04-2561. Supplemental Security Income (SSI) Demonstration: Work Incentives for Participants in the Florida Freedom Initiative

AGENCY:

Social Security Administration (SSA).

ACTION:

Notice.

SUMMARY:

The Commissioner of Social Security (the Commissioner) will exercise her authority under section 1110(b) of the Social Security Act to conduct a demonstration and is publishing this notice in accordance with regulations at 20 CFR 416.250(e).

The demonstration, called Work Incentives for Participants in the Florida Freedom Initiative, will test whether the modification of certain SSI program rules fosters greater self-sufficiency among SSI beneficiaries participating in the Florida Freedom Initiative. The Florida Freedom Initiative is a demonstration being undertaken by the Florida Department of Children and Families through a Systems Change grant from the Department of Health and Human Services (DHHS), Centers for Medicare & Medicaid Services (CMS).

EFFECTIVE DATES:

It is anticipated that the Florida Freedom Initiative will begin no later than March 1, 2004. According to the demonstration plan, beneficiaries may participate throughout the period of the demonstration for up to three years. Thus, the anticipated ending date for participation will be no later than February 28, 2007. In some cases, however, the modified SSI program rules that the Commissioner is creating relative to individual development accounts and plans for achieving self-support (see below) may continue to apply for a limited time after an individual's participation in the Florida Freedom Initiative ends.

FOR FURTHER INFORMATION CONTACT:

Stephen Fear by e-mail at [e-mail], by telephone at [phone], or by mail at Social Security Administration, Office of Program Development and Research, 3516 Annex Building, 6401 Security Boulevard, Baltimore, MD 21235.

SUPPLEMENTARY INFORMATION:

Florida Freedom Initiative and Consumer Directed Care Plus Demonstrations

The Florida Freedom Initiative will attempt to build on the success of an ongoing “Cash and Counseling” demonstration, Consumer Directed Care Plus, that the State has been conducting with partners that include: CMS, the Office of the Assistant Secretary for Planning and Evaluation at DHHS, the National Program Office at the University of Maryland Center on Aging, the Robert Wood Johnson Foundation, the National Council on Aging, and Mathematica Policy Research (as the evaluator).

For Consumer Directed Care Plus, the Secretary of DHHS (the Secretary) exercised his authority under section 1115 of the Act to waive certain Medicaid program rules. The Medicaid waivers permit Medicaid beneficiaries using personal-attendant, supported-employment, or certain other services, to receive a cash allowance in lieu of those services, along with information support that enables them to select and purchase the specific services they need from providers of their choosing.

The Commissioner, to enable SSI beneficiaries to participate in the Consumer Directed Care Plus demonstration and to test the effect of modified SSI program rules in the demonstration's Medicaid-waiver environment, waived SSI rules regarding how long an individual can retain certain cash received for medical and social services before they count toward the SSI resources limit. The Commissioner also waived SSI rules that would require interest earned on such retained funds to count as income. See 63 FR 58802 (November 2, 1998).

For the Florida Freedom Initiative, the Secretary will expand the types of services for which Medicaid beneficiaries can receive a cash allowance. The demonstration also will incorporate, to a greater extent than was possible in Consumer Directed Care Plus, the principles of self-determination, one of which emphasizes the generation of personal income through work, often through the development of a microenterprise. To aid in the removal of systemic barriers to work that were identified in the course of the Consumer Directed Care Plus demonstration, the Commissioner will provide the following waivers of SSI program requirements for the Florida Freedom Initiative.

1. Exclusion From Resources of Medicaid Payments Being Saved for the Purchase of Medical or Social Services and Exclusion From Income and Resources of Interest Earned by Such Savings

Cash from a government source to pay for medical or social services does not count as income to an SSI beneficiary when received. However, if the cash is not reimbursement for expenses already paid, and the beneficiary retains it, current rules require counting it as a resource beginning with the second calendar month after the month in which is received. See regulations at 20 CFR 416.1103(a) and (b) and 20 CFR 416.1201(a)(3).

The Commissioner is waiving this requirement in order to permit beneficiaries to save for future purchases of medical and social services as long as they continue to participate in the Florida Freedom Initiative and the funds are retained in a form that is separately identifiable from other assets. Under current rules, any interest earned by such savings would count as income in the month it is earned and as a resource thereafter. The Commissioner also is waiving these requirements. The Commissioner provided the same waivers for the Consumer Directed Care Plus demonstration project.

Cash received for medical or social services during participation in the demonstration and retained after participation in the demonstration ends will be excluded from resources for the first full calendar month after participation ends and will be subject to regular SSI resources rules beginning with the second full calendar month after participation ends. For example, if participation in the demonstration were to end on February 28, 2007, cash received for medical or social services prior to that date, if retained, would be subject to regular SSI resources rules beginning April 2007. Interest earned by such cash once it becomes subject to regular SSI resources rules is subject to regular SSI income rules.

2. Expansion of Exclusions Related to Individual Development Accounts (IDA)

An IDA is a trust or custodial account created to help low-income individuals and families save for certain expenses. Except for certain emergencies, IDA funds can be used only for going to college, buying a first home, or starting a business. The account holder makes deposits to an IDA from his or her earned income. Each dollar the account holder deposits is matched at rates varying from one to eight dollars, usually depending on the availability of funding.

Individual development accounts are used in two Federal programs: temporary assistance to needy families (TANF) and an Assets for Independence Act (AFIA) demonstration program. In these programs, matching contributions are drawn from a combination of TANF funds or AFIA grant monies and entities such as foundations and Community Development Credit Unions. Federal matching dollars are limited to $2,000 per individual or $4,000 per household over the five-year life of the IDA demonstration program.

Section 415 of the AFIA (title IV of Pub. L. 105-285 as amended by section 610 of Pub. L. 106-55, App. A) and section 404(h)(4) of the Social Security Act provide that funds in an AFIA or TANF IDA are to be disregarded in determinations of eligibility for, or the amount of, a Federal benefit that takes into account financial circumstances. SSA thus excludes these IDAs when it determines whether someone's resources exceed the SSI limit. It also excludes matching contributions when it determines countable income, and deducts the beneficiary's own deposits from countable income. As a result, SSI benefits allow the beneficiary to meet living expenses while saving for the specified qualifying purposes.

Numerous non-federally supported IDA or “IDA-like” programs have emerged nationwide. These other programs usually adopt AFIA IDA program rules, but permit an individual to save for one or more purposes, such as transportation or assistive technology, in addition to the three mentioned above. Under current SSI program rules, the exclusions that apply to federally supported IDAs do not extend to these programs. For the Florida Freedom Initiative, the Commissioner will extend the exclusions to these other programs, subject to her approval of their rules.

To ensure that participants are able to benefit fully from the savings opportunity afforded by an IDA, the exclusions related to IDAs, other than those accounts involving AFIA grant monies or Federal TANF dollars, will continue to apply until the individual's participation in the IDA program has ended, in accordance with the IDA program's rules. It thus is possible that such IDA exclusions will continue for a limited time after participation in the Florida Freedom Initiative ends.

3. Increased Exclusion for Earned Income

Social Security Act section 1612(b)(3) and 20´CFR 416.1112 provide for excluding the first $65 a month, plus half the remainder of earned income not previously excluded by other provisions. To further encourage work and earnings, SSA will exclude the first $280 of earned income, and half of any earnings over that amount, for SSI beneficiaries participating in the Florida Freedom Initiative.

The exclusion of the first $280 (instead of $65) of an individual's earnings each month ends with the month in which his or her participation in the Florida Freedom Initiative demonstration project ends.

4. Modified Goal for a Plan for Achieving Self-Support (PASS)

Under current rules, although education can be part of a PASS, the PASS must in all cases specify an occupational goal (Social Security Act section 1633 and 20 CFR 416.1181). For the Florida Freedom Initiative, SSA will approve an otherwise satisfactory PASS that specifies postsecondary education as its goal, as long as the PASS includes a step for specifying a work goal at least six months prior to completion of course requirements.

A PASS, with a goal of postsecondary education, should take into account the time it ordinarily would take the individual to complete the coursework involved. Approval of such a PASS will not require that the coursework be completed before the Florida Freedom Initiative ends. A PASS approved as part of the Work Incentives for Participants in the Florida Freedom Initiative demonstration subsequently will be treated like any other PASS.

5. Suspension of Continuing Disability Reviews (CDR)

Section 221(i) of the Act requires that SSA periodically review medical and/or other evidence to determine whether an individual continues to meet the requirements for benefits, and section 1633(c.) contemplates that SSA will undertake similar reviews with respect to SSI recipients. Our regulations at 20 CFR 416.989, 416.989(a) and 416.990 explain when we will conduct these CDRs for SSI recipients. If the evidence shows that the individual no longer meets these requirements, benefits stop. The Commissioner will suspend CDRs for Florida Freedom Initiative participants while they are participating in the project.

Objectives of the Work Incentives for Participants in the Florida Freedom Initiative Demonstration

Through Work Incentives for Participants in the Florida Freedom Initiative, the Commissioner will:

• Support the efforts of CMS, the State of Florida, and other partners to conduct the Florida Freedom Initiative;
• Further test the appropriateness of current SSI rules requiring that cash received for the purchase of medical or social services be counted as a resource if retained for more than one calendar month after the month of receipt;
• Empower Florida Freedom Initiative participants to use their earnings to save toward purchasing a home, capitalizing a small business or micro-enterprise, attending college, or other approved purpose; e.g., the purchase of assistive technology or transportation;
• Permit a determination of whether the combination of altered policies and procedures used for the Florida Freedom Initiative can generate SSI and/or Medicaid program savings by more effectively enabling participants to maximize their self-sufficiency.

SSA will work with CMS and the State of Florida to develop appropriate measurements for these objectives and to make arrangements for necessary data collection.

Additional Background: Cash Received for Medical or Social Services

Section 1612(a) of the Act defines income for purposes of the SSI program, while section 1612(b) specifies exclusions from income. As explained in regulations at 20 CFR 416.1102, income includes anything an individual receives in cash or in kind that can be used to meet food, clothing, and shelter needs. Regulations at 20 CFR 416.1103(a)(3) and (b)(1) explain that assistance provided in cash or in kind under a Federal, State, or local government program, whose purpose is to provide medical care or services or social services, including vocational rehabilitation, is not income.

Section 1613 of the Act specifies exclusions from resources for purposes of the SSI program. Regulations at 20 CFR 416.1201(a) define resources as cash, or other liquid assets, or any real or personal property, that an individual (or spouse) owns and could convert to cash to be used for support and maintenance. Regulations at 20 CFR 416.1207(d) explain that items received in cash or in kind during a month are evaluated first under the rules for counting income. If they are retained until the first moment of the following month, they then are evaluated under the rules for counting resources.

Regulations at 20 CFR 416.1201(a)(3) explain that, except for reimbursement of expenses already paid, cash an individual receives for medical or social services, that is neither income under 20 CFR 416.1103(a) or (b) nor a retroactive cash payment excluded from deeming under 20 CFR 416.1161(a)(16), is not a resource for the calendar month following the month of its receipt if it is separately identifiable from other resources. If retained after that time, it becomes a countable resource.

SSI regulations recognize that cash payments made specifically to enable people to pay for medical or social services are not income for SSI purposes because they are assumed to not be available for support and maintenance. Recognizing that the recipient is not always able to use the cash for payment for medical or social services in the month of receipt, SSI regulations provide for not counting as resources any cash received to pay for medical and social services which is retained one full calendar month following the month of receipt, so long as it is separately identifiable from other resources. The rule permitting not counting such cash as resources does not encompass cash received as reimbursement for medical or social service bills the individual has already paid. The rule which permits not counting cash as resources, if retained into the month following the month of receipt, is consistent with the purpose of the SSI program, which is to meet the current needs of beneficiaries for food, clothing and shelter.

Additional Background: Plans for Achieving Self-Support

Sections 1612(b)(4) and 1613(a)(4) of the Act provide for excluding such income and resources of an individual, if he or she has a plan for achieving self-support approved by the Commissioner, as may be necessary for the fulfillment of such plan. A plan for achieving self-support, or PASS, is a self-directed plan in which individuals identify:

• The job they want or business they want to start;
• what they need in order to achieve their goal, such as training or education, transportation, assistive technology or business inventory, and how much it will cost; and
• the income or assets they will use for these expenses, such as savings, wages from an existing job, or Social Security Disability Insurance (SSDI) benefits.

Several “ownership” factors make the PASS program a particularly effective work incentive. There is a personal investment in the attainment of plan goals because the individuals themselves create those goals and use their own income or assets to pay for expenses, although SSI benefits replace those funds. Although the plan must be realistic, and expenses must be reasonable, the individuals themselves decide what goods, equipment, services, training, and education they will purchase, and from whom, in order to reach their goals.

A PASS can help an individual pay for expenses such as:

• PASS preparation fees, which can include the cost of vocational evaluations and similar assessments;
• education or training, including tuition, books, supplies, and associated fees and costs, such as fees for tutoring, testing, and counseling;
• meals and lodging while temporarily absent from one's permanent residence to attend educational, training, employment, trade, or business activities, if there is also a cost associated with maintaining the permanent residence;
• transportation, including the lease, rental, or purchase of a vehicle and associated costs for fuel, insurance, maintenance, registration, taxes, etc., modifications to a vehicle, the hire of private or commercial carriers, and the hire of someone to drive one's vehicle;
• business start-up costs, including equipment, supplies, operating capital, and inventory required to establish and carry on a trade or business;
• assistive technology, including assistive technology mobility devices (power chairs and scooters) and/or upgrades;
• modifications to buildings for operational or access purposes for persons with disabilities;
• childcare;
• attendant care;
• basic living skills training;
• dues and subscription costs for publications for academic or professional purposes;
• equipment and tools, including safety equipment, whether specific to the individual's condition or designed for use by someone who does not have a disability;
• job coaching/counseling services;
• uniforms, specialized clothing, safety equipment, and appropriate attire, such as suits or dresses needed for job interviews or to begin working in an office or professional setting; and
• job search or relocation expenses.

If approved, a PASS can help SSI beneficiaries pay for these and other expenses in a number of ways:

• First, SSA excludes income and resources that will be used for plan expenses when it determines SSI eligibility and payment amount. In some cases, this permits SSI eligibility where it would otherwise not exist.
• Eligibility for SSI generally results in eligibility for Medicaid, as well. Medicaid can cover the cost of medicines and other items not presently covered by Medicare.
• If an individual is eligible for SSI, a PASS may permit a higher benefit.
• Income excluded under a PASS also is excluded from consideration in determinations of eligibility for Food Stamps and Federal housing assistance.

An important way in which a PASS can help pay for a major purchase is by its use to obtain and pay off a loan. People with disabilities who have little income or credit rarely have the option to save for a major purchase or obtain financing. Approval of a PASS that has loan payments built into it has made it possible for some individuals to obtain financing for major purchases. This can have the added advantage of enabling someone to establish or rebuild credit, which can be critical to running a business.

Who May Participate in the Work Incentives for Participants in the Florida Freedom Initiative Demonstration?

To take part in the Work Incentives for Participants in the Florida Freedom Initiative, an individual must be receiving SSI benefits based on disability or blindness and be enrolled in the Florida Freedom Initiative demonstration.

Consent Required

The consent of an SSI beneficiary to participate in this demonstration project is required under section 1110(b)(2)(b) of the Act and 20 CFR 416.250(d). The State of Florida will obtain written consent from every participant who is an SSI beneficiary. The consent will ensure that participation is voluntary and participants will be informed that they can stop participating at any time.

New or Additional Program Costs

We anticipate that the Work Incentives for Participants in the Florida Freedom Initiative demonstration will involve no, or minimal, new or additional program costs to the Federal government under title XVI of the Act or to the State of Florida under section 1616 of the Act. If the Commissioner decided not to exercise her authority under section 1110(b) of the Act to provide the waivers described in this announcement, we believe that few if any SSI beneficiaries would participate in the Florida Freedom Initiative since to do so could result in a reduction or loss of SSI benefits. Continued SSI eligibility for beneficiaries who choose to participate in the demonstration project is not a new or additional cost related to the Commissioner's demonstration project.

Statutory and Regulatory Provisions Waived: The Commissioner waives for the duration of an individual's participation in the Cash and Counseling demonstration project certain SSI resources counting rules where application of those rules would otherwise affect the eligibility of an individual for SSI. The specific statutory and regulatory provisions waived are those described in the preceding section.

Authority: Section 1110(b) of the Social Security Act.

Dated: January 30, 2004.

Jo Anne B. Barnhart,

Commissioner of Social Security.