Reduction in Supplemental Security Income (SSI) Payable to Institutionalized Children Whose Medical Costs Are Covered by Private Insurance

SOCIAL SECURITY ADMINISTRATION

20 CFR Part 416

[Regulations No. 16]

RIN 0960-AE61

Reduction in Supplemental Security Income (SSI) Payable to

Institutionalized Children Whose Medical Costs Are Covered by Private

Insurance

AGENCY: Social Security Administration.

ACTION: Interim final rules with request for comments.

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SUMMARY: These regulations implement an amendment to section

1611(e)(1)(B) of the Social Security Act (the Act) made by section 214

of Public Law 104-193, the Personal Responsibility and Work Opportunity

Reconciliation Act of 1996. Section 214 extends applicability of the

reduced SSI benefit rate (currently $30.00 per month) to children under

age 18 in medical care facilities receiving payments on their behalf

under a health insurance policy issued by a private provider. With

these rule changes, children with private health insurance coverage

will be treated the same as children with Medicaid coverage in terms of

the amount of benefits for which they are eligible. While the major

impact of these regulations will be to reduce benefits for those

children described above, some children residing in public

institutions, which receive private health insurance payments and which

currently do not receive any SSI benefits on their behalf, will become

eligible for SSI benefits up to $30 per month.

DATES: These interim final rules are effective beginning January 8,

1997. To be sure that your comments are considered, we must receive

them no later than March 10, 1997.

ADDRESSES: Comments should be submitted in writing to the Commissioner

of Social Security, P.O. Box 1585, Baltimore, MD 21235; sent by telefax

to (410) 966-2830; sent by E-mail to ``[email protected]''; or,

delivered to the Division of Regulations and Rulings, Social Security

Administration, 3-B-1 Operations Building, 6401 Security Boulevard,

Baltimore, MD 21235, between 8:00 A.M. and 4:30 P.M. on regular

business days. Comments may be inspected during these same hours by

making arrangements with the contact person shown below.

FOR FURTHER INFORMATION CONTACT: Daniel T. Bridgewater, Legal

Assistant, Division of Regulations and Rulings, Social Security

Administration, 6401 Security Boulevard, Baltimore, MD 21235, (410)

965-3298 for information about these rules. For information on

eligibility or claiming benefits, call our national toll-free number,

1-800-772-1213.

SUPPLEMENTARY INFORMATION:

Background

Section 1611(e)(1)(A) of the Act generally precludes eligibility

for SSI benefits when a claimant is a resident of a public institution

throughout a month. Section 1611(e)(1)(B) provided an exception to that

bar. Under that section, payments could be made at the reduced Federal

benefit rate to individuals in institutions ``receiving payments (with

respect to such individual or spouse) under a State plan approved under

title XIX * * * .'' This language was implemented through regulations

to mean that individuals in institutions would receive only the reduced

benefit amount when ``Medicaid (title XIX of the Social Security Act)

pays a substantial part (more than 50 percent) of the cost of'' the

claimant's care (Sec. 416.211(b)).

Section 214 of Public Law 104-193, effective for benefits beginning

with the month of December 1996, amends section 1611(e)(1)(B) of the

Act by extending applicability of the reduced SSI benefit rate to

children under age 18 in medical care facilities receiving payments on

their behalf under a health insurance policy issued by a private

provider (hereinafter referred to as private health insurance). Prior

to the enactment of section 214, children under the age of 18 in

private institutions with private health insurance generally could be

eligible for a full SSI payment. Section 214 now restricts the SSI

payment for such children to the Federal reduced benefit rate. Also, as

is noted above, prior to this legislation, individuals in public

institutions not receiving substantial Medicaid payments on their

behalf generally were ineligible for SSI. However, as a result of this

legislation, children under age 18 in public institutions receiving

private health insurance on their behalf now are eligible for SSI

payments at the reduced Federal benefit amount.

Section 214 could be interpreted as requiring application of the

reduced benefit amount where any amount of private health insurance

payments is being made on behalf of an institutionalized child for the

cost of the child's care in the institution. However, if the private

health insurance is not paying for a significant amount of the cost of

care, we believe that application of the reduced SSI payment would be

at odds with the intent of the SSI program to help provide for the

basic needs of the child for food, clothing, and shelter.

Moreover, the legislative history indicates that ``[c]hildren in

medical institutions whose medical costs are covered by private

insurance would be treated the same as children whose bills are

currently paid by Medicaid (that is, their monthly SSI cash benefit

would be reduced to $30 per month).'' H.R. Conf. Rep. No. 725, 104th

Cong., 2d Sess. 333 (1996). In addition, the legislative history

references children whose costs are ``covered,'' not children for whom

any private insurance payments are being made. Since Congress used the

same phrase, ``receiving payments,'' in referring to cases where

Medicaid is paying towards the cost of care and to cases where private

health insurance is paying towards the cost of care, we believe that

the extent of the medical coverage which would reduce the SSI payment

to $30 should be the same. Therefore, we have decided that the more

equitable approach is to apply the reduced benefit amount to children

under age 18 with private health insurance when it pays a substantial

part (more than 50 percent) of the cost of their care in the

institution. Similarly, since Congress apparently wanted to treat all

children with significant medical coverage in the same manner, we also

have decided that the reduced benefit amount will apply in those cases

where children under age 18 are in medical care facilities receiving a

combination of Medicaid and private health insurance payments which

combined pay a substantial part (more than 50 percent) of the cost of

their care.

Regulatory Changes

Section 416.211 explains the general prohibition against SSI

eligibility for residents of public institutions, as well as the

statutory exceptions to that prohibition. We have revised

Sec. 416.211(b) to include a reference to private health insurance as a

factor in applying the exception that permits SSI payments at a reduced

rate for certain individuals in medical care facilities. The

introductory text of paragraph (b)

[[Page 1054]]

refers to Sec. 416.414, where the reduced benefits are described and

the requirements are explained more thoroughly.

Section 416.212 explains the two statutory provisions that permit

continuation of full benefits in certain cases of medical confinement.

Under section 1611(e)(1)(E) of the Act, as originally implemented, a

recipient whose SSI eligibility is based on section 1619(a) or (b) of

the Act for the month preceding the first full month of residence in

(1) a public medical or psychiatric institution or (2) a public or

private institution where Medicaid is paying more than 50 percent of

the cost of care can remain eligible for an SSI benefit for up to 2

full months after entering the institution, if the recipient is

allowed, under agreement with the medical institution, to retain any

SSI benefits. Also, under 1611(e)(1)(G) of the Act, a recipient is

eligible for continuation of full SSI benefits for up to 3 full months

after entering certain medical or psychiatric institutions if a

physician certifies, within certain time restrictions, that the

recipient's stay in the facility is likely not to exceed 3 months and

if the recipient needs to continue to maintain and provide for the

expenses of the home to which he or she may return.

To include the provisions of section 214, we have revised

Sec. 416.212(a) to include children under age 18 whose benefits are

reduced because of residence in a public or private institution where

private health insurance, or a combination of Medicaid and private

health insurance, is paying a substantial part (more than 50 percent)

of the cost of their care. We have also revised Sec. 416.212(b) to

extend applicability of the continued benefits to children under age 18

whose SSI benefits otherwise would be reduced because of residence in a

public institution where private health insurance, or a combination of

Medicaid and private health insurance, is paying a substantial part

(more than 50 percent) of the cost of care.

Section 1611(e)(1)(G) specifies that the recipient must be ``* * *

an inmate of a public institution the primary purpose of which is the

provision of medical or psychiatric care, or which is a hospital,

extended care facility, nursing home, or intermediate care facility

receiving payments * * * under a State plan approved under title XIX *

* * .'' Because Public Law 104-193 did not amend this section of the

Act, SSI payments to children in private medical care facilities for

whom private health insurance, or a combination of Medicaid and private

health insurance, is paying more than 50 percent of the cost of care,

will be limited to the reduced benefit amount beginning with their

first full month of institutionalization.

Section 416.414 explains that reduced benefits are payable where

Medicaid paid more than 50 percent of the cost of care, or where

Medicaid would have paid more than 50 percent of the cost of care but

for the application of section 1917(c) of the Act due to a transfer of

assets for less than fair market value. To include the provisions of

section 214, we have revised Sec. 416.414(a) to explain that for

children under age 18, the reduced benefits also apply where private

health insurance, or a combination of Medicaid and private health

insurance is paying a substantial part (more than 50 percent) of the

cost of care in the medical facility.

Section 416.1149 explains what is a temporary absence from a living

arrangement and explains how we value in-kind support and maintenance

(ISM) received by an eligible individual during a temporary absence. In

general, during a temporary absence we continue to value ISM the same

way that we did in the permanent residence. Currently, paragraph (a)(1)

of Sec. 416.1149 states that a temporary absence from the permanent

living arrangement exists if the eligible individual (or eligible

individual and eligible spouse) becomes a resident of a public or

private medical care facility where over 50 percent of the cost of care

is paid by Medicaid, and who is eligible for the continuation of

benefits payable under Sec. 416.212. During this temporary absence we

continue to value the eligible individual's support and maintenance the

same way that we did in the permanent living arrangement.

We are changing paragraph (a)(1) of Sec. 416.1149 to conform to the

changes we are making in Sec. 416.212 and Sec. 416.414. For purposes of

determining ISM, we also will consider as temporarily absent from the

permanent living arrangement a child under 18, who receives a reduced

benefit because of residence in a public or private medical facility

where private health insurance (or a combination of Medicaid and

private health insurance) pays a substantial part (more than 50

percent) of the cost of care and who is eligible for the continuation

of benefits under Sec. 416.212. For such a child, during the temporary

absence we continue to value the ISM the same way that we did in the

permanent living arrangement.

The existing paragraph (c) of Sec. 416.1149 describes an exception

to the general rule for temporary absences described in paragraph (b).

In paragraph (c), an eligible individual is considered temporarily

absent from the permanent living arrangement regardless of the length

of stay, if he or she enters a medical care facility in which Medicaid

pays over 50 percent of the cost of care, is eligible for a reduced

payment under Sec. 416.414, and is not eligible under Sec. 416.212. In

this situation, ISM is valued using the rules that apply to the

permanent living arrangement for the month the individual enters the

facility and the month the individual leaves the facility. No ISM is

chargeable for the full months the individual is in the facility and

receives a reduced payment under Sec. 416.414.

We are changing paragraph (c) of Sec. 416.1149 to conform to the

changes we are making in Sec. 416.212 and Sec. 416.414. Thus, we will

also consider as temporarily absent from the permanent living

arrangement a child under 18, who is not eligible under Sec. 416.212,

and who receives a reduced payment under Sec. 416.414 because of

residence in a public or private medical facility where private health

insurance (or a combination of Medicaid and private health insurance)

pays a substantial part (more than 50 percent) of the cost of care. ISM

will be valued for these children as it is for the eligible individuals

described in the preceding paragraph.

We are also revising Sec. 416.1165(i)(1) and Sec. 416.1202(b)(2)(i)

so that those rules conform with the revised rules in Sec. 416.414.

Section 416.1165 describes how we deem income to a child from the

child's ineligible parent(s). Subsection (i) describes a situation when

we do not deem income to a child. Paragraph (1) is revised so that it

conforms with the revised rules in Sec. 416.414.

Subsection 416.1202(b) describes how we deem resources to a child

from the child's ineligible parent(s). Paragraph (b)(2) describes a

situation when we do not deem resources to a child. Paragraph (b)(2)(i)

is revised so that it conforms with the revised rules in Sec. 416.414.

Electronic Version

The electronic file of this document is available on the Federal

Bulletin Board (FBB) at 9:00 a.m. on the date of publication in the

Federal Register. To download the file, modem dial (202) 512-1387. The

FBB instructions will explain how to download the file and the fee.

This file is in WordPerfect and will remain on the FBB during the

comment period.

Regulatory Procedures

Pursuant to section 702(a)(5) of the Act, 42 U.S.C. 902(a)(5), as

amended by

[[Page 1055]]

section 102 of Public Law 103-296, the Social Security Administration

follows the Administrative Procedure Act (APA) rulemaking procedures

specified in 5 U.S.C. 553 in the development of its regulations. The

APA provides exceptions to its prior notice and public comment

procedures when an agency finds that 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 these

interim final rules, we have determined that under 5 U.S.C. 553(b)(B),

good cause exists for waiving the prior notice procedures.

Public Law 104-193 was signed into law on August 22, 1996. As noted

above, section 214 of Public Law 104-193, which is the subject of these

interim final rules, was made effective December 1, 1996. Moreover,

section 215 requires the Commissioner to issue regulations necessary to

carry out the amendments made by section 214 within 3 months after the

date of enactment (i.e., by November 22, 1996). Accordingly, to issue

these rules as an NPRM would have delayed issuance of final rules until

well past the statutorily mandated deadlines.

In light of the above statutory deadlines, we believe that, under

the APA, good cause exists for waiver of the prior notice procedures

since issuance of proposed rules would be impracticable. While we are

issuing these rules as interim final regulations, we are interested in

receiving public comments regarding the substance of these interim

rules.

In addition, we find good cause for dispensing with the 30-day

delay in the effective date of a substantive rule, provided for by 5

U.S.C. 553(d). As explained above, these regulations reflect and

implement statutory provisions effective December 1, 1996 for which

publication of implementing regulations is required by November 22,

1996. In order for these regulations to be effective as close as

possible to the mandated dates, we find that it is in the public

interest to make these rules effective upon publication.

Executive Order 12866

These interim final rules reflect and implement the provisions of

section 214 of Public Law 104-193. The Office of Management and Budget

(OMB) has reviewed these interim final rules and determined that they

meet the criteria for a significant regulatory action under Executive

Order 12866. Therefore, we prepared and submitted to OMB, separately

from these interim final rules, an assessment of the potential costs

and benefits of this regulatory action. This document also contains an

analysis of alternative policies we considered and chose not to adopt.

This assessment is available for review by members of the public.

Regulatory Flexibility Act

We certify that these interim final rules will not have a

significant economic impact on a substantial number of small entities

since these rules affect only individuals. Therefore, a regulatory

flexibility analysis as provided in Public Law 96-354, the Regulatory

Flexibility Act, is not required.

Paperwork Reduction Act

These interim final rules impose no additional reporting or

recordkeeping requirements subject to Office of Management and Budget

clearance.

(Catalog of Federal Domestic Assistance: Program No. 96.006-

Supplemental Security Income.)

List of Subjects in 20 CFR Part 416:

Administrative practice and procedure, Aged, Blind, Disability

benefits, Public assistance programs, Reporting and recordkeeping

requirements, Supplemental Security Income (SSI).

Dated: December 6, 1996.

Shirley S. Chater,

Commissioner of Social Security.

For the reasons set out in the preamble, subparts B, D, K, and L of

part 416 of chapter III of title 20 of the Code of Federal Regulations

are amended as follows:

PART 416--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND

DISABLED

Subpart B--[Amended]

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

read as follows:

Authority: Secs. 702(a)(5), 1110(b), 1602, 1611, 1614, 1615(c),

1619(a), 1631, and 1634 of the Social Security Act (42 U.S.C.

902(a)(5), 1310(b), 1381a, 1382, 1382c, 1382d(c), 1382h(a), 1383,

and 1383c); secs. 211 and 212, Pub. L. 93-66, 87 Stat. 154 and 155

(42 U.S.C. 1382 note); sec. 502(a), Pub. L. 94-241, 90 Stat. 268 (48

U.S.C. 1681 note); sec. 2, Pub. L. 99-643, 100 Stat. 3574 (42 U.S.C.

1382h note).

2. Section 416.211 is amended by revising paragraph (b)(1) to read

as follows:

Sec. 416.211 You are a resident of a public institution.

* * * * *

(b) * * *

(1)(i) You reside throughout a month in a public institution that

is a medical care facility where Medicaid (title XIX of the Social

Security Act) pays a substantial part (more than 50 percent) of the

cost of your care; you are a child under the age of 18 residing

throughout a month in a public institution that is a medical care

facility where a substantial part (more than 50 percent) of the cost of

your care is paid under a health insurance policy issued by a private

provider of such insurance; or, you are a child under the age of 18

residing throughout a month in a public institution that is a medical

care facility where a substantial part (more than 50 percent) of the

cost of your care is paid by a combination of Medicaid payments and

payments made under a health insurance policy issued by a private

provider of such insurance; or

(ii) You reside for part of a month in a public institution and the

rest of the month in a public institution or private medical facility

where Medicaid pays a substantial part (more than 50 percent) of the

cost of your care; you are a child under the age of 18 residing for

part of a month in a public institution and the rest of the month in a

public institution or private medical facility where a substantial part

(more than 50 percent) of the cost of your care is paid under a health

insurance policy issued by a private provider of such insurance; or you

are a child under the age of 18 residing for part of a month in a

public institution and the rest of the month in a public institution or

private medical facility where a substantial part (more than 50

percent) of the cost of your care is paid by a combination of Medicaid

payments and payments made under a health insurance policy issued by a

private provider; and

* * * * *

3. Section 416.212 is amended by revising paragraphs (a)

introductory text and (b)(1) introductory text to read as follows:

Sec. 416.212 Continuation of full benefits in certain cases of medical

confinement.

(a) Benefits payable under section 1611(e)(1)(E) of the Social

Security Act. Subject to eligibility and regular computation rules (see

subparts B and D of this part), you are eligible for the benefits

payable under section 1611(e)(1)(E) of the Social Security Act for up

to 2 full months of medical confinement during which your benefits

would otherwise be suspended because of residence in a public

institution or reduced because of residence in a public or private

institution where Medicaid pays a substantial part (more than 50

percent) of the cost of your care or, if

[[Page 1056]]

you are a child under age 18, reduced because of residence in a public

or private institution which receives payments under a health insurance

policy issued by a private provider, or a combination of Medicaid and a

health insurance policy issued by a private provider, pay a substantial

part (more than 50 percent) of the cost of your care if--

* * * * *

(b) Benefits payable under section 1611(e)(1)(G) of the Social

Security Act. (1) Subject to eligibility and regular computation rules

(see subparts B and D of this part), you are eligible for the benefits

payable under section 1611(e)(1)(G) of the Social Security Act for up

to 3 full months of medical confinement during which your benefits

would otherwise be suspended because of residence in a public

institution or reduced because of residence in a public or private

institution where Medicaid pays a substantial part (more than 50

percent) of the cost of your care or, if you are a child under age 18,

reduced because of residence in a public institution which receives

payments under a health insurance policy issued by a private provider,

or a combination of Medicaid and a health insurance policy issued by a

private provider, pay a substantial part (more than 50 percent) of the

cost of your care if--

* * * * *

Subpart D--[Amended]

4. 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).

5. Section 416.414 is amended by revising paragraph (a) to read as

follows:

Sec. 416.414 Amount of benefits; eligible individual or eligible

couple in a medical care facility.

(a) General rule. Except where the Sec. 416.212 provisions provide

for payment of benefits at the rates specified under Secs. 416.410 and

416.412, reduced SSI benefits are payable to persons and couples who

are in medical care facilities where a substantial part (more than 50

percent) of the cost of their care is paid by a State plan under title

XIX of the Social Security Act (Medicaid). This reduced SSI benefit

rate applies to persons who are in medical care facilities where a

substantial part (more than 50 percent) of the cost would have been

paid by an approved Medicaid State plan but for the application of

section 1917(c) of the Social Security Act due to a transfer of assets

for less than fair market value. This reduced SSI benefit rate also

applies to children under age 18 who are in medical care facilities

where a substantial part (more than 50 percent) of the cost of their

care is paid by a health insurance policy issued by a private provider

of such insurance, or where a substantial part (more than 50 percent)

of the cost of their care is paid for by a combination of Medicaid

payments and payments made under a health insurance policy issued by a

private provider of such insurance. Persons and couples to whom these

reduced benefits apply are--

(1) Those who are otherwise eligible and who are in the medical

care facility throughout a month. (By throughout a month we mean that

you are in the medical care facility as of the beginning of the month

and stay the entire month. If you are in a medical care facility you

will be considered to have continuously been staying there if you are

transferred from one medical facility to another or if you are

temporarily absent for a period of not more than 14 consecutive days.);

and

(2) Those who reside for part of a month in a public institution

and for the rest of the month are in a public or private medical care

facility where Medicaid pays or would have paid (but for the

application of section 1917(c) of the Act) a substantial part (more

than 50 percent) of the cost of their care; and

(3) Children under age 18 who reside for part of a month in a

public institution and for the rest of the month are in a public or

private medical care facility where a substantial part (more than 50

percent) of the cost of their care is being paid under a health

insurance policy issued by a private provider or by a combination of

Medicaid and payments under a health insurance policy issued by a

private provider.

* * * * *

Subpart K--[Amended]

6. The authority citation for subpart K of part 416 continues to

read as follows:

Authority: Secs. 702(a)(5), 1602, 1611, 1612, 1613, 1614(f),

1621, and 1631 of the Social Security Act (42 U.S.C. 902(a)(5),

1381a, 1382, 1382a, 1382b, 1382c(f), 1382j, and 1383); sec. 211,

Pub. L. 93-66, 87 Stat. 154 (42 U.S.C. 1382 note).

7. Section 416.1149 is amended by revising paragraph (a)(1) and the

first sentence of paragraph (c)(1)(i) to read as follows:

Sec. 416.1149 What is a temporary absence from your living

arrangement.

(a) * * *

(1) Become a resident of a public institution, or a public or

private medical care facility where you otherwise would be subject to

the reduced benefit rate described in Sec. 416.414, and you are

eligible for the benefits payable under Sec. 416.212; or

* * * * *

(c) Rules for temporary absence in certain circumstances. (1)(i) If

you enter a medical care facility where you are eligible for the

reduced benefits payable under Sec. 416.414 for full months in the

facility, and you are not eligible for either benefit payable under

Sec. 416.212 (and you have not received such benefits during your

current period of confinement) and you intend to return to your prior

living arrangement, we consider this a temporary absence regardless of

the length of your stay in the facility. * * *

* * * * *

8. Section 416.1165 is amended by revising paragraph (i)(1) to read

as follows:

Sec. 416.1165 How we deem income to you from your ineligible

parent(s).

* * * * *

(i) * * *

(1) You previously received a reduced SSI benefit while a resident

of a medical facility, as described in Sec. 416.414;

* * * * *

Subpart L--[Amended]

9. The authority citation for subpart L of part 416 continues to

read as follows:

Authority: Secs. 702(a)(5), 1602, 1611, 1612, 1613, 1614(f),

1621, and 1631 of the Social Security Act (42 U.S.C. 902(a)(5),

1381a, 1382, 1382a, 1382b, 1382c(f), 1382j, and 1383); sec. 211,

Pub. L. 93-66, 87 Stat. 154 (42 U.S.C. 1382 note).

10. Section 416.1202 is amended by revising paragraph (b)(2)(i) to

read as follows:

Sec. 416.1202 Deeming of resources.

* * * * *

(b) * * *

(2) * * *

(i) Previously received a reduced SSI benefit while a resident of a

medical facility, as described in Sec. 416.414;

* * * * *

[FR Doc. 97-247 Filed 1-7-97; 8:45 am]

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