Supplemental Security Income for the Aged, Blind, and Disabled; Reliable Information Which Is Currently Available for Determining Benefit Amounts in the Supplemental Security Income Program

SOCIAL SECURITY ADMINISTRATION

20 CFR Part 416

[Regulations No. 16]

RIN 0960-AD65

Supplemental Security Income for the Aged, Blind, and Disabled;

Reliable Information Which Is Currently Available for Determining

Benefit Amounts in the Supplemental Security Income Program

AGENCY: Social Security Administration (SSA).

ACTION: Final rules.

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SUMMARY: The Social Security Act (the Act) provides that if the

Commissioner of Social Security determines that reliable information is

currently available concerning the income of an individual, the

Commissioner may use that information to determine an individual's

current month's supplemental security income (SSI) benefit amount. This

method of determining SSI benefit amounts is an exception to the use of

income from a prior month, known as retrospective monthly accounting

(RMA). These rules provide that the Commissioner, in exercising his or

her discretionary authority, has determined that no reliable

information exists which is currently available for determining SSI

benefit amounts for a current month using any method other than RMA.

EFFECTIVE DATE: These rules are effective July 7, 1997.

FOR FURTHER INFORMATION CONTACT: Henry D. Lerner, Legal Assistant,

Division of Regulations and Rulings, Social Security Administration,

6401 Security Blvd., Baltimore, MD 21235, (410) 965-1762 for

information about

[[Page 30748]]

these rules. For information on eligibility or claiming benefits, call

our national toll-free number, 1-800-772-1213.

SUPPLEMENTARY INFORMATION: In accordance with the orders of the United

States District Court for the Central District of California in the

case of Newman, et al. v. Shalala, No. CV 89-04028 SVW (October 20,

1993), and the United States Court of Appeals for the Ninth Circuit in

Newman v. Chater, 87 F.3d 358 (1996), we are providing rules concerning

reliable information for determining benefits in the SSI program

pursuant to section 1611(c)(4) of the Act. A different district court,

in Gould v. Sullivan, 819 F. Supp. 685 (S.D. Ohio 1992), ordered us to

propose a rule concerning section 1611(c)(4) of the Act. On March 16,

1993, we published a notice of proposed rulemaking (NPRM) in the

Federal Register (58 FR 14191) with a correction notice published in

the Federal Register (58 FR 26383) on May 3, 1993. The NPRM provided 60

days in which the public could comment on the proposed rules. The

district court in Newman also ordered us to propose a rule concerning

section 1611(c)(4) with a 60-day comment period. The Newman district

court found that the NPRM we published in March 1993 complied with this

aspect of the order. Further, the Newman district court directed us to

publish in the Federal Register a final rule concerning 1611(c)(4). In

these cases, the Commissioner had argued that unless he identified

reliable information which is currently available and which he intended

to use as an exception to the usual RMA rules, the publication of

regulations is not necessary. This position was upheld on July 27, 1994

by the United States Court of Appeals for the Sixth Circuit in Gould v.

Shalala, 30 F.3d 714 (1994) when the district court's decision was

reversed. The circuit court agreed that the publication of regulations

is not necessary under section 1611(c)(4) of the Act. However, on June

25, 1996, the United States Court of Appeals for the Ninth Circuit in

Newman v. Chater, 87 F.3d 358 (1996), affirmed the district court

decision directing us to publish a final rule in the Federal Register.

In light of the directive in Newman to publish a final rule, we are

publishing these rules explaining that we have determined that no

reliable information exists for determining SSI benefits. The NPRM

which was published pursuant to the district court's decision in Gould

provided 60 days in which the public could comment on the proposed

rules. That period has run, and we have received public comments to

which we will now respond.

Previously, we published final regulations on November 26, 1985 (50

FR 48563), implementing various provisions in section 1611(c) of the

Act. Section 1611(c)(1) of the Act, the RMA provision, provides that an

individual's eligibility for SSI benefits is to be determined based on

income, resources, and other relevant characteristics from the current

month. The SSI benefit amount for a month is to be determined on the

basis of income and other characteristics in the first or, if the

Commissioner so chooses, the second month preceding the month of

eligibility. The final regulations provided that generally the income

and other characteristics in the second month preceding the month of

eligibility are to be used for determining the amount of SSI benefits.

Section 1611(c)(3) of the Act provides that an increase in Social

Security (title II) benefits over the amount payable for the first

preceding month, or at the Commissioner's election, the second

preceding month, will be counted in determining the amount of an SSI

benefit for the first month or, at the Commissioner's election, the

second month in which there is an SSI benefit increase due to a cost-

of-living adjustment (COLA) made under section 1617 of the Act. The

final regulations, published November 26, 1985 (50 FR 48563), provided

for counting an increase from a COLA or recomputation in Social

Security benefits for January and February as income in the month

received to determine the SSI benefit amounts for January and February.

Section 1611(c)(4)(A) of the Act provides that if the Commissioner

determines, at his or her discretion, that reliable information is

currently available about an individual's income and other

circumstances for a month, the Commissioner, at his or her discretion,

may determine the SSI benefit amount for that month on the basis of

that information rather than based on income and other characteristics

from the first or second prior month as required under RMA pursuant to

section 1611(c)(1) of the Act. This is known as the ``reliable

information exception'' to the RMA provision. If the Commissioner

determines that reliable information is currently available and he or

she further determines that he or she may use it to affect the current

SSI benefit amount, section 1611(c)(4)(B) requires the Commissioner to

issue regulations prescribing the circumstances in which the

information may be used to determine the SSI benefit amount. However,

under section 1611(c)(4), the Commissioner, at his or her discretion,

may continue to use RMA even if he or she identifies reliable

information which is currently available.

With respect to recipients, the optional computation under section

1611(c)(4)(A) of the Act would, in comparison to RMA, be advantageous

in some circumstances and disadvantageous in others. Consider, for

illustrative purposes only, what would happen if the Commissioner were

to determine that all title II income information is reliable and

currently available and is to be used to determine the current month's

benefit.

Title II income above $20 serves to reduce the SSI benefit dollar-

for-dollar. A reduction in the ongoing title II benefit amount will

result in an increase in the SSI benefit, and, conversely, an increase

in the title II benefit will result in a reduction in the SSI benefit.

Under RMA, the effects of changes in title II income other than COLA or

recomputation increases are generally delayed 2 months. For example, an

SSI recipient who is receiving title II mother's benefits and whose

benefits terminate because she no longer has a child in her care would

continue to receive a reduced SSI benefit for 2 months after the

termination of the title II income. Conversely, an SSI recipient who

becomes entitled to a title II mother's benefit will continue to

receive an unreduced SSI benefit for 2 months after the title II

benefit begins, and her SSI benefit would not be reduced until the

third month following title II entitlement.

Under the current month accounting approach, title II income would

affect the SSI benefit as of the month the income is received. The

mother whose title II benefit terminates would receive increased SSI in

the month following termination. The SSI recipient who subsequently

becomes entitled to a title II benefit would have her SSI benefit

reduced effective with the month she begins receiving the title II

benefit.

Statistically valid sample data indicate that using current month

accounting for title II income would be disadvantageous to more SSI

recipients than it would be advantageous. Of the approximately 99,400

recipients whose title II income started or stopped in the 12 months

ending with June 1996 and who continued to receive SSI benefits, 78.3

percent would have received less in total SSI benefits under current

month accounting and 21.7 percent would have received more. Of the

approximately 131,000 recipients whose countable title II income

increased or decreased in those 12 months and who

[[Page 30749]]

continued to receive SSI benefits, 71.3 percent would have received

less in total SSI benefits using current month accounting, while 28.7

percent would have received more.

For purposes of RMA, we are defining ``reliable information'' in

these final regulations as payment information maintained on a computer

system of records by the government agency determining the payments

(e.g., Department of Veterans Affairs, the Office of Personnel

Management for Federal civil service information, and the Railroad

Retirement Board). Because this is actual payment information which is

verified by the custodial agency, it is correct virtually all the time.

We define the term ``currently available information'' as information

that is available to the Commissioner within the time required for us

to compute and issue a correct SSI benefit for the month the

information is pertinent.

When we published the regulations on November 26, 1985 (50 FR

48563), to reflect various provisions of section 1611(c) of the Act, we

discussed the section 1611(c)(4) exception (50 FR 48565) using the

following language:

These regulations do not include a rule to determine a current

month's benefit based on reliable information which is currently

available. The Secretary has this matter under consideration, and is

not exercising this authority at this time.

After publication of the final rules, we examined information

regarding other Federal and State benefit programs to determine whether

these sources could provide us reliable information which is currently

available to be used for determining SSI benefit amounts. The following

explains what we determined as a result of this examination.

We maintain computer interfaces only with some Federal agencies,

such as the Department of Veterans Affairs, the Office of Personnel

Management for Federal civil service information, and the Railroad

Retirement Board. We receive this benefit information through computer

interface after these other agencies prepare their payment tapes for

the Treasury Department to use in issuing benefit checks or making

electronic deposits. These interfaces provide us with information with

respect to income and other circumstances. We use this information to

maintain and update the SSI records for eligible individuals.

The Privacy Act, 5 U.S.C. 552a(p), requires that if the computer

match data would cause SSA to take an adverse action against an

individual (i.e., to reduce, suspend, terminate or deny payments), SSA

must notify the individual of our findings, including the data and

their source, and defer the adverse action until the expiration of any

time period established for the program by statute or regulation for

the individual to respond to the notice (10 days in the SSI program) to

give the individual the opportunity to challenge the accuracy of the

data. Because of the time required for the receipt of the data and

individual notification and appeal rights, data we receive from these

other agencies in January, for example, cannot adversely affect an

individual's payment until March at the earliest. Thus, based on our

definition, we cannot consider even timely computer interface

information from other agencies to be currently available for

determining the SSI benefit amount.

In addition to the computer interfaces with other agencies, we

maintain a computer interface with title II records within SSA. The

title II interface does not require special electronic matching and is

not subject to the Privacy Act requirements discussed above. Pursuant

to sections 1611(c)(2) and 1611(c)(3), we determine the SSI benefit

amount for a month based on certain income received in that month.

However, our regulations provide, based on Goldberg versus Kelly,

397 U.S. 254 (1970), that before SSA can reduce, suspend or terminate

an SSI payment, we must issue a written notice to the individual

informing him or her of the event and providing the opportunity to

appeal. If an adverse change is posted on an SSI claimant's record

after the 10th day of the month, due to computer system constraints, we

are unable to reduce the SSI payment for the next month. This creates

an overpayment for the individual. Because of the advance notice

requirements and systems limitations, only changes posted to the SSI

record by the 10th of the month before the payment month affect the

payment. Because of the various increases and decreases in title II

benefits occurring throughout the month, approximately one-half of the

changes are posted by the 10th of the month before the payment month.

For the other one-half of the cases involving changes, the information

is not currently available for SSA's system to make timely changes in

order to avoid causing an overpayment or an underpayment. It would be

inequitable to treat title II income differently in the computation of

an SSI payment based on when in the month the income was received

because such differing treatment could lead to different SSI benefit

amounts for two individuals with identical title II income in a

particular month.

Based on the foregoing review and examination of computer interface

information, the Commissioner has determined that no information exists

which is reliable and currently available to use in computing SSI

benefit amounts pursuant to section 1611(c)(4). Therefore, the

regulations explain that the Commissioner is exercising his or her

discretion by declining to determine the SSI benefit amount for a

current month using a method other than RMA, as allowed under section

1611(c)(4) of the Act.

We are amending Sec. 416.420 to define the terms ``reliable

information'' and ``currently available information'' and to state that

the Commissioner has determined that there exists no reliable

information which is currently available to use for determining SSI

benefit amounts under section 1611(c)(4).

As noted above, these regulations were published in the Federal

Register (58 FR 14191) on March 16, 1993, as an NPRM with a correction

notice published in the Federal Register (58 FR 26383) on May 3, 1993.

Interested individuals were given 60 days to submit comments. Comments

were received from three attorneys in response to the NPRM.

Discussion of Comments

A summary of the comments and our responses follow. For ease of

reference, we have grouped the comments according to the issues raised.

Comment: Two commenters disagreed with our definition of reliable,

which limits reliable information to benefit payment information

maintained on a computer-based system of records by the government

agency determining the payments. One commenter stated that in other

areas we make determinations based on information provided by the

recipients. Another commenter stated that SSA should have conducted

studies to compare the accuracy of data received by electronic tapes,

telephone, or paper.

Response: These commenters ignore the crucial distinction between

the way information is used under normal RMA processing and the way its

use is contemplated under this exception to RMA. Under RMA, SSA

generally has two months' lead time to verify and process reported

changes in income, including information provided by recipients and

claimants before such changes affect the payment. We are required to

verify this information by section 1631(e) of the Act. Under the

exception which provides for current month accounting, such changes

would

[[Page 30750]]

affect the payment immediately, with no opportunity for prior

verification. Therefore, application of more stringent criteria to

ensure the reliability of that information is appropriate.

Because the data would be applied immediately to the computation of

benefit amounts without additional verification, necessary components

of ``reliability'' are that the data be obtained from the original

source agency and that it be obtained in such a way that the

Commissioner can be confident that no alteration has taken place. Also,

given the number of SSI recipients for which we must calculate benefit

amounts monthly, and the potential for frequent fluctuation of benefit

payment information, a computerized system of information is the most

accurate, accessible and efficient system for purposes of large numbers

of calculations. These considerations buttress the definition of

``reliable'' contained in the NPRM and demonstrate its reasonable, not

arbitrary, nature.

Comment: Two commenters stated that our definition of ``currently

available'' is flawed because it ignores the ``reality'' of how benefit

computations are made. The commenters correctly note that many SSI

benefit computations, particularly those which result from a recent

application for SSI, are made for payment months in the past as well as

current payment months. Therefore, the commenters state, reliable

information is currently available, and should be used, when these

retroactive benefit calculations are made.

Response: Were we to adopt this approach, we would then have two

different sets of computation rules depending upon whether we were

computing current or retroactive payments. Consequently, it would be

possible for two individuals with identical income in the same months

to be due different benefit amounts, depending on when their payments

were calculated. Such an approach would be inequitable.

Comment: Addressing specifically the question of AFDC income (which

was processed under RMA rules from 1982 until April 1988, at which time

Congress, under section 9106 of Pub. L. 100-203, specifically mandated

current month accounting for this income), one commenter states ``. . .

the Commissioner is aware that the AFDC income ceases as a matter of

law when the recipient becomes eligible for SSI.''

Response: Local procedures developed in various States and counties

to meet local needs and conditions govern the interactions of local SSA

field offices and the State AFDC agency in communicating when SSI is to

begin and AFDC is to terminate. The State AFDC agency must tell SSA

when the AFDC terminates. This may be accomplished via written or

telephone communication. This is not a fail-safe process, and periodic

reminder items have been issued to field offices when we become aware

of errors. Therefore, we believe that this information does not fit our

definition of ``reliable'' or ``currently available'' for purposes of a

procedure of current month accounting that would rely upon fast,

accurate transmission of data.

Comment: One commenter asserts that the proposed rule is

inconsistent with SSA's other practices, that the terms ``reliable''

and ``currently available'' are not used elsewhere in the regulations,

and that we have used an unreasonably constricted sense of the concepts

which the terms represent.

Response: Because section 1611(c)(4) provides an exception to the

usual method of calculating SSI benefit amounts, the terminology is

unique to that provision. Therefore, these terms would not be used in

our regulations other than in a regulation concerning the section

1611(c)(4) exception to RMA. We do not find an inconsistency between

the proposed rule and SSA's other practices as the reliable information

exception to RMA is not addressed elsewhere in our regulations.

Finally, for the reasons we explained in responses to comments

discussed previously, we do not believe we have used an unreasonably

constricted sense of the concepts of ``reliable'' and ``current

available'' information.

Comment: One commenter also questions why, if current month

accounting is not possible, the Commissioner does not implement one-

month retrospective accounting under section 1611(c)(4).

Response: The Commissioner has discretion to use one-month

retrospective accounting under section 1611(c)(1) and would not need to

implement section 1611(c)(4) to do so.

Comment: One commenter discusses the statistical data presented in

the proposed rule as it pertains to the reliable information exception.

The commenter states that this information was not produced during the

course of litigation, including cases in Ohio and California, regarding

section 1611(c)(4).

Response: While the statistical data was not requested by any of

the plaintiffs in the various lawsuits, it was presented by the

Government in the Newman case. Moreover, this statistical data is

relevant to the regulations process. The data in the proposed rule, as

well as the updated data in these final rules, indicates the treatment

of title II income information as an exception to RMA would be

disadvantageous to more SSI recipients than it would be advantageous.

Under RMA, changes in the SSI benefit due to changes in countable

income are delayed for two months (except for cost-of-living

increases). It is far more likely that an SSI recipient will begin

receiving, or have an increase in, his or her Social Security benefit

(and consequently would receive an advantage under RMA rather than

under current month accounting), than it is that his or her Social

Security benefit will terminate or be reduced.

Comment: One commenter states that SSA, by not implementing this

exception to RMA, is missing an opportunity to improve the accounting

system's responsiveness to current need.

Response: Congress' intent in instituting RMA was to reduce the

number of incorrect payments which were being made under the previous

method of quarterly prospective accounting. RMA allows for income

changes that are reported promptly to be taken into account in

determining subsequent payments rather than requiring SSI benefit

amounts to be determined on the basis of income anticipated by the

recipient in the payment month under a current month accounting method.

Because the current month's payment is computed based on income from

two months ago, if that income changes there is obviously a lag in

adjustment of the SSI benefit to the new income level, but this benefit

calculation process generally is less prone to error. If Congress had

intended instantaneous benefit adjustments in any substantial manner

rather than as a limited discretionary exception, Congress would have

enacted current month accounting.

For the reasons discussed above, we are adopting these rules

essentially as proposed.

Regulatory Procedures

Executive Order 12866

We have consulted with the Office of Management and Budget (OMB)

and determined that these rules do not meet the criteria for a

significant regulatory action under Executive Order 12866. Thus, they

are not subject to OMB review.

Paperwork Reduction Act

These regulations impose no new reporting or recordkeeping

requirements subject to OMB clearance.

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Regulatory Flexibility Act

We certify that these rules will not have a significant economic

impact on a substantial number of small entities. Therefore, a

regulatory flexibility analysis as provided in Pub. L. 96-354, the

Regulatory Flexibility Act, is not required.

(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: May 27, 1997.

John J. Callahan,

Acting Commissioner of Social Security.

Subpart D of part 416 of chapter III of title 20 of the Code of

Federal Regulations is amended as follows:

PART 416--[AMENDED]

1. The authority citation for subpart D of part 416 continues to

read as follows:

Authority: Secs. 702(a)(5), 1611(a), (b), (c), and (e), 1612,

1617, and 1631 of the Social Security Act (42 U.S.C. 902(a)(5),

1382(a), (b), (c), and (e), 1382a, 1382f, and 1383).

2. Section 416.420 is amended by revising paragraph (a) and

redesignating paragraph (c) as paragraph (d) and adding a new paragraph

(c) to read as follows:

Sec. 416.420 Determination of benefits; general.

* * * * *

(a) General rule. We use the amount of your countable income in the

second month prior to the current month to determine how much your

benefit amount will be for the current month. We have determined that

no reliable information exists which is currently available to compute

benefits on a current basis as is explained in paragraph (c) of this

section. However, if you have been receiving an SSI benefit and

receiving a Social Security insurance benefit and the latter is

increased on the basis of the cost-of-living adjustment or because your

benefit is recomputed, we will compute the amount of your SSI benefit

for January, the month of an SSI benefit increase, by including in your

income the amount by which your Social Security benefit in January

exceeds the amount of your Social Security benefit in November.

Similarly, we will compute the amount of your SSI benefit for February

by including in your income the amount by which your Social Security

benefit in February exceeds the amount of your Social Security benefit

in December.

Example 1. Mrs. X's benefit amount is being determined for

September (the current month). Mrs. X's countable income in July is

used to determine the benefit amount for September.

Example 2. Mr. Y's SSI benefit amount is being determined for

January (the current month). Mr. Y has Social Security income of

$100 in November, $100 in December, and $105 in January. We find the

amount by which his Social Security income in January exceeds his

Social Security income in November ($5) and add that to his income

in November to determine the SSI benefit amount for January.

* * * * *

(c) Reliable information which is currently available for

determining benefits. The Commissioner has determined that no reliable

information exists which is currently available to use in determining

benefit amounts.

(1) Reliable information. For purposes of this section ``reliable

information'' means payment information that is maintained on a

computer system of records by the government agency determining the

payments (e.g., Department of Veterans Affairs, Office of Personnel

Management for Federal civil service information and the Railroad

Retirement Board).

(2) Currently available information. For purposes of this section

``currently available information'' means information that is available

at such time that it permits us to compute and issue a correct benefit

for the month the information is pertinent.

* * * * *

[FR Doc. 97-14614 Filed 6-4-97; 8:45 am]

BILLING CODE 4190-29-P