[Federal Register Doc. 99-3677 Filed 2-12-99]

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.

ACTION: Notice of proposed rulemaking.
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SUMMARY: These proposed rules would raise from $500 to $700 the average
monthly earnings guidelines used to determine whether work done by persons
with impairments other than blindness is substantial gainful activity (SGA)
for purposes of 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.) We
propose to revise 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. The proposed increase
reflects our assessment of the amount which roughly corresponds to wage
growth since the last increase in 1990.

DATES: In order to be considered, we must receive your comments on the
specific proposal to increase the amount of the earnings guidelines, by March
18, 1999.

  Note: Under the heading "Additional Items," we ask for more general
suggestions concerning work incentive provisions and how best to review and
revise guidelines in the future. We will accept these suggestions until April
19, 1999.

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 "regulations@ssa.gov"; or delivered to the Office
of Process and Innovation Management, Social Security Administration, L2109
West Low Rise, 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: Jack Baumel, Office of Disability, Social
Security Administration, 6401 Security Boulevard, Baltimore, Maryland 21235,
(410) 965-9834 or TTY (410) 966-6210.

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 an individual's ability to engage in SGA.
  These proposed rules would increase the amount in the monthly earnings
guidelines used in determining whether an individual's work activities
demonstrate that he or she is able to perform SGA. Under the current
guidelines in Secs. 404.1574 and 416.974, if a person claiming title II or
title XVI benefits or receiving title II benefits based on disability 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
the proposed rules, the $500 amount would be raised to $700 per month.
  The amount of average monthly earnings that ordinarily demonstrates SGA 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
would provide an updated indicator of when earnings demonstrate the ability
to engage in SGA and would be a significant improvement to the existing work
incentive provisions.
Proposed Regulations

  We propose to revise 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
would also be applied to the self-employed in certain circumstances by cross-
references now present in Secs. 404.1575 and 416.975.) We have not raised the
SGA earnings amount for approximately nine years. We are proposing to raise
the SGA level now to $700, which roughly corresponds to wage growth since the
last increase in 1990.
Additional Items

  While these proposed rules would 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 this area as well.
Therefore, we invite the public to provide us with general suggestions for
changes which might be desirable in related provisions (e.g., the trial work
period services amount, and the earnings level that ordinarily demonstrates
that an individual has not engaged in SGA). We also request suggestions
reviewing and revising SGA guidelines in the future. Please note that, in
order to be considered, we must receive comments on the specific provisions
in these proposed rules by March 18, 1999. However, we will accept general
suggestions on the "additional items" mentioned in this paragraph if they are
received by April 19, 1999.
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
Justification for 30-day Comment Period

  Executive Order 12866 states that, in most cases, an agency should provide
a 60-day period for comments on its proposed rules. We ordinarily provide a
60-day period. However, for these proposed rules we are providing a 30-day
comment period. As these proposed rules would increase the scope of
disability eligibility for Old-age, Survivors and Disability Insurance and
SSI benefits, as well as for related Medicare and Medicaid benefits, we
believe it is in the public interest to proceed quickly to advance this
change. In this way, this important change could have an impact at the
earliest date practicable. However, it remains important to us to consider
public comments on the proposal. Therefore, we are establishing a 30-day
comment period.
Paperwork Reduction Act

  These regulations impose no new reporting/record-keeping requirements
necessitating clearance by OMB.
Executive Order 12866
Regulatory Impact Analysis

  Introduction--Based on the costs associated with these proposed 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 proposed 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 regulations do not create any unfunded mandates for State or local
entities pursuant to sections 202-205 of the Unfunded Mandates Act of 1995.
The Office of Management and Budget has reviewed this proposed rule.
  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 proposed
regulations would increase the amounts of those earnings guidelines. We have
not raised the SGA earnings amount for approximately nine years. We are
proposing to raise it now to approximate wage growth during that time.
  Intended Effect--We expect that the increase in the amount of earnings that
constitute SGA would provide a greater incentive for many beneficiaries to
attempt to work or, if already working, to continue to work or increase their
work effort. Hundreds of thousands of beneficiaries already work and could be
advantaged by the proposed revisions. For these individuals, as well as those
not now working, the proposed revisions could enhance their potential to
participate in the workforce, and, as a consequence, improve their economic
well-being by increasing their income through earnings.
  In addition, the increase would permit some individuals with disabilities
who have earnings in excess of the current regulatory limit ($500) but less
than the amount in these proposed rules ($700), to receive benefits. We
estimate that by 2004, an additional 27,000 individuals who would not
otherwise be receiving benefits will do so as a result 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 proposed 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 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 proposed increase in the SGA as
well. These costs are estimated by HCFA to be (in millions):
                                        Fiscal year

                                                                 Total,
                                                                 1999-
                             1999  2000  2001  2002  2003  2204   2004

       Medicaid State Share    30    45    55    55    70    75     330

  Although the costs are significant, we consider these changes as necessary
improvements to existing work incentives. The costs of these regulations
would be paid for through programmatic and regulatory changes.
Regulatory Flexibility Act

  We certify that these regulations will not have a significant economic
impact 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 recordkeeping
requirements, Social Security.
20 CFR Part 416

  Administrative practice and procedure, Aged, Blind, Disability benefits,
Public assistance programs, Reporting and recordkeeping requirements,
Supplemental Security Income (SSI).

  Dated: February 10, 1999.
Kenneth S. Apfel,

Commissioner of Social Security.

  For the reasons stated in the preamble, the Social Security Administration
proposes to amend 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-)

  1. 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.

  2. Section 404.1574 is amended by revising paragraph (b)(2)(vi) and
(b)(2)(vii), adding a new paragraph (b)(2)(viii), revising paragraphs
(b)(4)(vi) and (b)(4)(vii) and adding a new paragraph (b)(4)(viii) to read as
follows:
Sec. 404.1574   Evaluation guides if you are an employee.

* * * * *

  (b) * * *
  (2) * * *
  (vi) Your earnings averaged more than $300 a month in calendar years after
1979 and before 1990;
  (vii) Your earnings averaged more than $500 a month after calendar year
1989 and before (insert first day of the month beginning after 30 days
following date of publication of the final rules in the Federal Register); or
  (viii) Your earnings averaged more than $700 a month after (insert date
that is one day earlier than date shown at the end of paragraph (b)(2)(vii)
of this section).

* * * * *

  (4) * * *
  (vi) Your average earnings are not greater than $300 a month in calendar
years after 1979 and before 1990;
  (vii) Your average earnings are not greater than $500 a month after
calendar year 1989 and before (insert first day of the month beginning after
30 days following date of publication of the final rules in the Federal
Register); or
  (viii) Your average earnings are not greater than $700 a month after
(insert date that is one day earlier than date shown at the end of paragraph
(b)(4)(vii) of this section).

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

  1. 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).

  2. Section 416.974 is amended by revising paragraph (b)(2)(vi) and
(b)(2)(vii), adding a new paragraph (b)(2)(viii), revising paragraphs
(b)(4)(vi) and (b)(4)(vii) and adding a new paragraph (b)(4)(viii) to read as
follows:
Sec. 416.974   Evaluation guides if you are an employee.

* * * * *

  (b) * * *
  (2) * * *
  (vi) Your earnings averaged more than $300 a month in calendar years after
1979 and before 1990;
  (vii) Your earnings averaged more than $500 a month after calendar year
1989 and before (insert first day of the month beginning after 30 days
following date of publication of the final rules in the Federal Register); or
  (viii) Your earnings averaged more than $700 a month after (insert date
that is one day earlier than date shown at the end of paragraph (b)(2)(vii)
of this section).

* * * * *

  (4) * * *
  (vi) Your average earnings are not greater than $300 a month in calendar
years after 1979 and before 1990;
  (vii) Your average earnings are not greater than $500 a month after
calendar year 1989 and before (insert first day of the month beginning after
30 days following date of publication of the final rules in the Federal
Register); or
  (viii) Your average earnings are not greater than $700 a month after
(insert date that is one day earlier than date shown at the end of paragraph
(b)(4)(vii) of this section).

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