20 CFR 416.1121(a), 416.1123(b), 416.1124, 416.1142(a), 416.1161(a)(2), and 416.1163

SSR 84-4c

Perez v. Schweiker, 5th Circuit, Civ. No. 81-1293 (1/22/82)

When the Social Security Administration (SSA) determined that the claimant was ineligible for supplemental security income (SSI) benefits because the income deemed to her from her husband exceeded the statutory limit, the claimant appealed. She contended that her husband's income, which consisted solely of title II disability benefits, should have been reduced by the amount of his routine medical treatment expenses before that income was deemed to her because those expenses were expenses of obtaining the title II disability benefits. The district court agreed that the medical expenses were deductible, but the court of appeals found that neither the statute nor the regulations provide for such a deduction. The court of appeals ruled that the medical expenses were not a prerequisite for receiving the title II disability benefits and thus could not be considered expenses of obtaining the income. The claimant also contended that her husband's title II disability benefits should have been excluded from income, under 20 CFR 416.1161(a)(2), as public income-maintenance payments. The court of appeals found, however, that the title II disability benefits are not public income-maintenance payments, as defined in 20 CFR 416.1142(a). In reversing the district court's decision, the court of appeals held that SSA's determination was consistent with the law and that it was supported by substantial evidence.

POLITZ, Circuit Judge:

Mrs. Julia Perez was denied Supplemental Security Income (SSI), 42 U.S.C. §§ 1381 et seq., because her husband's income was "deemed" to be hers, making her ineligible. Following a hearing, the Administrative Law Judge found that under applicable regulations, Mr. Perez's disability benefits under Title II of the Social Security Act should be deemed the income of Mrs. Perez for purposes of determining SSI eligibility. Because the income thus counted exceeded the SSI standard payment amount, Mrs. Perez was declared not eligible.

The Appeals Council's subsequent denial of review became the final decision of the Secretary of Health and Human Services. Mrs. Perez filed suit contending that the Secretary erred in failing to deduct her husband's medical expenses from his Title II disability payments before deeming the income to her. The district court remanded the matter for a determination of the net amount of Mr. Perez's income after deducting his medical expense. We reverse.

This appeal requires a review and analysis of several regulations and consideration of what is and is not found in relevant statutes. SSI is a flat grant amount set by statute and subject to reduction for all of a person's countable income. Countable income, by definition, includes both earned and unearned income. 20 C.F.R. § 416.1115(a) previously provided in pertinent part:

The amount of a beneficiary's countable income . . . is used to determine whether he is . . . eligible for benefits. . . . Countable income . . . is the sum of . . . total earned income . . . and . . . total unearned income. . . .

This regulation since the recodification of October 3, 1980, is now found, without pertinent substantive change, in 20 C.F.R. § 416.1104.

Unearned income includes the income of a spouse which is "deemed" to the applicant, as prescribed by 42 U.S.C. § 1382C(F)(1):

For purposes of determining eligibility for and the amount of benefits for any individual who is married and whose spouse is living with him in the same household but is not an eligible spouse, such individual's income and resources shall be deemed to include any income and resources of such spouse, whether or not available to such individual, except to the extent determined by the Secretary to be inequitable under the circumstances.

The Secretary, pursuant to congressional authorization, has promulgated regulations for administration and application of the program. These regulations explain "deeming," in part, in 20 C.F.R. § 416.1160:

(1) If you live in the same household as your ineligible spouse . . . we look at that person's income to determine whether we must consider (deem) some of it to be your income. . . . (2) We use the term 'deeming' to identify the process of considering another person's income to be your own income. when the rules for deeming apply, it does not matter whether the income of the other person is actually available to you. . . .

Countable income is subtracted from the quarterly standard payment for an eligible couple. That amount for the appellee was $852.30 per quarter. The record reflects that Mr. Perez receives $1,023.30 each quarter in Title II benefits. Deducting the $60 allowed by 20 C.F.R. § 416.1124 (formerly § 416.1165), results in a net amount of $963.30 which exceeds the amount of the SSI payment, thus disqualifying both spouses unless some of Mr. Perez's income is excluded.

Pursuant to congressional directive the Secretary has issued regulations detailing the sums to be excluded from the income equation. Section 416.1123 (formerly § 416.1120), provides that in calculating unearned income, the gross amount is to be reduced by the expenses incurred in getting the income. Prior to recodification the regulation spoke to "ordinary and necessary expenses." We do not find the semantic abbreviation occasions a substantive change. Further exclusions from countable income are found in section 416.1124 (formerly § 416.1145).

The district court concluded that the amount of Mr. Perez's medical expenses should be deducted from his Title II payments. There is an obvious equitable appeal to this position, however, it is not consistent with the regulations and statutory scheme. The Secretary is empowered by 42 U.S.C. § 1382C(F)(1) to determine to what extent deeming of a spouse's income might prove inequitable. The Secretary has not opined that equity demands the exclusion of medical bills from the calculation of unearned income resulting from social security disability payments made to an ineligible spouse. It lies within the Secretary's discretion, as vested by the Congress, to make this determination, giving consideration to the obvious administrative and logistic burden such a regulation would cause. The Secretary's approach to this problem, as reflected in the regulations, is not patently unreasonable.

In further support of the ruling by the ALJ which became the decision of the Secretary, is the recognition that medical expenses are not a prerequisite to receiving Title II funds. It cannot be gainsaid that one receiving disability payments most likely incurs medical expenses associated with the disability, but the existence of medical expenses is not the sine que non of the payments. Mrs. Perez's reliance on the regulation excluding expenses from unearned income is not well placed. The obvious extension of that approach would be to exclude all routine living expenses from the calculation of unearned income, a result which lies outside the reach of the statute. Such an expansion can only come from the legislative branch after consideration of the total impact in administration and cost.

Finally, Mrs. Perez maintains that under the current § 416.1161(a)(2) the Title II payments to Mr. Perez should not be counted. That section prescribes in pertinent part:

For an ineligible spouse or parent. We do not include any of the following types of income . . .
(2) Any public income-maintenance payments (§ 416.1142(A)) your ineligible spouse . . . receives, and any income which was counted or excluded in figuring the amount of that payment;

We are directed to § 416.1142(a) for a detailing of public income-maintenance payments. An examination of that section reflects that such payments include those made under Titles IV-A (aid to Families with Dependent children) and XVI of the Social Security Act, and payments made under the Refugee Act of 1980, the Disaster Relief Act of 1974, general assistance programs of the Bureau of Indian Affairs, Veterans Administration programs and state and local government assistance programs based on need. Title II disability payments are not included.

The decision of the Secretary is consistent with the law and is supported by substantial evidence. The judgment of the district court must be and is REVERSED.

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