[Federal Register Volume 61, Number 82 (Friday, April 26, 1996)]
[Proposed Rules]
[Pages 18528-18532]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10058]
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[[Page 18529]]
SOCIAL SECURITY ADMINISTRATION
20 CFR Part 416
[Regulations No. 16]
RIN 0960-AD75
Supplemental Security Income for the Aged, Blind, and Disabled;
Charging Administration Fees for Making State Supplementary Payments;
Interest Charging on State Supplementary Payment Funds
AGENCY: Social Security Administration, (SSA).
ACTION: Proposed rules.
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SUMMARY: We propose to revise our rules to bring them into accord with
statutory changes which require the Social Security Administration
(SSA) to charge the States an administration fee for making
supplementary payments on behalf of States and authorize SSA to charge
the States an additional services fee for performing services at the
request of States not customarily provided. We also propose to conform
our regulations to reflect the requirements of the law regarding the
transfer of funds from States to SSA for use in making supplementary
payments.
DATES: To be sure that your comments are considered, we must receive
them no later than June 25, 1996.
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 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.
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 format and will remain on the FBB during
the comment period.
FOR FURTHER INFORMATION CONTACT: Henry D. Lerner, Legal Assistant,
Division of Regulations and Rulings, Social Security Administration,
6401 Security Blvd., Baltimore, MD 21235, (410) 965-1762 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
These proposed regulations reflect the provisions of section 13731
of Public Law 103-66 (the Omnibus Budget Reconciliation Act (OBRA) of
1993) and Public Law 101-453 (the Cash Management Improvement Act
(CMIA) of 1990) as amended by Public Law 102-589 (the Cash Management
Improvement Act Amendments of 1992). From the inception of the
supplemental security income (SSI) program in January 1974 through
September 1993, SSA did not have the authority to charge States for the
costs it incurred in administering mandatory and optional State
supplementary payment programs. During that same period of time, SSA
did not have specific authority to charge States for the costs it
incurred in performing, at the request of the States, services not
customarily provided in the administration of State supplementary
payment programs.
Section 13731 of Public Law 103-66, effective for supplementary
payments made for any month beginning on or after October 1, 1993,
requires SSA to charge the States an administration fee for making
supplementary payments on behalf of States and authorizes SSA to charge
the States an additional services fee for performing services at the
request of States not customarily provided.
The CMIA requires that transfers of funds from the States to SSA
for the payment of supplementary payments be timed to coincide as
closely as possible with disbursements of those funds to eligible
individuals. In the case of certain States, transfers which do not
occur on due dates and/or which are not in appropriate amounts will
cause the imposition of an interest liability on either the States or
on the Federal Government in accordance with the regulations of the
United States Department of the Treasury implementing the CMIA. The
provisions of the CMIA were effective on the later of July 1, 1993, or
the first day of the State's fiscal year beginning in 1993. Prior to
the effective date of the CMIA, no interest liability was incurred by
either the States or the Federal Government on the transfer of funds to
SSA for use in making State supplementary payments.
Present Policy
At the outset of the SSI program, States were encouraged to
supplement the Federal benefit. As an incentive to provide a
supplement, States that agreed to make optional supplementary payments
and signed an agreement to have those payments administered by the
Federal Government would not be charged a fee for Federal
administration. States required to pay mandatory supplementary payments
could also enter into agreements providing for Federal administration
of those payments at no cost to the States. States electing Federal
administration were required to periodically transfer to SSA only
amounts equal to the expenditures made by SSA for supplementary
payments. This former requirement is still reflected in the current
regulations at Secs. 416.2010(c) and 416.2090(a).
On October 1, 1993, pursuant to amendments made to the Social
Security Act (the Act) and to section 212(b)(3) of Public Law 93-66 by
section 13731 of Public Law 103-66, SSA began charging States that had
elected Federal administration of optional and/or mandatory State
supplementary payments a fee for administering those payments. The
administration fee is charged monthly and is derived by multiplying the
number of State supplementary payments made by SSA on behalf of a State
for a month by the applicable dollar rate for the fiscal year (FY), as
prescribed in section 13731 of Public Law 103-66. The dollar rates are
as follows: for FY 1994, $1.67; for FY 95, $3.33; for FY 96, $5.00;
and, for FY 1997 and each succeeding FY, $5.00 or such different rate
as determined by SSA to be appropriate for any particular State, taking
into account the complexity of administering the State's supplementary
payment program. The number of supplementary payments made by SSA in a
month is the total number of checks issued, and direct deposits made,
to recipients in that month, that are composed in whole or in part of
State supplementary funds. The number of supplementary payments
include, for example, recurring monthly payments (ongoing monthly
payments to individuals who maintain eligibility from the previous
month); supplemental payments (payments certified after the date
established for the regular transfer of payment data to the United
States Department of the Treasury); daily payments (non-recurring
initial claims or post-entitlement payments including one-time payments
such as those made to correct underpayments); erroneous payments
(overpayments and payments to ineligibles); split payments (multiple
check payments resulting from the systems safeguard limiting single
checks to an amount not greater than
[[Page 18530]]
$49,999.99); unnegotiated check payments (payments by check not
presented for payment by the recipient within 180 days of issuance);
replacement checks (duplicate checks issued when recipients allege
nonreceipt of original check issuances); and, installment payments
(payments made over a period of months, the sum of which is equal to
amounts due recipients).
Section 13731 of Public Law 103-66 also authorizes SSA to charge a
State an additional services fee if, at the request of the State, SSA
agrees to provide the State with additional services beyond the level
customarily provided in the administration of State supplementary
payments. SSA is not required to perform any additional services
requested by a State and may, at its sole discretion, refuse to perform
those additional services. An additional services fee charged a State
may be a one-time charge or, if the furnished services result in
ongoing costs to the Federal Government, a monthly or less frequent
charge to the State for providing such services. Section 13731 of
Public Law 103-66 requires that the additional services fee be in an
amount that SSA determines is necessary to cover all costs (including
indirect costs) incurred by the Federal Government in furnishing the
additional services. Prior to the effective date of section 13731 of
Public Law 103-66, SSA had no specific authority to impose additional
services fees.
The CMIA was enacted to ensure greater efficiency, effectiveness
and equity in the exchange of funds between the Federal Government and
the States. For purposes of Federal administration of State
supplementary payments, the CMIA requires that the transfer of funds
from the States to SSA for use in making supplementary payments be
timed to coincide as closely as possible with the actual payment of
those funds to recipients. While all States are required to comply with
the funding techniques of the CMIA, pursuant to the implementing
regulations of the United States Department of the Treasury at 31 CFR
Part 205, only those States whose State supplementary payment programs
meet the requirements of a major Federal assistance program in their
respective States are subject to the interest liability provisions of
the CMIA. For those States, transfers of supplementary payment funds to
SSA which are not made on due dates and/or are not made in appropriate
amounts will cause the imposition of an interest liability on either
the State, or the Federal Government. Currently, SSA administers the
supplementary payment programs of 26 States and the District of
Columbia. The supplementary payment programs of 12 of those States and
the District of Columbia meet the requirements of a major Federal
assistance program and, thus, are subject to the interest liability
provisions of the CMIA.
Each month, States are notified of the amount of funds they must
transfer to SSA to be used in the succeeding month to make
supplementary payments and to pay administration fees. Notification is
made, generally, 7 work days before the end of the month. For purposes
of complying with the funding technique requirements of the CMIA and
its implementing regulations, all State funds must be received by SSA
by the fifth Federal business day following the day the regularly
recurring monthly supplementary payments are issued. This date is the
State supplementary payment transfer date and represents the dollar-
weighted average day of clearance of all SSI/State supplementary
payment checks and direct deposits made to individuals in a month.
Section 1616(d) of the Act and section 212(b)(3) of Public Law 93-66,
as amended by section 13731 of Public Law 103-66, require that the
States pay administration fees on the same day they transfer to SSA the
amounts necessary to make State supplementary payments. However, the
provisions of the CMIA apply only to the amounts transferred to SSA for
use in making supplementary payments. Therefore, the interest
provisions of the CMIA are inapplicable to the payment of
administration fees not made on transfer dates and/or not made in
appropriate amounts. However, administration fee payment delinquencies
by States are subject to the provisions of the claims collection
regulations at 45 CFR part 30, which include the imposition of interest
on amounts due SSA. These Department of Health and Human Services
regulations remain applicable after March 30, 1995, to the assessment
of interest on delinquent administration fees by SSA pursuant to
section 106(b) of Public Law 103-296, the Social Security Independence
and Program Improvements Act of 1994.
It is not possible for SSA to forecast the precise amount of State
expenditures that will be made in the subsequent month. Therefore, the
amounts transferred on the State supplementary payment transfer date
are based on estimates made by SSA. After the close of the month for
which the amounts are transferred, when final expenditure figures
become available, those amounts will be revealed to be either more or
less than actually expended, therefore triggering an interest liability
on either the State or the Federal Government. Current regulations do
not reflect the CMIA requirement that supplementary payment funds be
transferred to SSA on the date of average clearance of SSI/
supplementary payments, nor do they authorize the charging or payment
of interest by either SSA or the States with regard to the transfer of
State supplementary payment funds.
Proposed Policy
We propose to amend the regulations at Secs. 416.2010(b) and
416.2090 to reflect the provisions section 13731 of Public Law 103-66
that require SSA to charge States an administrative fee for
administering their State supplementary payments and authorize SSA to
charge States an additional services fee for services not customarily
performed. Examples of services not customarily provided States and
thus, for which an additional fee will be charged if SSA agrees to
perform them, are presented below. The list is not intended to be
inclusive. Any and all additional services performed by SSA at the
request of a State will be subject to the services fee, including:
The collection and/or verification of additional
information in the claims or redetermination process which SSA does not
now typically or usually collect and/or verify;
The modification of a supplementary payment level
variation or replacement of a supplementary payment level variation,
resulting in a variation more labor intensive or otherwise more costly
to administer than variations normally administered by SSA;
The modification or expansion of the existing SSI Quality
Assurance sample that would increase the level of reporting usually
performed by SSA;
The development and issuance of notices to SSI/State
supplementary payment recipients in the State beyond those normally
provided;
The revision of State supplementary payment amounts which
requires software changes in the SSI payment system not otherwise
necessary. Such revisions would be other than the customary revisions
associated with annual cost-of-living adjustments to the Federal
benefit rate;
The provision of more detailed or frequent accounting data
or reports; and
A service that would require SSA to engage in software
development or modification and/or reprogramming efforts not normally
undertaken.
We also propose to amend the regulations at Sec. 416.2090(a)(2) to
[[Page 18531]]
provide, consistent with our present procedure, that all State funds to
be used by SSA to make monthly supplementary payments and to pay
administration fees for that month, as estimated by SSA, must be on
deposit with SSA by the fifth Federal business day following the day
the regularly recurring monthly supplementary payments are issued. This
paragraph would also provide that any additional services fees are to
be on deposit with SSA on the date specified by SSA. In addition, we
propose to amend Sec. 416.2090(b) to clarify that administration and
additional services fees are included in SSA's accounting of State
funds and to reflect the fact that SSA and the States may now incur
interest charges with respect to the adjustment and accounting of State
supplementary payment funds in accordance with the CMIA and
implementing regulations of the United States Department of the
Treasury.
We also propose to make technical revisions to the regulations in
Subpart T that are unrelated to the provisions of OBRA of 1993 and the
CMIA. Section 184 of Public Law 97-248, enacted September 3, 1982,
phased out the hold-harmless provisions of the Social Security Act. In
order to reflect the fact that these provisions are now obsolete, we
propose to delete the hold-harmless regulations at Secs. 416.2010(b)
(except for the last sentence which is unrelated to the hold-harmless
protection and which will be inserted at the end of Secs. 416.2005(d)),
416.2080, 416.2082, and 416.2085 per SSA's June 1, 1995, report to
President Clinton on Eliminating and Improving Regulations, and to
amend the regulations at Secs. 416.2050(b)(1) and 416.2090 (a)(2) and
(d). Section 416.2010(d) will be redesignated as Sec. 416.2010(c) and
will be revised to indicate that agreements will renew automatically
one year after the date they are signed for a period of one year unless
the State or SSA gives written notice not to renew at least 90 days
before the beginning of the new period. The regulations now provide
that the agreements will run until June 30, the Federal government's
former end of a fiscal year. This proposed change takes into
consideration the fact that States have not signed their agreements on
one uniform date. Finally, these proposed rules would, in the sections
being amended, replace all references to the Secretary of Health and
Human Services with references to SSA to reflect Public Law 103-296
which, effective March 31, 1995, established SSA as an independent
agency separate from the Department of Health and Human Services.
Regulatory Procedures
Executive Order 12866
We have consulted with the Office of Management and Budget (OMB)
and determined that these rules do not meet the criteria for a
significant regulatory action under Executive Order 12866. Thus, they
were not subject to OMB review.
Regulatory Flexibility Act
We certify that these proposed rules will not have a significant
economic impact on a substantial number of small entities. Therefore, a
regulatory flexibility analysis as provided in Public Law 96-354, the
Regulatory Flexibility Act, is not required.
Paperwork Reduction Act
These proposed rules impose no reporting/recordkeeping requirements
subject to OMB 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.
Dated: April 16, 1996.
Shirley Chater,
Commissioner of Social Security.
Subpart T of part 416 of chapter III of title 20 of the Code of
Federal Regulations is proposed to be amended as follows:
PART 416 --[AMENDED]
Subpart T--[Amended]
1. The authority citation for subpart T of part 416 continues to
read as follows:
Authority: Secs. 702(a)(5), 1616, 1618, and 1631 of the Social
Security Act (42 U.S.C. 902(a)(5), 1382e, 1382g, and 1383); sec.
212, Pub. L. 93-66, 87 Stat. 155 (42 U.S.C. 1382 note); sec. 8(a),
(b)(1)-(b)(3), Pub. L. 93-233, 87 Stat. 956 (7 U.S.C. 612c note and
1431 note and 42 U.S.C. 1382e note); secs. 1(a)-(c) and 2(a),
2(b)(1), 2(b)(2), Pub. L. 93-335, 88 Stat. 291 (42 U.S.C. 1382 note,
1382e note).
2. Section 416.2005 is amended by revising paragraph (a), removing
``the Secretary'' and adding ``SSA'' in the heading and each time it
appears in paragraphs (b)-(d) and adding a sentence to the end of
paragraph (d) to read as follows:
Sec. 416.2005 Administration agreements with SSA.
(a) Agreement-mandatory only. Subject to the provisions of
paragraph (d) of this section, any State having an agreement with the
Social Security Administration (SSA) under Sec. 416.2001(c) may enter
into an administration agreement with SSA under which SSA will make the
mandatory minimum supplementary payments on behalf of such State. An
agreement under Sec. 416.2001(c) and an administration agreement under
this paragraph may be consolidated into one agreement.
* * * * *
(d) * * * If the State elects options available under this subpart
(specified in Secs. 416.2015 through 416.2035), such options must be
specified in the administration agreement.
3. Section 416.2010 is amended by removing paragraph (b),
redesignating paragraphs (c) through (f) as paragraphs (b) through (e),
removing ``the Secretary'' and adding ``SSA'' each time it appears in
paragraphs (a), (d) and (e), and by revising redesignated paragraphs
(b) and (c) to read as follows:
Sec. 416.2010 Essentials of the administration agreements.
* * * * *
(b) Administrative costs. (1) SSA shall assess each State that had
elected Federal administration of optional and/or mandatory State
supplementary payments an administration fee for administering those
payments. The administration fee is assessed and paid monthly and is
derived by multiplying the number of State supplementary payments made
by SSA on behalf of a State for any month in a fiscal year by the
applicable dollar rate for the fiscal year. The number of supplementary
payments made by SSA in a month is the total number of checks issued
and direct deposits made to recipients in that month, that are composed
in whole or in part of State supplementary funds. The dollar rates are
as follows:
(i) For fiscal year 1994, $1.67;
(ii) For fiscal year 1995, $3.33;
(iii) For fiscal year 1996, $5.00; and
(iv) For fiscal year 1997 and each succeeding fiscal year, $5.00,
or such different rate as determined by SSA to be appropriate for any
particular State, taking into account the complexity of administering
the State's supplementary payment program.
(2) SSA shall charge a State an additional services fee if, at the
request of the State, SSA agrees to provide the State with additional
services beyond the level customarily provided in the administration of
State supplementary
[[Page 18532]]
payments. The additional services fee shall be in an amount that SSA
determines is necessary to cover all costs, including indirect costs,
incurred by the Federal government in furnishing the additional
services. SSA is not required to perform any additional services
requested by a State and may, at its sole discretion, refuse to perform
those additional services. An additional services fee charged a State
may be a one-time charge or, if the furnished services result in
ongoing costs to the Federal Government, a monthly or less frequent
charge to the State for providing such services.
(c) Agreement period. The agreement period for a State which has
elected Federal administration of its supplementary payments will
extend for one year from the date the agreement was signed unless
otherwise designated. The agreement will be automatically renewed for a
period of one year unless either the State or SSA gives written notice
not to renew, at least 90 days before the beginning of the new period.
For a State to elect Federal administration, it must notify SSA of its
intent to enter into an agreement, furnishing the necessary payment
specifications, at least 120 days before the first day of the month for
which it wishes Federal administration to begin, and have executed such
agreement at least 30 days before such day.
* * * * *
4. Paragraph (b)(1) of section 416.2050 is amended by removing the
phrase ``(as defined in Sec. 416.2085(e))'' and removing ``the
Secretary'' and adding ``SSA'' each time it appears.
Sec. 416.2080 [Removed]
5. Section 416.2080 is removed.
Sec. 416.2082 [Removed]
6. Section 416.2082 is removed.
Sec. 416.2085 [Removed]
7. Section 416.2085 is removed.
8. Section 416.2090 is amended removing ``the Secretary'' and
adding ``SSA'' each time it appears in paragraph (c), by removing the
phrase ``for purposes of Sec. 416.2080'' at the end of paragraph (d),
and by revising the section heading and paragraphs (a) and (b) to read
as follows:
Sec. 416.2090 State funds transferred for supplementary payments.
(a) Payment transfer and adjustment. (1) Any State which has
entered into an agreement with SSA which provides for Federal
administration of such State's supplementary payments shall transfer to
SSA:
(i) An amount of funds equal to SSA's estimate of State
supplementary payments for any month which shall be made by SSA on
behalf of such State;
(ii) An amount of funds equal to SSA's estimate of administration
fees for any such month determined in the manner described in
Sec. 416.2010(b)(1); and
(iii) If applicable, an amount of funds equal to SSA's
determination of the costs incurred by the Federal government in
furnishing additional services for the State as described in
Sec. 416.2010(b)(2).
(2) In order for SSA to make State supplementary payments on behalf
of a State for any month as provided by the agreement, the estimated
amount of State funds referred to in paragraph (a)(1)(i) of this
section, necessary to make those payments for the month, together with
the estimated amount of administration fees referred to in paragraph
(a)(1)(ii) of this section, for that month, must be on deposit with SSA
on the State supplementary payment transfer date, which is the fifth
Federal business day following the day in the month that the regularly
recurring monthly supplemental security income payments are issued. The
additional services fee referred to in paragraph (a)(1)(iii) of this
section, shall be on deposit with SSA on the date specified by SSA. The
amount of State funds paid to SSA for State supplementary payments and
the amount paid for administration fees will be adjusted as necessary
to maintain the balance with State supplementary payments paid out by
SSA on behalf of the State, and administration fees owed to SSA,
respectively.
(b) Accounting of State funds. (1) As soon as feasible, after the
end of each calendar month, SSA will provide the State with a statement
showing, cumulatively, the total amounts paid by SSA on behalf of the
State during the current Federal fiscal year; the fees charged by SSA
to administer such supplementary payments; any additional services fees
charged the State; the State's total liability therefore; and the end-
of-month balance of the State's cash on deposit with SSA.
(2) SSA shall provide an accounting of State funds received as
State supplementary payments, administration fees, and additional
services fees, within three calendar months following the termination
of an agreement under Sec. 416.2005.
(3) Adjustments will be made because of State funds due and payable
or amounts of State funds recovered for calendar months for which the
agreement was in effect. Interest will be incurred by SSA and the
States with respect to the adjustment and accounting of State
supplementary payments funds in accordance with applicable laws and
regulations of the United States Department of the Treasury.
* * * * *
[FR Doc. 96-10058 Filed 4-25-96; 8:45 am]
BILLING CODE 4190-29-P
