Food Stamp Program; Medical Expense Deduction

Federal RegisterOct 3, 1994

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SUMMARY: This action will change Food Stamp Program rules relating to

the excess medical expense deduction. The changes will simplify the

means by which households with elderly and disabled members claim

deductions from income for verified, prospective, non-reimbursed

medical expenses.

DATES: Effective Date: This rule is effective and must be implemented

no later than October 1, 1994.

Comments: Comments must be received on or before December 2, 1994

to be assured of consideration.

ADDRESSES: Comments should be submitted to Judith M. Seymour,

Eligibility and Certification Regulation Section, Certification Policy

Branch, Program Development Division, Food and Nutrition Service, USDA,

3101 Park Center Drive, Alexandria, Virginia, 22302. Comments may also

be datafaxed to the attention of Ms. Seymour at (703) 305-2454. All

written comments will be open for public inspection at the office of

the Food and Nutrition Service during regular business hours (8:30 a.m.

to 5 p.m., Monday through Friday) at 3101 Park Center Drive,

Alexandria, Virginia, Room 720.

FOR FURTHER INFORMATION CONTACT: Questions regarding this rulemaking

should be addressed to Ms. Seymour at the above address or by telephone

at (703) 305-2496.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be significant and was reviewed by

the Office of Management and Budget under Executive Order 12866.

Executive Order 12372

The Food Stamp Program is listed in the Catalog of Federal Domestic

Assistance under No. 10.551. For the reasons set forth in the final

rule in 7 CFR 3015, Subpart V and related Notice (48 FR 29115), this

Program is excluded from the scope of Executive Order 12372 which

requires intergovernmental consultation with State and local officials.

Regulatory Flexibility Act

This rule has been reviewed with regard to the requirements of the

Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Ellen Haas, the

Assistant Secretary for Food and Consumer Services, has certified that

this interim rule will not have a significant economic impact on a

substantial number of small entities. State and local welfare agencies

will be the most affected to the extent that they administer the

Program.

Paperwork Reduction Act

This rule does not contain reporting or recordkeeping requirements

subject to approval by the Office of Management and Budget (OMB) under

the Paperwork Reduction Act of 1980 (44 U.S.C. 3507).

Executive Order 12778

This rule has been reviewed under Executive Order 12778, Civil

Justice Reform. This rule is intended to have preemptive effect with

respect to any State or local laws, regulations or policies which

conflict with its provisions or which would otherwise impede its full

implementation. This rule is not intended to have retroactive effect

unless so specified in the Effective Date paragraph of this preamble.

Prior to any judicial challenge to the provisions of this rule or the

application of its provisions, all applicable administrative procedures

must be exhausted. In the Food Stamp Program the administrative

procedures are as follows: (1) for Program benefit recipients--State

administrative procedures issued pursuant to 7 U.S.C. 2020(e)(1) and 7

CFR 273.15; (2) for State agencies--administrative procedures issued

pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for rules related to

non-quality control (QC) liabilities) or Part 284 (for rules related to

QC liabilities); (3) for Program retailers and wholesalers--

administrative procedures issued pursuant to 7 U.S.C. 2023 set out at 7

CFR 278.8.

Public Participation and Effective Date

The amendment to section 5(e) of the Food Stamp Act of 1977 (7

U.S.C. 2014(e)) which is reflected in this rule was enacted in 1990 as

section 1717 of the Mickey Leland Memorial Domestic Relief Act (1990

Leland Act), Title XVII, Pub. L. 101-624 (104 Stat. 3783, Nov. 28,

1990). This amendment was effective February 1, 1992. The provisions of

this rule are required to be implemented not later than October 1,

1994, in order to assure that all State agencies are in full compliance

with the amendment as soon as possible. For this reason, Ellen Haas,

Assistant Secretary for Food and Consumer Services, has determined

pursuant to 5 U.S.C. 553 that public comment on this rule prior to

implementation is impracticable and that good cause exists for making

this rule effective less than 30 days after its publication. However,

because we believe the administration of the rule may be improved by

public comment, comments are solicited on this rule for 60 days after

publication. All comments received within the comment period will be

analyzed, and any appropriate changes will be incorporated in the

subsequent publication of a final rule.

Background

Section 351 of the Hunger Prevention Act of 1988, Pub. L. 100-435

(102 Stat. 1645, September 19, 1988) (HPA) amended Section 5(e) of the

Food Stamp Act of 1977, as amended, 7 U.S.C. 2014(e), to require State

agencies to offer eligible households with an elderly or disabled

member a method for claiming a deduction for recurring medical expenses

in place of provisions that had required households to report and

verify expenses monthly. On June 7, 1989, the Department published an

interim rulemaking at 54 FR 24518, which implemented Section 351 of

Pub. L. 100-435. The interim rules are still in effect.

The 1989 interim rule amended several provisions of the regulations

pertaining to the medical deduction, particularly in the area of

reporting and verification requirements for allowable medical expenses.

Under the 1989 interim rule, households subject to monthly reporting

are given the option of either reporting and verifying all medical

expenses monthly, or of reporting and verifying changes in medical

expenses in excess of $25 occurring during the certification period,

but they cannot be required to report under both procedures. The 1989

interim rule amended 7 CFR 273.21(h)(3) (i) and (ii), (i)(1), and

(j)(3)(iii) to specify the household's options with regard to reporting

and verifying medical expenses in a monthly reporting and retrospective

budgeting (MRRB) system. In addition, 7 CFR 273.12(a)(1)(vi) and 7 CFR

273.21(h)(3)(iii) were amended by the 1989 interim rule to simplify

reporting changes in medical expenses. The 1989 interim rule required

that changes in total medical expenses greater than $25 must be

reported, as opposed to a $25 change in each individual allowable

medical expense.

Following publication of the 1989 interim rule, the 1990 Leland Act

was enacted. Regulations published to implement provisions of that Act

superseded some of the changes made in the 1989 interim rule. Section

1724 of the 1990 Leland Act delegated to each State agency the

responsibility for design of the monthly report form, including the

determination of what information relevant to eligibility and benefits

was to be included on that form. These provisions of section 1724 were

implemented by the Monthly Reporting and Retrospective Budgeting

Amendments and Mass Changes final rule, published on December 4, 1991

at 56 FR 63597. Conforming amendments to verification requirements

associated with the monthly report were also made at that time. The

regulatory amendments in the December 4, 1991 final rule superseded the

changes made to 7 CFR 273.21(h)(3) (i), (ii), and (iii), and (i)(1) by

the 1989 interim rule, because the interim provisions concerned the

information that the Department mandated be contained on the monthly

report form.

The amendments made to the regulations at 7 CFR 273.12(a)(vi) and

273.21(j)(iii) (C) and (D) by the 1989 interim rule were neither

finalized nor superseded by subsequent regulations. As explained below,

however, the Department is now making new amendments to these sections.

Section 1717 of the 1990 Leland Act amended section 5(e) of the

Food Stamp Act to provide for a simplified means for eligible

households to claim the excess medical expense deduction for recurring

medical costs. Section 1717 requires State agencies to estimate at

certification a recipient's recurring medical expenses for the

certification period based upon the recipient's current verified

medical expenses, as well as available information about the

recipient's medical condition, and public or private medical insurance

coverage. The household's medical deduction would be based on these

estimates, and further verification would not be required. In a

proposed rule entitled ``Miscellaneous Provisions of the Mickey Leland

Memorial Domestic Hunger Relief Act and Food Stamp Certification

Policy,'' published on June 28, 1991 (56 FR 29594), the Department

stated that food stamp regulations at 7 CFR 273.2(f)(8) and

273.12(a)(6) already reflected the intent of the statute and that,

therefore, no change to the regulations was required. No comments

disputing this position were received, and the position was reiterated

in a final rule published on December 4, 1991 (56 FR 63594).

It has come to the attention of the Department that some State

agencies may not be properly applying section 1717. This may be due to

confusion on the part of State agencies with regard to the Department's

decision not to issue regulations in connection with section 1717. To

ensure that State agencies are in compliance with section 1717, the

Department issued three memoranda to FNS regional offices, dated

February 3, 1994, April 1, 1994, and May 12, 1994. In the memoranda,

the Department instructed the regional offices to remind State agencies

that they must be in compliance with the provisions of section 1717.

The Department also offered direction as to how the State agencies can

implement the provisions of section 1717.

In a further effort to insure that State agencies are implementing

the provisions of section 1717, the Department is amending food stamp

regulations that concern the medical expense deduction. These changes

will clarify current regulations to better express the intent of

section 1717. Accordingly, this rule amends 7 CFR 273.10(d)(1)(i),

273.10(d)(4), 273.12(a)(vi), 273.21 (h), (i), and (j)(iii) (C) and (D).

Under the amendments, the household will be required to report and

verify all medical expenses at certification and recertification. The

household's monthly medical deduction for its certification period will

be based on the information reported and verified by the household, and

any anticipated changes in the household's medical expenses that can be

reasonably expected to occur during the certification period based on

available information about the recipient's medical condition, public

or private insurance coverage, and current verified medical expenses.

If the household reports a medical expense at certification but cannot

verify the expense at that time, and if the amount of the expense

cannot be reasonably anticipated based on available information about

the recipient's medical condition, public or private insurance

coverage, and current verified medical expenses, the expense will be

considered at the time the amount of the expense or reimbursement is

reported and verified. The household will not be required to file

reports about its medical expenses during the certification period. If

the household voluntarily reports a change in its medical expenses, the

State agency will act on the changes in accordance with current

regulations at 7 CFR 273.12(c).

The Department is also making a related amendment to the

regulations at 7 CFR 273.12(c) for changes in medical expenses that are

discovered from a source other than the household. Currently, those

regulations require the State agency to act on all changes in a

household's circumstances, including those it discovers from a source

other than the household. Often times, however, the State agency must

contact the household to verify such unreported changes. Since the

intent of section 1717 is to avoid recurrent reporting and verification

on the part of households receiving the medical expense deduction, the

Department is amending 7 CFR 273.12(c) to require that the State agency

act on those changes in medical expenses it learns of from a source

other than the household only if it can act without contacting the

household for further information or verification. The household will

be informed about the changes in accordance with the notice

requirements at 7 CFR 273.13. Those changes learned from a source other

than the household which are not verified upon receipt and therefore

necessitate contact with the household for verification purposes shall

not be acted upon until the household is recertified.

Implementation

This rule is effective and must be implemented no later than

October 1, 1994. For quality control purposes, any variances resulting

from the implementation of the rule shall be excluded from error

analysis for 120 days from the required implementation date, in

accordance with 7 CFR 275.12(d)(2)(vii). The provision must be

implemented for all households that newly apply for Program benefits on

or after the required implementation date. The current caseload shall

be converted to these provisions at the household's request, at the

time of recertification, or when the case is next reviewed, whichever

occurs first. The State agency must provide restored benefits to such

households back to the required implementation date or the date of

application whichever is later. If for any reason a State agency fails

to implement on the required implementation date, restored benefits

shall be provided, if appropriate, back to the required implementation

date or the date of application whichever is later.

List of Subjects

7 CFR Part 272

Alaska, Civil rights, Food stamps, Grant programs--social programs,

Reporting and recordkeeping requirements.

7 CFR Part 273

Administrative practice and procedure, Aliens, Claims, Food stamps,

Fraud, Grant programs--social programs, Penalties, Records, Reporting

and recordkeeping requirements, Social Security.

Accordingly, 7 CFR parts 272 and 273 are amended as follows:

1. The authority citation for 7 CFR parts 272 and 273 continues to

read as follows:

Authority: 7 U.S.C. 2011-2032.

PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

2. In Sec. 272.1, paragraph (g)(138) is added to read as follows:

Sec. 272.1 General terms and conditions.

* * * * *

(g) Implementation * * *

(138) Amendment No. 359 The provision of Amendment No. 359

regarding the medical expense deduction is effective and must be

implemented no later than October 1, 1994. Any variances resulting from

implementation of the provisions of this amendment shall be excluded

from error analysis for 120 days from this required implementation date

in accordance with 7 CFR 275.12(d)(2)(vii). The provision must be