[Federal Register Volume 60, Number 67 (Friday, April 7, 1995)]
[Rules and Regulations]
[Pages 17628-17631]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8492]
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DEPARTMENT OF AGRICULTURE
Food and Consumer Service
7 CFR Parts 272 and 273
[Amendment No. 359]
RIN 0584-AB78
Food Stamp Program: Medical Expense Deduction
AGENCY: Food and Consumer Service, USDA.
ACTION: Final rule.
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SUMMARY: This rule finalizes an interim rulemaking published on October
3, 1994. The interim rulemaking amended food stamp regulations to
simplify the means by which households with elderly and disabled
members claim deductions from income for verified, prospective, non-
reimbursed medical expenses.
DATES: The amendments to Sec. 272.1(g)(138), Sec. 273.10(d)(4), and
Sec. 273.21(f)(2)(iv), Sec. 273.21(i) and Sec. 273.21(j)(3)(ii)(C) are
effective May 8, 1995 and must be implemented no later than September
5, 1995. The remaining provisions of the interim rule which are being
adopted as final without change, were effective October 1, 1994.
FOR FURTHER INFORMATION CONTACT: Eligibility and Certification
Rulemaking Section, Certification Policy Branch, Program Development
Division, Food and Consumer Service, USDA, 3101 Park Center Drive,
Alexandria, Virginia, 22302, (703) 305-2496.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be significant and was reviewed by
the Office of Management and Budget under Executive Order 12866.
Executive Order 12372
The Food Stamp Program is listed in the Catalog of Federal Domestic
Assistance under No. 10.551. For the reasons set forth in the final
rule in 7 CFR 3015, Subpart V and related Notice (48 FR 29115), this
Program is excluded from the scope of Executive Order 12372 which
requires intergovernmental consultation with State and local officials.
Regulatory Flexibility Act
This rule has been reviewed with regard to the requirements of the
Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Ellen Haas, the
Under Secretary for Food, Nutrition, and Consumer Services, has
certified that this interim rule will not have a significant economic
impact on a substantial number of small entities. State and local
welfare agencies will be the most affected to the extent that they
administer the Program.
Paperwork Reduction Act
This rule does not contain reporting or recordkeeping requirements
subject to approval by the Office of Management and Budget (OMB) under
the Paperwork Reduction Act of 1980 (44 U.S.C. 3507).
Executive Order 12778
This rule has been reviewed under Executive Order 12778, Civil
Justice Reform. This rule is intended to have preemptive effect with
respect to any State or local laws, regulations or policies which
conflict with its provisions or which would otherwise impede its full
implementation. This rule is not intended to have retroactive effect
unless so specified in the EFFECTIVE DATE paragraph of this preamble.
Prior to any judicial challenge to the provisions of this rule or the
application of its provisions, all applicable administrative procedures
must be exhausted. In the Food Stamp Program the administrative
procedures are as follows: (1) For Program benefit recipients--State
administrative procedures issued pursuant to 7 U.S.C. 2020(e)(1) and 7
CFR 273.15; (2) for State agencies--administrative procedures issued
pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for rules related to
non-quality control (QC) liabilities) or Part 284 (for rules related to
QC liabilities); (3) for Program retailers and wholesalers--
administrative procedures issued pursuant to 7 U.S.C. 2023 set out at 7
CFR 278.8.
Background
On October 3, 1994, the Department published an interim rule at 59
FR 50153 (interim regulation) amending the food stamp regulations to
simplify the means by which households with elderly and disabled
members claim deductions from income for verified, prospective, non-
reimbursed medical expenses. Comments were solicited on the provisions
of the interim rule through December 2, 1994. This final action
addresses the commenters' concerns. Readers are referred to the interim
rule for a more complete understanding of this final action.
The Department received 5 comments on the interim rule. Two of the
commenters supported the interim rule, believing that it benefitted
households and State agencies alike by eliminating unnecessary
reporting requirements. Four of the five commenters raised issues which
are addressed below.
Budgeting of Medical Expenses
A commenter noted that, although the interim regulations require
State agencies to allow households to estimate, prospectively,
recurring medical expenses, they do not explicitly prohibit
retrospective budgeting of those expenses. Such retrospective budgeting
is prohibited by section 5(e) of the Food Stamp Act of 1977, as
amended, 7 USC 2014(e) (Act). Since only households in which all
members are elderly or disabled with no earned income are amongst those
groups of households exempt from retrospective budgeting, the interim
rule's failure to explicitly prohibit the retrospective budgeting of
medical expenses leaves open the possibility that some households'
medical expenses would be budgeted in that manner.
The Department agrees with the commenter that the interim
regulations failed to explicitly prohibit the retrospective budgeting
of medical expenses. Therefore, the Department is amending current
regulations at 7 CFR 273.21(f)(2)(iv) to require that State agencies
prospectively budget recurring medical expenses.
Verification of Medical Expenses
The same commenter requested clarification of the procedures for
State agency action on a household's voluntary report of a change in
medical expenses. Although reporting of changes in medical expenses
during the [[Page 17629]] certification period was not required by the
interim rule, the household was given the option of voluntarily
reporting any changes in medical expenses it incurred between
certifications. If the household voluntarily reported a change in its
medical expenses, the interim rule required the State agency to act on
the change in accordance with current regulations at 7 CFR 273.12(c).
The commenter felt that the reference was unclear and that further
clarification was necessary. The commenter was particularly concerned
about instances in which a household voluntarily reports a change in
medical expenses that would cause a decrease in the household's
allotment. Under current regulations at 7 CFR 273.12(c), the State
agency may act on a reported change that would decrease the household's
allotment or make the household ineligible without verification, though
verification which is required by 7 CFR 273.2(f) has to be obtained
prior to the household's recertification. The commenter felt that it
should be clear in the regulatory language at 7 CFR 273.2, that if the
household voluntarily reports a change in its recurring medical
expenses that would decrease its allotment, the State agency should act
on the change without requiring the household to verify it.
The Department agrees with the commenter that, with respect to
State agency action on a household's voluntary report of changes in
medical expenses, additional clarification of the requirements is
desirable. Therefore, the Department is amending 7 CFR 273.10(d)(4) and
7 CFR 273.21(i) and (j)(iii)(C) to describe the procedures for acting
on a household's voluntary report of changes in its medical expenses.
The State agency is required to verify reported changes that would
increase a household's allotment. The State agency has the option of
either requiring verification prior to acting on the changes, or
requiring the verification prior to the second normal monthly allotment
after the change is reported. In the case of a reported change that
would decrease the household's allotment, or make the household
ineligible, the State agency shall act on the change without
verification, though verification which is required by 7 CFR 273.2(f)
has to be obtained prior to the household's recertification.
Restored Benefits
A commenter stated that the interim rule should have provided for
restoration of benefits back to October 1, 1991; the effective date of
section 1717 of the Mickey Leland Memorial Domestic Hunger Relief Act
of 1990 (1990 Leland Act), Title XVII, Public Law 101-624. The
commenter argued that, because the Department failed to issue
regulations in connection with section 1717 of the 1990 Leland Act,
elderly and disabled households were wrongfully denied allotments based
on recurring medical expenses during the period beginning October 1,
1991 (the effective date of section 1717 of the 1990 Leland Act) to
October 1, 1994 (the effective date of the October 3, 1994 interim
rule). The commenter believed that the interim regulations should
permit these households to receive restored benefits back to October 1,
1991.
Another commenter, however, questioned the need for the restoration
of benefits under the interim rule. The commenter noted that under
previous regulations, eligible households were receiving allowable
medical expense deductions and that the interim rule merely simplified
the process through which households can claim that deduction. Since
eligible households were already receiving a deduction, the commenter
asked in what case would a household be entitled to restored benefits.
The Department agrees with the second commenter that restored
benefits are not necessary in connection with the interim rule. The
provisions of the interim rule did not change eligibility requirements
for the medical deduction, but only simplified reporting procedures for
claiming the deduction. Households that claimed the deduction under the
previous rules should have received a benefit similar to that received
under current rules.
It could be argued that some eligible households may have refrained
from claiming the medical deduction under the old rules because they
felt that the former reporting requirements were too exacting, and that
if the simplification provisions of the October 3, 1994 interim
regulation had been published by the effective date of the 1990 Leland
Act, those households would have claimed the medical deduction.
However, restored benefits would not be appropriate for such households
since the Department's former reporting requirements were consistent
with the statute and within the Department's discretion. Therefore,
such households could not argue they were wrongfully denied benefits.
At the time the 1990 Leland Act was enacted, the Department
believed that its then existing regulations adequately addressed the
intent of section 1717. This claim was made in a proposed rule
(Miscellaneous Provisions of the Mickey Leland Memorial Domestic Hunger
Relief Act, June 28, 1991, 56 FR 29594), and no comment was received to
the contrary. After learning that some States may have been confused
and were misapplying the reporting requirements, the Department first
issued regional memoranda and then exercised its discretion to revise
and simplify its rules in a way designed to ease the reporting burden
on both households and State agencies.
The Department maintains that its old rules satisfied the
requirements of section 1717 of the 1991 Leland Act. Under the rules
that existed at that time, a household's medical expense deduction for
the certification period was still based on the household's
prospectively estimated recurring medical expenses and there was no
change in the procedures that occur at the time of certification or
recertification. Households were, however, required to report
unanticipated changes of $25 or more which occurred during the
certification period.
The major simplification provision of the interim rule was the
elimination of the household's requirement to report unanticipated
changes of $25 or more in its medical expenses that it experienced
during the certification period. The Department believes that this
simplification was not required by section 1717 of the 1990 Leland Act
but was within the discretion of the Department to further simplify
medical deduction reporting procedures for households and beleaguered
State agencies alike.
The Department disagrees with the commenter that households
eligible for the medical deduction should be issued restored benefits.
First, the provisions of the interim rule merely simplified
discretionary reporting requirements and did not alter eligibility
requirements. Households eligible for the medical deduction would have
received essentially the same benefit under the old rules as they did
under the interim regulations. Second, though some households may have
refrained from claiming the medical expense deduction because of the
reporting requirements connected with the deduction, the Department
contends that since the regulations in effect prior to the interim rule
were reasonably within the Department's discretion when implementing
the medical expense provisions of the 1990 Leland Act, no household was
wrongly denied benefits.
Consistent with the above, the Department is not amending the
interim regulations to provide for the restoration [[Page 17630]] of
benefits back to October 1, 1991 for households eligible for the
medical expense deduction. The Department, however, is amending the
interim regulations at 7 CFR 272.1(g)(138) to eliminate the requirement
that restored benefits be issued back to October 1, 1994, the effective
date of the interim rule, for households converted to the interim
rule's procedures after the effective date. As noted by the second
commenter, households eligible for the medical expense deduction were
receiving correct deductions under prior regulations, and thus restored
benefits are not necessary. If the household properly reported and
verified its allowable medical expenses, it should have received the
correct amount of benefits.
On a related issue, a commenter wrote that State agencies should be
required to notify eligible households immediately of the provisions of
the interim rule. The interim rule required State agencies to implement
the changes in medical deduction policy on October 1, 1994, and all
households that newly apply for Program benefits on or after October 1,
1994 would be subject to the interim rule procedures. For households
participating prior to October 1, 1994, the interim rule required that
they be subject to the new provisions at their request, at the time of
recertification, or when their case is next reviewed, whichever occurs
first. The State agency is required to provide restored benefits to
such households back to the required implementation date or the date of
application, whichever is later.
The commenter felt that since households are unlikely to know about
the changes in medical deduction policy required by the October 3, 1994
interim rule and, therefore, are unlikely to request benefit conversion
to the new policy, State agencies should be required to notify
households of the provisions of the interim rule immediately and not
wait until the household's next recertification or case review. The
commenter noted that households with elderly or disabled persons are
likely to have longer certification periods, perhaps up to 24 months.
Therefore, waiting until a household's next recertification could delay
implementation of the interim rule's provisions for several years. The
commenter also contended that restored benefits are insufficient
because they force vulnerable, hungry households to go without benefits
during the certification period when they most need the assistance.
The provisions of the interim rule simplify the means by which
households with elderly and disabled members can claim the medical
deduction. Those provisions benefit both eligible households and State
agencies by reducing the reporting burden associated with the
deduction. The Department agrees with the commenter, therefore, that it
is in the best interest of both households and State agencies for
eligible households to be made aware of the interim rule's procedures
as soon as possible. Therefore, the Department is revising the
implementation regulations of the interim rule at 7 CFR 272.1(g)(138)
to require that State agencies notify all households eligible for the
medical expense deduction of the change in medical deduction reporting
procedures and of their right to be converted to those new procedures
immediately. The method of notification is being left up to the State
agencies.
Another commenter requested clarification of a State agency's
obligation to establish claims or provide supplemental benefits to
households as a result of the changes in medical deduction policy. As
noted above, a household's medical deduction is based on expenses
reported at certification and changes in those expenses that can be
reasonably anticipated. The household does not have to report any
changes in its medical expenses during the certification period. The
State agency would learn of any difference between the deduction and
actual costs at the household's next recertification, when the
household would be required to report and verify all of its current
medical expenses. However, the State agency would not be allowed to
apply this information to the previous (i.e., ending) certification
period.
Because of the change in policy regarding the reporting of medical
expenses during the certification period, the State agency shall not
issue supplements to or establish claims against households that choose
not to report and/or verify changes in medical expenses when they occur
during the certification period. The Department is amending the interim
regulations at 7 CFR 273.10(d)(4) to clarify this requirement.
Implementation
Under the interim rule, the provisions addressed in this final rule
were effective October 1, 1994. The Department received one comment
criticizing the short implementation time of the interim rule. The
commenter wrote that State agencies are put in an awkward position
whenever regulatory changes are made effective prior to the date of
release of a regulation. This anomaly, the commenter noted, usually
results because of the statutory implementation date of a provision.
The provisions of the October 3, 1994 interim rule, however, were
discretionary, and the commenter felt that the Department could have
afforded State agencies a reasonable period of time for implementation.
The Department understands the difficulties State agencies
encounter when the effective date of a rule precedes its publication
date. However, the Department felt that, due to apparent misapplication
of the reporting requirements by some State agencies, the provisions of
the interim rule were important enough to warrant a retroactive
implementation date. In addition, in the Spring of 1994, the Department
informed State agencies through its regional offices of the likelihood
of a change in regulations regarding the medical expense deduction,
thus giving State agencies the opportunity to do advanced planning in
regard to implementing the rule. No change in the interim rule's
effective date is being made in this final rule.
The provisions of this final action which adopt as final without
change provisions of the interim rule were effective as of October 1,
1994. The provisions of this final action which require alteration of
State procedures are to be effective May 8, 1995 and must be
implemented no later than September 5, 1995.
Any variance resulting from the implementation of the provisions of
this final rule shall be excluded from quality control error analysis
for 120 days from the required implementation date in accordance with 7
CFR 275.12(d)(2)(vii).
List of Subjects
7 CFR Part 272
Alaska, Civil rights, Food stamps, Grant programs-social programs,
Reporting and recordkeeping requirements.
7 CFR Part 273
Administrative practice and procedure, Aliens, Claims, Food stamps,
Fraud, Grant programs--social programs, Penalties, Records, Reporting
and recordkeeping requirements, Social security.
Accordingly, the interim rule amending 7 CFR 272 and 273 which was
published at 59 FR 50153 on October 3, 1994, is adopted as a final rule
with the following changes:
1. The authority citation for 7 CFR parts 272 and 273 continues to
read as follows:
Authority: 7 U.S.C. 2011-2032. [[Page 17631]]
PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES
2. In Sec. 272.1, paragraph (g)(138) is revised to read as follows:
Sec. 272.1 General terms and conditions.
* * * * *
(g) Implementation * * *
(138) Amendment No. 359 The provision of Amendment No. 359
regarding the medical expense deduction is effective and must be
implemented no later than October 1, 1994. Any variances resulting from
implementation of the provisions of this amendment shall be excluded
from error analysis for 120 days from this required implementation date
in accordance with 275.12(d)(2)(vii) of this chapter. The provision
must be implemented for all households that newly apply for Program
benefits on or after the required implementation date. State agencies
must notify households eligible for the deduction of the change in
medical deduction reporting requirements and the right of the household
to be converted to those new procedures immediately. The current
caseload shall be converted to these provisions at the household's
request, at the time of recertification, or when the case is next
reviewed, whichever occurs first.
* * * * *
PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS
3. In Sec. 273.10, the eighth sentence of paragraph (d)(4) is
removed, and three new sentences are added to the end of paragraph to
read as follows:
Sec. 273.10 Determining household eligibility and benefit levels.
* * * * *
(d) Determining deductions. * * *
(4) Anticipating expenses. * * * If the household voluntarily
reports a change in its medical expenses, the State agency shall verify
the change in accordance with Sec. 273.2(f)(8)(ii) if the change would
increase the household's allotment. The State agency has the option of
either requiring verification prior to acting on the change, or
requiring the verification prior to the second normal monthly allotment
after the change is reported. In the case of a reported change that
would decrease the household's allotment, or make the household
ineligible, the State agency shall act on the change without requiring
verification, though verification which is required by Sec. 273.2(f)(8)
shall be obtained prior to the household's recertification.
* * * * *
4. In Sec. 273.21:
a. Paragraph (f)(2)(iv) is amended by adding the words ``, except
medical expenses,'' after the words ``prorated over two or more
months'' in the first sentence, and by adding a new sentence after the
first sentence.
b. The third sentence of paragraph (i) is revised and a fourth
sentence is added.
c. Paragraph (j)(3)(iii)(C) is revised.
The revisions and addition read as follows:
Sec. 273.21 Monthly Reporting and Retrospective Budgeting (MRRB).
* * * * *
(f) Calculating allotments for households following the beginning
months. * * *
(2) Income and deductions. * * *
(iv) * * * Medical expenses shall be budgeted prospectively. * * *
* * * * *
(i) Verification. * * * If the household voluntarily reports a
change in its medical expenses, the State agency shall verify the
change in accordance with Sec. 273.2(f)(8)(ii) before acting on it if
the change would increase the household's allotment. In the case of a
reported change that would decrease the household's allotment, or make
the household ineligible, the State agency shall act on the change
without requiring verification, though verification which is required
by Sec. 273.2(f)(8)(i) shall be obtained prior to the household's
recertification.
(j) State agency action on reports. * * *
(3) Incomplete filing. * * *
(iii) * * *
(C) If a household fails to verify a change in reported medical
expenses in accordance with Sec. 273.2(f)(8), and that change would
increase the household's allotment, the State agency shall not make the
change. The State agency shall act on reported changes without
requiring verification if the changes would decrease the household's
allotment, or make the household ineligible.
* * * * *
Dated: March 30, 1995.
Ellen Haas,
Under Secretary for Food, Nutrition, and Consumer Services.
[FR Doc. 95-8492 Filed 4-6-95; 8:45 am]
BILLING CODE 3410-30-U
