comments that are either about the interim final rules
as a whole or apply to more than one section of the rules; then, we
address the remaining comments about specific sections of the rules.
General Comments
Comment: Most commenters objected to section 213 of the PRWORA,
section 221 of the PRWORA, or both. These commenters stated that they
did not believe these statutory provisions would improve the
administration of the SSI program and that this legislation should not
have been enacted. Attorneys commented that these statutory changes
were a disservice to their SSI clients and that these changes would
deny SSI recipients access to competent legal representation because
they did not allow for increased installment payments to cover attorney
fees or for attorney fees to be recognized as allowable dedicated
account expenses. The commenters also were concerned that paying SSI in
installments could distress SSI recipients. These commenters requested
that we not implement the enacted requirements.
Response: We have not adopted these comments because we must
implement statutes that affect the programs we administer. Further, as
we explained above, when we decide whether the representative payee
must establish a dedicated account, we consider the amount of the past-
due benefits after payment of attorney fees. Public Law 104-193 affects
many aspects of the SSI program, and we are not authorized to ignore
any of the legislative provisions or to reconsider implementing these
changes. While sections 213 and 221 of the PRWORA restrict the use and
payment of certain SSI payments, Congress has also provided some
flexibility in determining appropriate uses and for increasing the
installment payment amounts when the SSI recipient's circumstances
involve certain debts and expenses, which we enumerate in Sec.
416.545. Also, we do not count an installment payment as a resource for
nine months after the month in which the payment is made. This
exclusion from resources allows an eligible person to spend down the
installment payment before it affects his or her eligibility for SSI.
The funds in a dedicated account are excluded entirely from income and
resources for determining SSI eligibility and payment amounts.
Comment: Two commenters questioned whether due process would be
afforded in misapplication situations.
Response: Misapplication of benefits occurs when a representative
payee knowingly uses dedicated account funds for expenditures that are
not permitted. A determination that a representative payee misapplied
funds and therefore is liable to us for such misapplication is an
initial determination with appeal rights under Sec. 416.1402.
Comment: One commenter stated that a regulatory flexibility
analysis is needed. The commenter expressed concern that banks would
profit from the establishment of dedicated accounts while landlords,
grocers, and public utilities would not. The commenter's concern is
that there could be significant economic impact because persons would
not have access to their entire lump sum amount.
Response: We do not agree with the commenter. A regulatory
flexibility analysis under the Regulatory Flexibility Act, 5 U.S.C.
601-612, is only required if a proposed or final
[[Page 448]]
regulation would have a significant economic impact on a substantial
number of small entities. It is not required if the head of the agency
certifies that the proposed or final rule would not have a significant
economic impact on a substantial number of small entities. In such a
case, the agency will publish the certification in the Federal Register
at the time it publishes a proposed or final rule and provide a
statement providing the factual basis for the certification. 5 U.S.C.
605.
Commissioner Chater certified that the interim final rule did not
require a regulatory flexibility analysis, and we provided an
appropriate factual basis for the certification in the preamble to the
interim final rule. 61 FR 67203, 67205 (1996). We have also certified
that these final rules do not require a regulatory flexibility
analysis, and we have included that certification, along with the
appropriate factual basis for the certification, in the preamble below.
The commenter's concern about the possible effect of the rule on
landlords, grocers, and public utilities does not require us to do a
Regulatory Flexibility Act analysis. Neither the interim final nor the
final rules would directly regulate any small entities, including any
landlords, grocers or public utilities. An agency is not required to
perform a regulatory flexibility analysis in order to assess the
indirect effects of a regulation on small entities that are not subject
to the regulation.
Comments About Specific Regulatory Sections
Section 416.538(d) Amount of Underpayment or Overpayment--Limited Delay
in Payment of Underpaid Amount to Eligible Persons Under Age 18 Who Has
a Representative Payee
Comment: One commenter stated that we should not require a
representative payee to establish a dedicated account prior to our
paying past-due benefits. The commenter suggested that we issue the
past-due payments to the payee and the payee will, at a later date,
tell us that he or she established the account.
Response: Section 1631(a)(2)(F)(i)(I) of the Act explicitly
requires that a representative payee must ``establish * * * an account
in a financial institution into which such benefits shall be paid * *
*.'' The intent of the legislation is to ensure that the funds are
placed in a separate dedicated account to be used only for certain
specified expenses primarily related to the child's impairment.
Accordingly, we must deposit these past-due benefits directly into the
dedicated account as directed by Congress. We have made no changes to
Sec. 416.538(d) as previously published.
Comment: One commenter believed that directly depositing title XVI
past-due benefits into the dedicated account would make these funds
subject to attachment, garnishment, or levy by creditors, which usually
they are not. They no longer would be ``benefit checks'' but simply
funds in an account. This would leave the door open to creditors to
attach the funds because the funds no longer would be protected by
section 207 of the Act.
Response: Section 207 of the Act, 42 U.S.C. 407, generally prevents
benefit payments from being subject to execution, levy, attachment,
garnishment, or other legal process or to the operation of any
bankruptcy or insolvency law. The protections afforded by section 207
apply to SSI payments pursuant to section 1613(d)(1) of the Act, 42
U.S.C. 1382(d). We have operated a successful direct deposit program
for more than two decades. Courts have generally ruled that title II
and title XVI benefits do not lose their identity as benefits protected
under section 207 of the Act when they are directly deposited into a
bank account. Further, the funds clearly retain such protection in the
dedicated account because they are not commingled with other funds.
In addition, we are currently pursuing another rulemaking that we
expect will address the commenter's concerns. On April 19, 2010, we
published a joint notice of proposed rulemaking, along with the
Department of the Treasury, the Department of Veterans Affairs, the
Office of Personnel Management, and the Railroad Retirement Board. 75
FR 20299 (2010). The joint proposed rule would implement statutory
restrictions on the garnishment of Federal benefit payments. The
agencies took this action in response to recent developments in
technology and debt collection practices that have led to an increase
in the freezing of accounts containing Federal benefit payments.
The proposed rule would establish procedures that financial
institutions must follow when a garnishment order is received for an
account into which Federal benefit payments have been directly
deposited. The proposed rule would require financial institutions that
receive a garnishment order to determine whether any Federal benefit
payments were deposited to the account within 60 calendar days prior to
receiving the order. If so, the financial institutions must ensure that
the account holder has access to an amount equal to the sum of such
payments in the account or to the current balance of the account,
whichever is lower.
Section 416.542 Underpayments--To Whom Underpaid Amount Is Payable
Comment: One commenter objected to our following Sec. 416.542(b)
if the eligible person dies before all installment payments have been
paid.
Response: The installment payment requirement in section
1631(a)(10) of the Act did not amend the law regarding the payment of
past-due benefits after a person's death. We believe that provision
applies to installment payments of past-due benefits the same way it
applies to regular payments of past-due benefits. Thus, we did not
modify Sec. 416.542.
Section 416.545 Paying Large Past-Due Benefits in Installments
Comment: One commenter suggested that we clarify the reference to
the 6-month resource exclusion rule, which applies to benefits received
before March 2, 2004.
Response: We did add Sec. 416.1247, which explains the exclusion
from resources of dedicated accounts and interest or other earnings on
the account. Section 431 of the SSPA changed the 6-month resource
exclusion for title XVI underpayments in effect at the time we
published the interim final rules to a 9-month resource exclusion. Our
rules at Sec. 416.1233 specifically state that we exclude from
countable resources the unspent portion of any title II or title XVI
retroactive payment for 9 months ``following the month of receipt'' (6
months for retroactive payments received before March 2, 2004). Also,
the notice that we send with the installment payment explains how the
resource exclusion period is applied.
Comment: One commenter asked whether the unpaid past-due benefits
would accrue interest until the installment payments are paid in full
to the SSI recipient.
Response: We have no statutory authority to pay interest on unpaid
benefits, including those being held for future installments.
Comment: One commenter stated that a recipient who is awarded SSI
benefits 11 months after filing should not be subject to the
installment payment provisions, since the provision only was applicable
because it had taken us an additional 6 weeks to complete the award and
payment process.
Response: Since section 1631(a)(10) of the Act requires us to
compute the amount of past-due SSI benefits before determining if
installment payments are required, we determine whether the
[[Page 449]]
installment payment provisions apply at the time the claim is paid. The
number of months from the date of filing an application until a
determination or decision is made and the reason for the amount of
past-due benefits are not factors in the computation.
Section 416.545(b) Paying Large Past-Due Benefits in Installments--
Installment Formula
Comment: One commenter stated that we should change the formula for
determining when benefits must be paid in installments to eliminate the
reference for including any State supplementary payments a recipient
may receive since a recipient who receives a State supplementary
payment would automatically have that amount factored into the formula
used in determining whether installments apply.
Response: We did not adopt this comment. Section 1631(a)(10)(D) of
the Act specifies that the benefits subject to installment payments
``includes supplementary payments pursuant to an agreement for Federal
administration under section 1616(a)'' of the Act, and ``under section
212(b) of Public Law 93-66.'' Accordingly, any federally administered
State supplementary payments payable to the recipient must be included
in the amount of past-due benefits when we determine if the amount is
large enough to require installment payments. We believe the interim
final rules accurately reflected the statutory formula and avoided
potential confusion about whether State supplementation payments are
included in applying the formula. Further, not all States provide a
supplementary payment to the SSI benefit, so it is important to include
references to the State supplement when providing the formula for
dedicated account requirements, as well as the formula for the
installment payment requirement.
Comment: Another commenter asked that we make the formula clearer
by adding language to indicate that the amount of past-due benefits
used in determining whether installment payments are required is based
upon the amount of past-due benefits remaining after any reimbursement
has been made to a State for interim assistance.
Response: We adopted this comment and are adding the parenthetical
phrase ``reimbursement to States for interim assistance'' to Sec.
416.545(b). We are also adding this phrase in Sec. 416.546(a), which
sets forth a similar formula used to determine whether a dedicated
account is required.
Comment: One commenter suggested that we clarify the formula to
indicate the amount of past-due benefits subject to installments that
is determined after interim assistance is paid to States.
Response: We added the phrase ``reimbursement to States for interim
assistance'' to both Sec. Sec. 416.545(b) and 416.546(a) after the
phrase ``Sec. 416.525,'' which is the section that explains
reimbursement to States for interim assistance.
Section 416.545(c) Paying Large Past-Due Benefits in Installments--
Exception--When Installment Payments Are Not Required
Comment: Another commenter asked that we clarify when the
exceptions to the installment payment process apply. The commenter
stated that the interim final rules did not make clear when the 12-
month period starts for determining whether death is likely to result
from a medically determinable impairment within 12 months or when a
recipient is likely to remain ineligible for 12 months.
Response: We did not adopt this comment. Section 1631(a)(10)(C) of
the Act states and Sec. 416.545(c) reflects that the installment
requirement does not apply to a recipient who, at the time we determine
that past-due benefits are payable, meets either of these two
exceptions. We believe the language is clear that we consider the 12-
month period beginning after we determine the recipient's eligibility
for payment of past-due SSI benefits.
Section 416.545(d) Paying Large Past-Due Benefits in Installments--
Exception--Increased First and Second Installment Payments
Comment: We received several comments objecting to the interim
final rules because they did not include attorney fees as an expense
for which we may increase the first or second installment payment.
Response: Section 1631(a)(10)(B)(iii) of the Act lists six kinds of
debt or expenses for which we may increase an installment payment.
Congress itemized certain outstanding debts relating to food, clothing,
shelter, and medical treatment, or current or anticipated expenses
relating to medical treatment, and the purchase of a home. The statute
provides that we may increase the first and second installment payments
by the amount of such debt or expenses beyond the normal statutory
limit. Congress did not include attorney fees as one of the items that
we could consider to increase the installment payments.
In addition, to the extent that the comment related to attorney
fees payable under section 206 of the Act, after we published the
interim final rules, Congress changed the law to provide that past-due
benefits for purposes of dedicated accounts and installment payments
include only those benefits remaining after the withholding of attorney
fees. We have revised final Sec. 415.545(b) to reflect that change in
the Act. Our longstanding policy also has considered attorney fees
incurred in the pursuit of a child's disability claim as an example of
an expense that could properly be considered payable from a dedicated
account. We are revising Sec. 416.640(e)(2)(iii) to add that provision
to our rules. Together, these two provisions greatly reduce, if not
eliminate, the need to increase installment payments based on attorney
fees payable.
Comment: A commenter believed that we should broaden the exceptions
for increasing the installment payments and include various expenses,
such as transportation, child support, or education.
Response: The statute is very explicit as to what expenses we may
consider to find an exception to the limit on the first and second
installment payments. The statute affords us no discretion to add to
these exceptions to the basic rule.
Comment: Another commenter asked what criteria we use to determine
whether we will make an increased installment payment due to certain
debts or expenses.
Response: Since the statute refers to ``outstanding debt'' and
``current or anticipated expenses,'' we require evidence from an SSI
recipient that shows that payment is due for a particular item or that
an obligation is being or will be incurred. The evidence could include,
but is not limited to, outstanding bills from electric or utility
companies, overdue rent bills, or letters of intent for purchasing a
home. Under certain circumstances, we may not approve an increase to
the installment payment based on documented debts that we consider
excessive. The recipient may appeal that determination.
Section 416.546 Payment Into Dedicated Accounts of Past-Due Benefits
for Eligible Persons Under Age 18 Who Have a Representative Payee
Comment: One commenter suggested eliminating the reference to
including any federally administered State supplementation in the
formula for determining whether a dedicated account must be
established.
Response: We are not adopting this comment because section
1631(a)(2)(F)(i)(II) of the Act defines
[[Page 450]]
benefits for purposes of that provision to ``include State
supplementary payments'' that we make.
Comment: Another commenter questioned our interpretation of the
dedicated account formula. The commenter felt the statute required only
the deposit of the amount of past-due benefits, which exceeded the
formula, not the entire amount.
Response: We did not adopt this comment because we believe the
statutory language requires deposit of the entire amount of past-due
benefits if the entire amount exceeds 6 times the FBR. Section
1631(a)(2)(F) of the Act requires the representative payee to establish
a dedicated account ``into which such benefits shall be paid'' if the
amount of the past-due benefits exceeds 6 times the maximum FBR. The
language does not say that the representative payee must establish a
dedicated account into which the amount that exceeds 6 times the
maximum FBR shall be paid.
Comment: Three commenters expressed concern that if an institution
required a minimum deposit to open an account, many recipients (or
representative payees) would not have funds available to open a
dedicated account in a financial institution as a prerequisite to
payment of past-due benefits, as required by the interim final rules.
Response: Our experience with the dedicated account provision is
that recipients and representative payees have not generally had
difficulty opening dedicated accounts due to the lack of funds. If we
receive reports that SSI recipients are unable to establish the
required accounts, we will enter into a dialogue with national banking
organizations concerning the requirements of the law. We will encourage
their member banks to accept our notice of past-due benefits to
recipients as a guarantee of the deposit of a Federal payment in excess
of $3,000 into their institution and to waive any minimum deposit
amounts or fees to establish an account for such recipients.
Section 416.570 Adjustment--General Rule
Comment: One commenter suggested that the rule state that an
underpayment cannot be used to recover an overpayment that occurred
prior to the computation of the underpayment.
Response: We did not adopt the comment. Section 1631(b)(1) of the
Act and Sec. 416.543 of our rules allow the use of an underpayment to
recover an overpayment that occurred in a different period. Congress
did not change this authority when it enacted the dedicated account
provision. Accordingly, the rule applies to situations where past-due
amounts must be deposited into a dedicated account.
We may recover an overpayment before we determine whether the past-
due benefits must be deposited into the dedicated account. If recovery
of the overpayment reduces past-due benefits below the formula, a
dedicated account is not required. However, once these funds are
deposited into the dedicated account, they may not be used to repay an
overpayment to us.
Section 416.640(e) Dedicated Accounts for Eligible Persons Under Age 18
Comment: One commenter stated we must clarify ``misapplication'' in
the dedicated account rules and how it relates to the misuse rules.
Response: We did not adopt this comment because we believe the
regulatory definition of misapplication is sufficiently clear. Section
416.640(e)(4) of our rules defines misapplication of benefits as the
use of funds from a dedicated account in any manner not authorized by
our rules. It provides that when a representative payee knowingly uses
dedicated account funds for the recipient for expenditures that are not
permitted, that representative payee will be liable in an amount equal
to the total amount of the misapplied funds.
Section 1631(a)(2)(A)(iv) of the Act defines misuse as occurring
when a representative payee receives payment under title XVI for the
use and benefit of another person and converts the payment, or any part
of it, to a use other than for the use and benefit of the recipient. As
reflected in these definitions, misapplication of benefits is different
than misuse of benefits because misapplied benefits might benefit the
recipient, but were not used for allowable expenses.
Comment: One commenter questioned the absence of any provision in
Sec. 416.640(e) dealing with the penalty for misapplication of funds
from a dedicated account by a recipient who is his or her own payee, as
provided in section 1631(a)(2)(F)(ii)(III)(bb) of the Act, as added by
section 213 of the PRWORA.
Response: The version of the PRWORA passed by the House of
Representatives contained a provision to reinstate the penalty for the
transfer of resources for less than fair market value at section
1613(c) of the Act. The dedicated account provision cross-referenced
section 1631(c) as the penalty applicable when a recipient who is his
or her own payee misapplies funds from a dedicated account (i.e.,
misapplied funds were to be considered transfers of resources resulting
in a period of ineligibility, the length of which is related to the
amount of funds misapplied). When the provision to reinstate the
penalty for transfer of resources was dropped from the Conference
Committee version, the cross-reference in section
1631(a)(2)(F)(ii)(III)(bb) to section 1613(c) was not deleted, nor was
an alternative penalty provision substituted. As a result of this
drafting error, there was no penalty for a recipient who is his or her
own payee and misapplies funds from a dedicated account because there
was no penalty for transfers of resources for less than fair market
value in the SSI program.
Subsequently, in 1997, Congress passed the BBA, which provided that
if a recipient becomes his or her own payee and misapplies funds from a
dedicated account, future benefits will be withheld in the amount of
the misapplied funds. Although Congress passed this amendment after the
publication of the interim final rules, we are not requesting public
comment on that provision in these final rules because we are merely
conforming the regulations to the statutory change and not making any
discretionary policy changes.
Comment: One commenter questioned why this provision applies
primarily to children, and why children's cases should be treated
differently.
Response: In section 213 of the PRWORA, Congress specifically
addressed eligible persons under the age of 18 with representative
payees. This was a legislative choice. Public Law 104-193.
Comment: One commenter expressed the opinion that ``requiring the
beneficiaries to have a bank account seems like an impermissible tying
arrangement since it has nothing to do with disability.''
Response: The commenter's specific objection is not clear. However,
as we stated above, the statutory provisions regarding dedicated
accounts are not discretionary. We must implement this mandatory
provision in the statute.
Comment: One commenter expressed the opinion that because we
require a representative payee to maintain two separate accounts, we
should pay the bank service charges at least on the dedicated account.
Response: This provision is required by statute. The statute does
not authorize us to pay bank service charges.
Comment: Two commenters requested that we revise Sec.
416.640(e)(1) to allow a
[[Page 451]]
dedicated account to be in the form of a trust.
Response: We did not adopt this comment. These accounts are
intended to ensure ready access to the funds and to facilitate the
monitoring of representative payee accountability. Furthermore, Sec.
1613(e), except in limited circumstances defines trust assets as
resources; whereas, funds in dedicated accounts are excluded from
resources for the nine-month period.
By law, trusts are administered by trustees according to the terms
of the trust. In many cases, a trustee would not be the representative
payee. Thus, if a dedicated account were established in the form of a
trust, the representative payee might have no authority over the use of
benefits in the trust. In that situation, we would be unable to fulfill
the requirement that we monitor and hold the representative payee
liable for the misapplication of funds.
Comment: One commenter requested that we revise this section of the
interim final rules to provide an exception for situations in which
dedicated account funds will not be able to be used in a manner
authorized by this provision, e.g., when a child is healthy but
mentally challenged, with virtually no medical expenses and no plans
for education or job training.
Response: This section implements section 1631(a)(2)(F)(i) of the
Act, which neither provides nor gives us authority to make exceptions
of this type. We can only approve impairment-related expenses.
Comment: Several commenters requested that we revise or clarify
this section to allow the use of dedicated account funds for basic
living expenses such as food, rent, utilities, and replacing lost
family income if a parent cannot work full time because of a child's
impairments.
Generally, these commenters suggested that disabled children's
impairments are exacerbated by living in impoverished conditions and,
therefore, we should consider using these funds to provide for basic
needs as an authorized impairment-related expenditure. One commenter
opined that the requested revision would make Sec. 416.640(e)(2)
consistent with existing Sec. 416.640(a).
Response: We did not adopt the comment to revise Sec.
416.640(e)(2) in the manner requested. Section 1631(a)(2)(F)(ii)(II) of
the Act allows expenditures from dedicated accounts for specific items
or services and for other items or services that we consider to be
appropriate, provided that they benefit the eligible recipient and are
related to his or her impairment(s). However, based on these public
comments, we revised Sec. 416.640(e)(2)(iii) specifically to include
the use of funds to prevent malnourishment or homelessness and to pay
attorney fees incurred in pursuit of the child's disability claim as
types of items and services that could be considered appropriate
expenditures.
We did not make a complete list of ``other items and services''
because we believe each situation must be considered on a case-by-case
basis. The procedural instructions we issued to our field offices
contain examples of a broad range of items and services that could be
allowable as impairment-related. Some examples are special foods for
children with special dietary needs, increased electrical bills
resulting from needed mechanical devices that must run constantly,
attorney fees in pursuit of the child's disability claim, and emergency
situations in which the unavailability of dedicated account funds for
basic living expenses may result in the child's becoming homeless or
malnourished.
We do not believe that it is consistent with the statutory
restrictions placed on the use of dedicated account funds for basic
living expenses to be considered impairment-related except in limited
circumstances and situations. In most situations, ongoing monthly
payments can and should be used to pay for the recipient's basic needs,
as provided in Sec. 416.640(a).
Comment: One commenter requested that we revise Sec. 416.640(e)(2)
to make it consistent with Sec. 416.545(d), which allows for
accelerated installment payments if the recipient has outstanding debts
for food, clothing, or shelter, or current or anticipated expenses for
the purchase of a home.
Response: We did not make the suggested change. Section 416.545(d)
of our rules implements a statutory exception to the defined amount of
installment payments. We may increase the amount of the first and
second installments when a recipient has outstanding debts or
anticipated expenses. Section 1631(a)(10)(B)(iii) of the Act. Among the
specified items are outstanding debts for food, clothing, or shelter,
and current or anticipated expenses for the purchase of a home.
However, there is no similar statutory exception in section
1631(a)(2)(F) or authority for us to consider the payment of
outstanding debts for food, clothing, or shelter, or the purchase of a
home in the recipient's name as allowable expenditures, unless those
items are related to the recipient's impairment. The general
installment payment rule of section 1631(a)(10) applies to all SSI
recipients. The specific dedicated account rule of section
1631(a)(2)(F) applies only to payments to representative payees of
recipients under the age of 18. That Congress enacted these two
provisions in the same legislation and did not make them uniform gives
rise to the logical inference that the more restrictive dedicated
account language takes precedence with respect to recipients under the
age of 18 with representative payees even when the past-due benefits
are being paid into the dedicated account in installments. In cases
where a recipient under age 18 has a representative payee and is
eligible for past-due benefits in an amount prescribed in section
1631(a)(10)(A) of the Act, both the installment payment and the
dedicated account provisions will apply, and past-due benefits will be
paid in installments into a dedicated account established by the
representative payee. Public Law 104-193.
Comment: Two commenters requested that we revise Sec.
416.640(e)(2)(iii) to include a comprehensive list of expenses that we
determine to be allowable. The commenters believed that the list should
include the basic necessities of life such as food, clothing, and
shelter, as well as child care, respite care, items related to
education, and participating in community and family activities such as
summer camp. Generally, the commenters were concerned that our field
office employees had too much discretion and might make arbitrary or
conflicting decisions.
Response: We disagree with the premise of these comments. We
decided not to exclusively itemize specific items or services that we
could consider allowable expenditures because, except for education,
job skills training, and medical treatment, section
1631(a)(2)(F)(ii)(II) of the Act requires that the item or service
benefit the disabled SSI recipient and be related to that recipient's
impairment. Since disabled recipients do not have universally
applicable impairment-related needs or might not benefit universally
from certain items or services, we conclude that we should review these
expenditures on a case-by-case basis. Further, Congress specified in
section 1631(a)(10) of the Act that we could increase installment
expenses in view of debts for basic living expenses while it chose not
to include similar language in section 1631(a)(2)(F) of the Act. We
interpret this as indicating Congress' intent not to allow basic living
expenses generally to be paid from dedicated account funds.
[[Page 452]]
Thus, rather than include an extensive list of specific examples in
the interim final rules, we provided general procedural instructions
for the field personnel. We issued instructions to our field offices to
make case-by-case determinations based on the payee's explanation about
how an item or service would benefit the recipient and how it is
related to the recipient's impairment(s). We included a broad non-
inclusive list of examples of how some items or services could be
related to certain impairments.
Some of the items that the commenters wanted included in Sec.
416.640(e)(2)(iii), such as child care, respite care, items related to
education, and participating in community and family activities could
readily be considered beneficial to the recipient as explained in our
procedural guidelines. However, as stated in previous responses, they
are not presumptively impairment-related. Therefore, general expenses
for food, clothing, and shelter cannot necessarily be paid from
dedicated account funds. Ongoing monthly payments can and should be
used to pay for the recipient's basic needs, as provided in Sec.
416.640(a). Nevertheless, we expanded the list of allowable expenses in
Sec. 416.640(e)(2)(iii) to include attorney fees incurred in the
pursuit of the child's disability claim, and basic living expenses
where emergency situations may result in the child becoming homeless or
malnourished without these funds being made available.
Comment: Two commenters wanted written instructions for
representative payees, as well as our employees, about the proper use
of dedicated account funds.
Response: We did not adopt the comment. We do not believe such
written instructions would be appropriate in our regulations, but we
have developed notices and information in ``A Guide for Representative
Payees'' (http://www.socialsecurity.gov/pubs/10076.pdf) regarding the
proper use of dedicated account funds.
Comment: Two commenters requested that we establish a time frame
for pre-approval of expenses from dedicated account funds.
Response: We did not adopt this comment. Payees are not required to
obtain prior approval for dedicated account expenditures. However, if a
payee is uncertain whether an expenditure is allowed, the payee should
seek our approval before making the expenditure. We explain this issue
further in our publication ``A Guide for Representative Payees.'' For
instance, the Guide notes that payees ``should first get approval from
us for these kind of expenses'' (i.e., expenses related to the child's
disability that we determine are appropriate).
Comment: One commenter stated that the potential for second-
guessing the expenditures of thousands of parents, aside from the undue
administrative burdens this could place on us, is quite real and
suggested we make a presumptive rule that any expenditure of less than
$1,000 should be presumed valid and not subject to review.
Response: The statutory language does not authorize us to establish
such a presumption that would exempt expenditures from the
misapplication rules. Accordingly, we did not adopt this comment.
Comment: Many commenters were concerned that attorney fees were not
listed as a permitted expenditure from dedicated account funds. They
urged that many SSI recipients are found disabled only through the
efforts of an attorney.
Response: As noted above, attorney fees incurred in pursuit of the
child's disability claim may be considered ``impairment-related'' and a
permitted expenditure of dedicated account funds. We have long included
this provision in our operating instructions. However, based on the
public comments, we included attorney fees related to the pursuit of
the child's disability claim in Sec. 416.640(e)(2)(iii) as an
expenditure that could be considered as appropriate. As noted
previously, section 1631(a)(2)(F)(i)(II) of the Act provides for paying
attorney fees from past-due benefits and for determining whether a
dedicated account is required, only after deducting such fees.
Section 416.1247 Exclusion of a Dedicated Account in a Financial
Institution
Comment: Two commenters opined that the resource exclusion for
dedicated accounts in Sec. 416.1247 should continue to apply after a
recipient's eligibility has terminated. Not allowing continuation of
the exclusion could become a bar to re-eligibility.
Response: Section 1613(a)(12) of the Act provides an exclusion from
resources of ``any account, including accrued interest or other
earnings thereon, established and maintained in accordance with section
1631(a)(2)(F).'' The maintenance requirements in section 1631(a)(2)(F)
deal with restrictions on the use of funds in the dedicated account and
requirements of the payee to report on and account for activity
respecting funds in the dedicated account. These restrictions and
accounting requirements continue during periods of suspension from SSI
eligibility and, accordingly, the resource exclusion continues during
periods of suspension due to ineligibility, as long as the recipient's
eligibility has not been terminated.
When a recipient's eligibility terminates, the restrictions on the
use of funds in a dedicated account and the payee's responsibility to
account for and report on activity in such an account also terminate,
and the resource exclusion ends. Once eligibility terminates, any
special status given to funds in a dedicated account and the dedicated
account designation itself end.
Comment: One commenter was concerned that, although dedicated
accounts are excluded from resources for SSI purposes, they could be a
resource for Medicaid purposes, causing ineligibility.
Response: Dedicated accounts will be excluded for most States for
which we make Medicaid eligibility determinations or that use SSI rules
to make their own Medicaid eligibility determinations. For the 11
States that make their own Medicaid eligibility determinations using
their own rules, dedicated accounts may be excluded from resources at
the option of each State.
Explanation of Revisions
These final rules reflect the following minor changes to the
interim final rules:
We added a new second sentence to Sec. 416.545(a) to
clarify current policy. The interim final rule was silent on our policy
and procedures for issuing additional past-due benefits that become
payable while a recipient is receiving installment payments so we are
including language in Sec. 416.545(a) to explain this process more
fully.
We amended the first sentence of Sec. Sec. 416.545(b) and
416.546(a) to include additional language as a result of the public
comments.
We amended Sec. 416.640(e)(2)(iii) by adding an
additional sentence to the end of the section to include attorney fees
and expenditures to prevent malnourishment and homelessness as
dedicated account expenditures that could be considered appropriate.
These final rules make the following changes based on statutes
enacted subsequent to the interim final rules:
We amended Sec. Sec. 416.545(b) and 416.546(a) to reflect
the SSPA provision to specify that past-due benefits for dedicated
account purposes and installment payment purposes are those benefits
remaining after any withholding for payment of attorney fees.
[[Page 453]]
We amended Sec. 416.545(b) to reflect changes based on
the nondiscretionary provision of section 7502 of the DRA to specify
the formula for past-due benefits for payment of installments will be
an amount which equals or exceeds 3 times the maximum monthly benefit
payable plus any federally administered State supplementation.
We amended Sec. 416.546(b) to reflect the technical
amendments in section 5522(b) of the BBA to clarify what subsequent
past-due benefits may be deposited into a dedicated account by the
representative payee.
We amended Sec. 416.546(e)(4) to reflect the technical
amendments in section 5522(b) of the BBA to clarify how we treat
misapplication of benefits in a dedicated account by a recipient who is
his or her own payee.
Except for the changes discussed above and set out below, the
interim final rules remain unchanged and are adopted as final.
Regulatory Procedures
Pursuant to sections 205(a), 702(a)(5) and 1631(d)(1) of the Social
Security Act, 42 U.S.C. 405(a), 902(a)(5) and 1383(d)(1), we follow the
Administrative Procedure Act (APA) rulemaking procedures specified in 5
U.S.C. 553 in the development of our regulations. The APA provides
exceptions to its prior 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.
In the case of this rule, we have determined that, under 5 U.S.C.
553(b)(B), good cause exists for dispensing with the notice and public
comment procedures for the three changes we are making based on
legislation enacted after we published the interim final rule because
these changes all are required by the statutes. The statutes do not
give us any discretion in implementing the provisions. Therefore,
opportunity for prior comment is unnecessary, and we are including
these changes in this final rule.
Executive Order 12866
We have consulted with the Office of Management and Budget (OMB)
and determined that these final rules meet the criteria for a
significant regulatory action under Executive Order 12866. Thus, they
were reviewed by OMB.
Regulatory Flexibility Act
We certify that these final rules will not have a significant
economic impact on a substantial number of small entities, because they
affect persons or States only. Therefore, a regulatory flexibility
analysis is not required under the Regulatory Flexibility Act, as
amended.
Paperwork Reduction Act
These final rules do not create any new, or affect any existing,
collections, and therefore, do not require OMB approval under the
Paperwork Reduction Act.
(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: September 28, 2010.
Michael J. Astrue,
Commissioner of Social Security.
0
For the reasons set forth in the preamble, we are amending subparts E
and F 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 E--[Amended]
0
1. The authority citation for subpart E of part 416 continues to read
as follows:
Authority: Secs. 702(a)(5), 1147, 1601, 1602, 1611(c) and (e),
and 1631(a)-(d) and (g) of the Social Security Act (42 U.S.C.
902(a)(5), 1320b-17, 1381, 1381a, 1382(c) and (e), and 1383(a)-(d)
and (g)); 31 U.S.C. 3720A.
0
2. Amend Sec. 416.545 by adding a new second sentence following the
first sentence in paragraph (a) and by revising the first sentence of
paragraph (b) to read as follows:
Sec. 416.545 Paying large past-due benefits in installments.
(a) * * * If an individual becomes eligible for past-due benefits
for a different period while installments are being made, we will
notify the individual of the amount due and issue these benefits in the
last installment payment. * * *
* * * * *
(b) * * * Installment payments must be made if the amount of the
past-due benefits, including any federally administered State
supplementation, after applying Sec. 416.525 (reimbursement to States
for interim assistance) and applying Sec. 416.1520 (payment of
attorney fees), equals or exceeds 3 times the Federal Benefit Rate plus
any federally administered State supplementation payable in a month to
an eligible individual (or eligible individual and eligible spouse). *
* *
* * * * *
0
3. Amend Sec. 416.546 by revising paragraphs (a) and (b) to read as
follows:
Sec. 416.546 Payment into dedicated accounts of past-due benefits for
eligible individuals under age 18 who have a representative payee.
* * * * *
(a) For an eligible individual under age 18 who has a
representative payee and who is determined to be eligible for past-due
benefits (including any federally administered State supplementation)
in an amount which, after applying Sec. 416.525 (reimbursement to
States for interim assistance) and Sec. 416.1520 (payment of attorney
fee), exceeds six times the Federal Benefit Rate plus any federally
administered State supplementation payable in a month, this unpaid
amount must be paid into the dedicated account established and
maintained as described in Sec. 416.640(e).
(b) After the account is established, the representative payee may
(but is not required to) deposit into the account any subsequent funds
representing past-due benefits under this title to the individual which
are equal to or exceed the maximum Federal Benefit Rate (including any
federally administered State supplementation).
* * * * *
Subpart F--[Amended]
0
4. The authority citation for subpart F of part 416 continues to read
as follows:
Authority: Secs. 702(a)(5), 1631(a)(2) and (d)(1) of the Social
Security Act (42 U.S.C. 902(a)(5) and 1383(a)(2) and (d)(1)).
0
5. Amend Sec. 416.640 by adding an additional sentence to the end of
paragraph (e)(2)(iii) and an additional sentence to the end of
paragraph (e)(4) to read as follows:
Sec. 416.640 Use of benefit payments.
* * * * *
(e) * * *
(2) * * *
(iii) * * * Attorney fees related to the pursuit of the child's
disability claim and use of funds to prevent malnourishment or
homelessness could be considered appropriate expenditures.
* * * * *
(4) * * * In addition, if a recipient who is his or her own payee
knowingly
[[Page 454]]
misapplies benefits in a dedicated account, we will reduce future
benefits payable to that recipient (or to that recipient and his or her
spouse) by an amount equal to the total amount of the misapplied funds.
* * * * *
[FR Doc. 2010-33272 Filed 1-4-11; 8:45 am]
BILLING CODE 4191-02-P