Supplemental security income: Federal old age, survivors, and disability insurance Substantial gainful activity amounts; average monthly earnings guideline,
[Federal Register: April 15, 1999 (Volume 64, Number 72)]
[Rules and Regulations]
[Page 18566-18571]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15ap99-5]
SOCIAL SECURITY ADMINISTRATION
20 CFR Parts 404 and 416
[Regulations No. 4 and 16]
RIN 0960-AE98
Old-Age, Survivors, and Disability Insurance and Supplemental Security Income for the Aged, Blind, and Disabled; Substantial Gainful Activity Amounts
AGENCY: Social Security Administration.
[[Page 18567]]
ACTION: Final rules.
SUMMARY: We are revising the rules for determining when earnings demonstrate the ability to engage in substantial gainful activity (SGA). This rule change applies to Social Security disability benefits provided under title II of the Social Security Act (the Act) and Supplemental Security Income (SSI) benefits based on disability under title XVI of the Act. (Eligibility for benefits under titles II and XVI also confers eligibility for related Medicare and Medicaid benefits under titles XVIII and XIX of the Act.) Specifically, we are raising from $500 to $700 the average monthly earnings guidelines used to determine whether work done by persons with impairments other than blindness is SGA. We are raising this level as part of efforts to encourage individuals with disabilities to attempt to work, and to provide an updated indicator of when earnings demonstrate the ability to engage in SGA. This increase reflects our assessment of the amount that roughly corresponds to wage growth since the last increase in 1990.
EFFECTIVE DATE: These rules are effective July 1, 1999.
FOR FURTHER INFORMATION CONTACT: Jack Baumel, Office of Employment Support Programs, Social Security Administration, 6401 Security Boulevard, Baltimore, Maryland 21235-6401, (410) 965-9834 or TTY (410) 966-6210. For information about 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 web site, SSA Online, www.ssa.gov.
SUPPLEMENTARY INFORMATION:
Background
Under 20 CFR 404.1572 and 416.972, the term ``substantial gainful activity'' means work activity that involves significant physical or mental effort and that is done for pay or profit. Work activity is gainful if it is the kind of work usually performed for pay or profit, whether or not a profit is realized. Sections 223(d)(4)(A) and 1614(a)(3)(E) of the Act require the Commissioner to prescribe by regulations the criteria for determining when earnings demonstrate ability to engage in SGA for a person with an impairment other than blindness.
The amount of average monthly earnings that ordinarily demonstrates SGA for people with an impairment other than blindness has not been increased since January 1, 1990. We are revising this level now after reassessing the current guidelines as part of our effort to improve incentives to encourage individuals with disabilities to attempt to work. We believe that the increase in the amount of earnings that constitutes SGA provides an updated indicator of when earnings demonstrate the ability to engage in SGA and is a significant improvement to the existing work incentive provisions.
Proposed Rules
We published a notice of proposed rulemaking (NPRM) in the Federal Register on February 16, 1999 (64 FR 7559). In the NPRM, we proposed rules to increase the amount in the monthly earnings guidelines used in determining whether the work activities of a person with an impairment other than blindness demonstrate that he or she is able to perform SGA. These guidelines in Secs. 404.1574 and 416.974 deal with persons claiming title II or title XVI benefits or receiving title II benefits based on disability. Under our prior rules, if such a person had earnings from work activities as an employee (including as an employee of a sheltered workshop or comparable facility) that averaged more than $500 a month, we would ordinarily consider that the person had engaged in SGA. Under these new rules, the $500 amount is raised to $700 per month.
While these rules make specific increases to the amount of earnings that will ordinarily show that a person has engaged in SGA, we will, at a future point, consider making other changes in the work incentive rules. Therefore, the NPRM invited the public to provide us with general suggestions for changes which might be desirable in related provisions (such as the trial work period services amount, and the earnings level that ordinarily demonstrates that an individual has not engaged in SGA) and the SGA guidelines in the future. We will consider those general suggestions not addressed below regarding possible future changes.
Public Comments
We received over 3000 sets of comments in response to the proposal. Commenters included many advocates for people with disabilities, State and local government entities, attorneys, employees from one SSA field office, one Administrative Law Judge, one member of Congress, and a large number of private citizens. With few exceptions, the comments we received were substantive assessments of the proposal and/or related suggestions. We have summarized these substantive comments, grouped them by subject, and discuss them below.
Comment: All but five of the comments received expressing an opinion about the proposed increase in the SGA guidelines were in favor. One was opposed and four expressed doubt that the increase in the SGA guidelines would achieve improvement. Many of the commenters in favor also believed that we should make further changes.
Response: We appreciate that all but a few commenters agreed with our assessment that an increase in the SGA guidelines is warranted. We have addressed the additional comments below.
Comment: Many of the comments expressing support for an increase also stated the general opinion that the proposed increase to $700 was not enough. Several commenters suggested that geographic differences in the cost-of-living or poverty level be taken into account in setting the SGA amount. Many expressed the view that the $700 amount is below the amount SGA would have attained had its growth kept pace with increases in average wages since its inception. Many also noted that the new $700 amount is significantly lower than a month's full-time earnings at the minimum wage level. Many also criticized us regarding the nine years lapse since the last increase.
Response: The historical relationship between the SGA amount and average wage growth was roughly consistent between 1961 (when the SGA guideline was first issued by regulation) and 1980. Since 1980, however, the SGA level has been kept constant for two long periods of time during which wages were experiencing growth. By 1989, the actual SGA level for the non-blind lagged behind average wage growth since the amount had stayed at $300 for a decade. In 1990, we raised the SGA amount to $500.
The Act does not spell out the definition of SGA for people with impairments other than blindness and the legislative record neither expresses nor implies a connection with average wages or prices. The Act provides that the Commissioner is to prescribe by regulation the criteria for determining when earnings demonstrate the ability to engage in SGA. We designed the SGA guidelines as a way of measuring an individual's ability to work and not as a measure of an individual's need for income. We decided on the amounts being implemented based on our experience with the disability programs and beneficiaries' work efforts and the need to maintain fiscal responsibility. In any event, the increase we are implementing now approximately corresponds to wage growth since 1990.
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Comment: Many comments noted that the SGA amount for people who are blind is $1110 for calendar year 1999. These comments expressed dissatisfaction with the discrepancy and generally considered it unjustified discrimination. Most of these commenters recommended that we increase the SGA amount for people with impairments other than blindness in a similar manner or to the same level as for people who are blind.
Response: Before 1977, Section 223(d) of the Act authorized the Commissioner to prescribe the level of earnings that demonstrate SGA for all title II applicants and recipients and all title XVI applicants. In 1977, Congress amended that section of the Act to provide a different criterion for setting the SGA level for people who are blind (i.e., annual adjustment based on the national average wage index). Congress consciously made this distinction between people who are blind and those with impairments other than blindness. The House and Senate conference report accompanying the Social Security Amendments of 1977 clearly stated that a different SGA amount was being established for blind persons, and that the conferees did not intend that the amount be applied to people with impairments other than blindness.
Comment: Many comments suggested either annual review of the SGA amount or that future increases be linked to increases in a generally recognized economic benchmark, e.g., average wage, cost-of-living, poverty level. They contend that annual review or indexing the SGA level would provide a consistent relationship with wages and/or prices, and prevent erosion of the work component of the definition of disability over time as these factors increase.
Response: As stated in a previous response, we designed the SGA guidelines as a way of measuring an individual's ability to work and not as a measure of an individual's need for income. We decided on the amounts we are implementing based on our experience with the disability programs and beneficiaries' work efforts and the need to maintain fiscal responsibility. The increase we are implementing now approximately corresponds to wage growth since 1990. However, we recognize that increasing program factors on a regular and predictable basis allows us to avoid making adjustments on an ad hoc basis. We may consider, in the future, if the SGA amounts should be indexed.
Comment: Several comments suggested that we stop using SGA to evaluate the work component of disability. They recommended that, in its place, we use an earnings offset formula to reduce cash benefits gradually as earnings rise (similar to the earned income exclusion currently under title XVI). One suggested that there should be no earnings limits placed on eligibility for people with disabilities.
Response: These suggested changes require new legislation and we can not implement them by regulation alone. Several legislative proposals to test the earnings offset approach under title II are pending before the current session of Congress.
Comment: Many commenters suggested that we also increase the monthly earnings amount that we consider being services for purposes of the Trial Work Period (TWP). Many of these also suggested that the TWP and SGA amounts should be the same. Many of these also suggested that we index TWP increases to an economic benchmark. One suggested that we apply the TWP earnings amount on an annual basis rather than monthly.
Response: The TWP is a work incentive. During the TWP, a title II beneficiary may test his or her ability to work and still be considered disabled. We will not consider services performed during the TWP as showing that disability has ended until services have been performed in at least 9 months (not necessarily consecutive). Services means any activity, even though it is not SGA, which is done by a person in employment or self-employment for pay or profit, or is the kind normally done for pay or profit. As established in Sec. 404.1592(b), if you are an employee, we currently consider your work to be services if you earn more than $200 a month. As a result of public comments, we will consider whether, in the future, to propose raising the monthly earnings guideline for services under the trial work period and related changes.
Comment: One commenter recommended raising the average monthly earnings amount that will ordinarily show that an employee did NOT engage in SGA (currently, earnings of less than $300).
Response: The effect of this provision is to create a range where monthly earnings are neither high enough nor low enough to show whether an employee engaged in SGA. If an employee's earnings fall into this range, we generally consider other information in addition to the employee's earnings to reach a determination. In practice, this provision affects a relatively small number of people. As a result of public comments, we will consider whether, in the future, to propose raising the amount and/or make other modification(s) to this provision.
Comment: Many comments expressed general support for the recognition of the special medical needs and medical insurance needs of people with disabilities. Several comments expressed support for recognition of the special needs of young people with disabilities who are in transition from education to work. Several comments advocated liberalization of other existing work incentive provisions and included suggestions for changes to these provisions.
Response: The issues addressed by these comments are outside the scope of this specific rules change. However, as we stated in the February 16, 1999 NPRM, we will consider these comments regarding possible future changes.
Comment: A few commenters suggested that a January 1, 1999 effective date for the SGA increase would be easier for us to administer and seem less arbitrary to the public.
Response: This rules change increases the number of people eligible for disability benefits under Old-Age, Survivors and Disability Insurance and the SSI program, as well as for related Medicare and Medicaid benefits. We believe it is in the public interest to proceed quickly with its implementation. However, we believe that an effective date of July 1, 1999 represents the earliest date practicable for these final rules to be effective.
Final Regulations
We are revising Secs. 404.1574(b)(2) and (4), and 416.974(b)(2) and (4) to increase from $500 to $700 the earnings guidelines that we use to determine whether a non-blind employee is engaging in SGA. (This standard also applies to the self-employed in certain circumstances by cross-references that have been and continue to be present in Secs. 404.1575 and 416.975.) We have not raised the SGA earnings amount for approximately nine years. We are raising the SGA level now to $700, which roughly corresponds to wage growth since the last increase in 1990.
In order to comply with the President's June 1, 1998 memorandum directing the use of plain language for all proposed and final rulemaking, we are rewriting the regulatory paragraphs affected by the above rule changes and the intervening paragraph ((b)(3)) into plain language. We intend this rewrite to have no substantive effect other than those substantive changes described in this preamble to these final rules.
[[Page 18569]]
Electronic Version
The electronic file of this document is available on the Internet at www.access.gpo.gov/nara. This document is also available on our Internet web site, SSA Online, www.ssa.gov.
Regulatory Procedures
Paperwork Reduction Act
These regulations impose no new reporting/record-keeping requirements necessitating clearance by the Office of Management and Budget (OMB).
Executive Order 12866
Regulatory Impact Analysis
Introduction--Based on the costs associated with these final rules, the Social Security Administration has determined that they require an assessment of costs and benefits to society per Executive Order 12866 because they meet the definition of a ``significant regulatory action.'' These final rules also meet the definition of a ``major rule'' under 5 U.S.C. 801ff., and this assessment also fulfills the requirements of those provisions as well. In addition, SSA has determined, as required under the aforementioned statute, that these final rules do not create any unfunded mandates for State or local entities pursuant to sections 202-205 of the Unfunded Mandates Act of 1995. OMB has reviewed these final rules.
Executive Order 12866 includes in its definition of a ``significant regulatory action'' one which generates a major increase in costs for the Federal government. Accordingly, a discussion follows of the effect of the regulations and general information on estimated costs and benefits to society.
Nature of the Program--Benefits to disabled and blind individuals are provided under title II and title XVI of the Act. Disability is defined under both programs as, ``* * * inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment * * *.'' Related medical benefits to disabled and blind individuals are provided under title XVIII and title XIX of the Act.
We use earnings guidelines to evaluate a person's work activity to determine whether the work activity is SGA and therefore whether that person may be considered disabled under the law. While this is only one of the tests used to determine disability, it is a critical threshold in disability evaluation. We evaluate the work activity of persons claiming or receiving disability benefits under title II of the Act and that of persons claiming benefits because of a disability under title XVI of the Act. These new regulations increase the amounts of those earnings guidelines. We have not raised the SGA earnings amount for approximately nine years. We are raising it now to approximate wage growth during that time.
Intended Effect--We expect that the increase in the amount of earnings that constitute SGA will provide a greater incentive for many people with disabilities to attempt to work or, if already working, to continue to work or increase their work effort. Hundreds of thousands of people with disabilities already work and the new revisions will be of advantage to many. For these individuals, as well as those not now working, the new revisions will enhance their potential to participate in the workforce, and, consequently, improve their economic well being by increasing their income through earnings.
In addition, the increase will permit some individuals with disabilities who have earnings in excess of the prior regulatory limit ($500) but less than the amount in these new rules ($700), to receive benefits. We estimate that by Fiscal Year (FY) 2004, an additional 27,000 individuals will receive benefits because of these changes. This estimate is based on analyses of the earnings distributions of a representative sample of disabled individuals.
The following chart provides the estimated increases in Old-age, Survivors and Disability Insurance payments, Federal SSI payments, Medicare benefits, and Federal share of Medicaid benefits due to the increase in the SGA amount to $700 in 1999, for fiscal years 1999-2004. (Amounts are in millions.)
Fiscal year
Total 1999- 1999
2000
2001
2002
2003
2004
2004
OASDI........................................................
10
30
55
75
100
120
390 SSI..........................................................
15
20
25
25
30
30
145 Medicare.....................................................
10
20
30
50
60
80
250 Medicaid.....................................................
40
60
70
75
90
100
435
Subtotal, all programs...................................
75
130
180
225
280
330
1220
Notes: \1\ Totals may not equal sum of rounded components. \2\ Above estimates based on the assumptions underlying the President's FY 2000 Budget, including the SSA Office of the Actuary's normal assumption of an SGA amount increasing with average wages. \3\ Estimates for Medicare and Medicaid provided by the Office of the Actuary in the Health Care Financing Administration (HCFA).
In addition, since States share in the costs of financing Medicaid, States will have some costs associated with the increase in the SGA amount as well. These costs are estimated by HCFA to be (in millions):
Fiscal year Medicaid
Total 1999- 1999
2000
2001
2002
2003
2004
2004
State Share...........................................
30
45
55
55
70
75
330
Although the costs are significant, we consider these changes as necessary improvements to the work incentives. The costs of these regulations will be paid through programmatic and regulatory changes.
Regulatory Flexibility Act
We certify that these regulations do not have a significant economic impact
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on a substantial number of small entities because they primarily affect individuals who are applying for or receiving title II, or applying for title XVI, benefits because of disability, and States which administer the Medicaid program.
(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social Security-Disability Insurance; 96.002, Social Security-Retirement Insurance; 96.004, Social Security-Survivors Insurance; 96.006, Supplemental Security Income)
List of Subjects
20 CFR Part 404
Administrative practice and procedure, Death benefits, Disability benefits, Old-Age, Survivors and Disability Insurance, Reporting and record keeping requirements, Social Security.
20 CFR Part 416
Administrative practice and procedure, Aged, Blind, Disability benefits, Public assistance programs, Reporting and record keeping requirements, Supplemental Security Income (SSI).
Dated: April 7, 1999. Kenneth S. Apfel, Commissioner of Social Security.
For the reasons stated in the preamble, the Social Security Administration is amending parts 404 and 416 of chapter III of title 20 of the Code of Federal Regulations as follows:
PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE (1950- )
-
The authority citation for subpart P of part 404 continues to read as follows:
Authority: Secs. 202, 205 (a), (b), and (d)-(h), 216(i), 221 (a) and (i), 222(c), 223, 225, and 702(a)(5) of the Social Security Act (42 U.S.C. 402, 405 (a), (b), and (d)-(h), 416(i), 421 (a) and (i), 422(c), 423, 425, and 902(a)(5)); sec. 211(b), Pub. L. 104-193, 110 Stat. 2105, 2189.
-
Section 404.1574 is amended by revising paragraphs (b)(2), (b)(3), and (b)(4) to read as follows:
Sec. 404.1574 Evaluation guides if you are an employee.
* * * * *
(b) * * *
(2) Earnings that will ordinarily show that you have engaged in substantial gainful activity. We will consider that your earnings from your work activity as an employee show that you have engaged in substantial gainful activity if--
Your monthly For months
earnings averaged more than
In calendar years before 1976..............................
$200 In calendar year 1976......................................
230 In calendar year 1977......................................
240 In calendar year 1978......................................
260 In calendar year 1979......................................
280 In calendar years 1980-1989................................
300 In January 1990-June 1999..................................
500 After June 1999............................................
700
(3) Earnings that will ordinarily show that you have not engaged in substantial gainful activity. We will generally consider that the earnings from your work as an employee will show that you have not engaged in substantial gainful activity if--
Your monthly For months
earnings averaged more than
In calendar years before 1976..............................
$130 In calendar year 1976......................................
150 In calendar year 1977......................................
160 In calendar year 1978......................................
170 In calendar year 1979......................................
180 In calendar years 1980-1989................................
190 After December 1989........................................
300
(4) If you work in a sheltered workshop. If you are working in a sheltered workshop or a comparable facility especially set up for severely impaired persons, your earnings and activities will ordinarily establish that you have not done substantial gainful activity if--
Your average monthly For months
earnings are not greater than
In calendar years before 1976..............................
$200 In calendar year 1976......................................
230 In calendar year 1977......................................
240 In calendar year 1978......................................
260 In calendar year 1979......................................
280 In calendar years 1980-1989................................
300 In January 1990-June 1999..................................
500 After June 1999............................................
700
* * * * *
PART 416--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND AND DISABLED
-
The authority citation for subpart I of part 416 continues to read as follows:
Authority: Secs. 702(a)(5), 1611, 1614, 1619, 1631(a), (c) and (d)(1), and 1633 of the Social Security Act (42 U.S.C. 902(a)(5), 1382, 1382c, 1382h, 1383(a), (c) and (d)(1), and 1383b); secs. 4(c) and 5, 6(c)-(e), 14(a) and 15, Pub. L. 98-460, 98 Stat. 1794, 1801, 1802, and 1808 (42 U.S.C. 421 note, 423 note, 1382h note).
-
Section 416.974 is amended by revising paragraphs (b)(2), (b)(3), and (b)(4) to read as follows:
Sec. 416.974 Evaluation guides if you are an employee.
* * * * *
(b) * * *
(2) Earnings that will ordinarily show that you have engaged in substantial gainful activity. We will consider that your earnings from your work activity as an employee show that you have engaged in substantial gainful activity if--
Your monthly For months
earnings averaged more than
In calendar years before 1976..............................
$200 In calendar year 1976......................................
230 In calendar year 1977......................................
240 In calendar year 1978......................................
260 In calendar year 1979......................................
280 In calendar years 1980--1989...............................
300 In January 1990--June 1999.................................
500 After June 1999............................................
700
(3) Earnings that will ordinarily show that you have not engaged in substantial gainful activity. We will generally consider that the earnings from your work as an employee will show that you have not engaged in substantial gainful activity if--
Your monthly For months
earnings averaged less than
In calendar years before 1976..............................
$130 In calendar year 1976......................................
150 In calendar year 1977......................................
160 In calendar year 1978......................................
170 In calendar year 1979......................................
180 In calendar years 1980--1989...............................
190 After December 1989........................................
300
(4) If you work in a sheltered workshop. If you are working in a sheltered workshop or a comparable facility especially set up for severely impaired persons, your earnings and activities will ordinarily establish that you have not done substantial gainful activity if--
Your monthly For months
earnings averaged more than
In calendar years before 1976..............................
$200 In calendar year 1976......................................
230 In calendar year 1977......................................
240 In calendar year 1978......................................
260 In calendar year 1979......................................
280 In calendar years 1980-1989................................
300 In January 1990-June 1999..................................
500 After June 1999............................................
700
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* * * * *
[FR Doc. 99-9427Filed4-14-99; 8:45 am]
BILLING CODE 4190-29-P
