Supplemental Security Income for the Aged, Blind, and Disabled; Valuation of In-Kind Support and Maintenance With Cost-of-Living Adjustment

SOCIAL SECURITY ADMINISTRATION

20 CFR Part 416

RIN 0960-AD82

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

Valuation of In-Kind Support and Maintenance With Cost-of-Living

Adjustment

AGENCY: Social Security Administration.

ACTION: Final rules.

-----------------------------------------------------------------------

SUMMARY: These regulations implement section 13735 of the Omnibus

Budget Reconciliation Act of 1993 (OBRA 1993). This statutory provision

amends the Social Security Act (the Act) and requires that the new

supplemental security income (SSI) benefit rate, as increased by a

cost-of-living adjustment (COLA), be used in determining the value of

the statutory one-third reduction and the regulatory presumed maximum

value for the computation of Federal SSI benefit payments for the first

2 months for which the COLA is in effect. These rules provide that we

value the statutory one-third reduction and the regulatory presumed

maximum value using the benefit rate as increased by a COLA to

determine the amount of in-kind support and maintenance received by an

individual which is to be counted for those months. This precludes a

decrease in the benefit amount the third month after a COLA, a

situation which occurred under the prior law. The legislation is

effective for benefits paid for months after calendar year 1994.

EFFECTIVE DATE: These final rules are effective July 20, 1998.

FOR FURTHER INFORMATION CONTACT: Daniel T. Bridgewater, Legal

Assistant, Office of Process and Innovation Management, L2109 West Low

Rise Building, Social Security Administration, 6401 Security Boulevard,

Baltimore, MD 21235-0001, (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: Under retrospective monthly accounting

(RMA), an individual's current SSI benefit amount is usually determined

based upon the individual's income in the second preceding month

(``budget month'') before the current month. For example, January's SSI

benefit amount is based on the individual's November income. In some

instances, an individual receives income in the form of in-kind support

and maintenance and it is counted using the value of the one-third

reduction (VTR) or the presumed maximum value (PMV) rule. Under the law

prior to the effective date of section 13735 of Public Law 103-66, the

VTR and the PMV were based on the applicable benefit rates in effect in

the ``budget month.'' Because of RMA principles, when an annual COLA to

the SSI benefit rate became effective in January, we used the VTR/PMV

amount from November of the previous year to determine the individual's

benefit for January if an individual had in-kind support and

maintenance in the ``budget month.'' For example, in figuring an

individual's January 1994 benefit, we used November 1993 as the

``budget month.'' Thus, in a computation using the VTR, we would

subtract the 1993 VTR amount of $144.66 from the 1994 benefit rate of

$446.00, giving the individual an SSI benefit of $301.34. February's

benefit amount would also be computed using the new benefit rate and

the 1993 VTR amount. However, in computing March's benefit amount, we

used the benefit rate of $446.00 less the January 1994 VTR amount of

$148.66, resulting in an SSI benefit amount of $297.34. Thus, the

individual's January and February payments exceeded the March payment

because of the increased amount of the new VTR used when January was

the ``budget month.'' Notices were then released to these individuals

notifying them of the decrease in their March payment. This was

confusing to SSI recipients because their payment amounts increased and

then decreased even if there was no change in their living

arrangements.

We are changing the method of valuation of the VTR/PMV to reflect

section 13735 of Public Law 103-66 for benefits paid after calendar

year 1994, by using the new benefit rate as increased by a COLA in

determining the VTR or PMV for the computation of SSI benefits for the

first 2 months for which the COLA is in effect. Thus, beginning with

the COLA effective January 1, 1995, both the new increased benefit rate

and new increased VTR or PMV amounts are being used in computing a

January and February benefit amount. Unlike the example used

previously, the individual's January, February, and March payments

calculated by using the VTR amount will be the same assuming all other

income remains constant--i.e., there will be no decrease in the SSI

benefit amount the third month after a COLA. This eliminates confusion

for recipients and also eliminates the need for issuance of notices

informing affected recipients of the decrease in their March payment.

We state in the final regulations at Sec. 416.420(a) that we will

use the benefit rate, as increased by a COLA, in determining the value

of certain in-kind support and maintenance used to compute an

individual's SSI benefit amount for the first 2 months in which the

COLA is in effect. We have added a third example to Sec. 416.420(a) to

further clarify the regulatory intent.

We state in the final regulations at Sec. 416.1130 how we value in-

kind support and maintenance when a COLA applies, and we have altered

the example to reflect the situation when a COLA becomes effective.

On August 9, 1995, we published these rules as a notice of proposed

rulemaking in the Federal Register at 60 FR 40542 with a 60-day comment

period. We received comments from only one source, and the commenter

fully supported the proposed rule because it eliminates a significant

anomaly in the SSI program. Therefore, we are publishing the final

rules essentially unchanged from the proposed rules.

Regulatory Procedures

Executive Order 12866

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

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

significant regulatory action under Executive Order 12866. Thus, they

were not subject to OMB review.

Paperwork Reduction Act of 1980

These final rules impose no new reporting or recordkeeping

requirements subject to OMB clearance.

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 only individuals. Therefore, a regulatory flexibility analysis

as provided in the Regulatory Flexibility Act, as amended, 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: June 9, 1998.

Kenneth S. Apfel,

Commissioner of Social Security.

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

416 of chapter III of title 20 of the Code of

[[Page 33546]]

Federal Regulations are amended as follows:

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

DISABLED

Subpart D--[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) to read as

follows:

Sec. 416.420 Determination of benefits; general.

* * * * *

(a) General rule. We generally 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 will use the

benefit rate (see Secs. 416.410 through 416.414), as increased by a

cost-of-living adjustment, in determining the value of the one-third

reduction or the presumed maximum value, to compute your SSI benefit

amount for the first 2 months in which the cost-of-living adjustment is

in effect. If you have been receiving an SSI benefit and 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. Z's SSI benefit amount is being determined for

January (the current month). There has been a cost-of-living

increase in SSI benefits effective January. Mr. Z's countable income

in November is used to determine the benefit amount for January. In

November, Mr. Z had in-kind support and maintenance valued at the

presumed maximum value as described in Sec. 416.1140(a). We will use

the January benefit rate, as increased by the COLA, to determine the

value of the in-kind support and maintenance Mr. Z received in

November when we determine Mr. Z's SSI benefit amount for January.

Example 3. 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.

* * * * *

Subpart K--[Amended]

3. 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).

4. Section 416.1130 is amended by revising paragraph (a) to read as

follows:

Sec. 416.1130 Introduction

(a) General. Both earned income and unearned income include items

received in kind (Sec. 416.1102). Generally, we value in-kind items at

their current market value and we apply the various exclusions for both

earned and unearned income. However, we have special rules for valuing

food, clothing, or shelter that is received as unearned income (in-kind

support and maintenance). This section and the ones that follow discuss

these rules. In these sections (Secs. 416.1130 through 416.1148) we use

the in-kind support and maintenance you receive in the month as

described in Sec. 416.420 to determine your SSI benefit. We value the

in-kind support and maintenance using the Federal benefit rate for the

month in which you receive it. Exception: For the first 2 months for

which a cost-of-living adjustment applies, we value in-kind support and

maintenance you receive using the VTR or PMV based on the Federal

benefit rate as increased by the cost-of-living adjustment.

Example: Mr. Jones receives an SSI benefit which is computed by

subtracting one-third from the Federal benefit rate. This one-third

represents the value of the income he receives because he lives in

the household of a son who provides both food and shelter (in-kind

support and maintenance). In January, we increase his SSI benefit

because of a cost-of-living adjustment. We base his SSI payment for

that month on the food and shelter he received from his son two

months earlier in November. In determining the value of that food

and shelter he received in November, we use the Federal benefit rate

for January.

* * * * *

[FR Doc. 98-16206 Filed 6-18-98; 8:45 am]

BILLING CODE 4190-29-P