Rescinded 1989

SSR 81-9: Pass Along of Future SSI Cost-of-Living Increases in Hold-Harmless States

SSR 81-9

PURPOSE:

To state new policy implementing the pass along of future supplemental security income (SSI) cost-of-living and other general increases so that that part of the State supplement payments that are presently borne entirely at Federal expense in certain States (Hawaii, Massachusetts, Wisconsin) will continue to be borne entirely at Federal expense.

CITATIONS (AUTHORITY):

Sections 1616 and 1618 of the Social Security Act, as amended; Section 401 of the Social Security Amendments of 1972, as amended by Section 2(b) of Public Law (P.L.) 94-585, and Section 504 of P.L. 94-566; Regulations No. 16, sections 416.2001, 416.2020, 416.2025, 416.2035, 416.2040, 416.2045, 416.2047, 416.2050, 416.2055, 416.2080, 416.2082, 416.2085, 416.2090, and 416.2095-416.2098.

PERTINENT HISTORY:

Current policy (mandated by Section 401 of the 1972 Social Security Amendments and expanded by Regulations No. 16, Subpart T, §416.2080) limits State fiscal liability for federally administered Supplementation to the total amount of the State's 1972 nonfederal share of expenditures as aid or assistance under the State plans. This "hold-harmless" protection applies only, however, to that portion of the State supplementary payment which does not exceed the difference between the adjusted payment level (APL) (defined below) and the "benefits under title XVI of the Social Security Act, plus income not excluded under section 1612(b) of such act."

As defined in the Act and the regulations, the APL is the amount of money payment which an individual with no other income would have received in January 1972. The difference between the APL and the "SSI benefit plus other countable income" equals a protected State payment. The annual sum of all protected payments is then compared to the 1972 nonfederal share of expenditures. A State reaches "hold-harmless" when the total of the State's protected payments for any given year exceeds the non-federal share of expenditures for 1972. At that point, the Federal Government begins to assume fiscal liability for all protected payments in that State for the remainder of the year.

In the past, cost-of-living raises in the Federal SSI benefits have increased the State's fiscal liability in these calculations. As the SSI standard increases, the difference between the APL and "SSI payment plus other income" deceases, yielding a smaller portion of protected State payment. Eventually, the amount of the SSI benefit periodically raised to reflect increases in the cost of living) would equal and then surpass the APL (a frozen amount based on January 1972 grants amounts). At such point, the State would not have any protected payments which could be applied in reaching the State's 1972 nonfederal share of expenditures. In any event, the Federal Government only assumes liability for protected State payments to the extent that those payments exceed the State's 1972 nonfederal share of expenditures. The State assumes full liability for the supplements when the protected payments in a year do not equal the State's 1972 nonfederal share of expenditures.

Section 2(b) of P.L. 94-585, signed into law on October 21, 1976, amends Section 401(a)(2) of the 1972 Social Security Amendments. (P.L. 94-566, signed into law on October 20, 1976, contains an identical amendment, with the exception of the duration of applicability. P.L. 94-566 provides that the amendment will be effective for 2 years—after June 30, 1977, and before July 1, 1979. P.L. 94-585 has no such limit on the duration, but simply provides that the amendment will be effective after June 30, 1977. Since P.L. 94-585 was signed 1 day later than P.L. 94-566, both statutes effectively continue "hold-harmless" protection through 1979 and P.L. 94-585 continues it thereafter.) Generally, Section 2 of P.L. 94-585 mandates that the State agree to maintain the supplementary payments at levels in effect for December 1976. Thus in effect, the States would pass along Federal cost-of-living increases by not reducing their supplementary payment levels. Section 2(b) of this law provides that, in the "hold-harmless" States, the Federal Government will continue to bear the same financial responsibility with respect to the State supplement payments despite these increases. Specifically, the amendment adds a new sentence to the ""hold-harmless" formula referred to above which reads: "In determining the differences between the level specified in subparagraph (A) (APL) and the benefits and income described in subparagraph (B) (SSI benefits plus countable income), there shall be excluded any part of any such benefits which results from (and would not be payable but for) any cost-of-living increase in such benefits (or any general increase enacted by law in the dollar amounts referred to in such section) becoming effective after June 30, 1977."

POLICY STATEMENT:

All cost-of-living increases in the Federal SSI benefit, or any general increase in such benefit enacted by law, effective after June 30, 1977, shall be excluded from the computation of protected State payments used for determining the limitation of State fiscal liability according to the "hold-harmless" provisions set forth in Section 401 of the Social Security Amendments of 1972. The States which still retain hold-harmless protection will be permitted to pass on Federal SSI increases to beneficiaries entirely at Federal expense. The exclusion of the Federal cost-of-living and general increases in the hold-harmless computation will apply to individuals receiving Federal SSI benefits and the State supplement, as well as individuals receiving the State supplement only. The latter group of individuals would not receive a Federal benefit because their countable income equaled or exceeded the Federal benefit level. Thus, for individuals receiving a supplement only in the three remaining "hold-harmless" States, Hawaii, Massachusetts, and Wisconsin, any increase will be borne at Federal expense. This will effectuate the provisions of Section 2 of P.L. 94-585 and the clear congressional intent expressed at Senate Report 94-1265, 94th Congress, Second Session, page 28 (1976). Accordingly, the amount of the cost-of-living increase will be subtracted from the SSI benefit found in the "hold-harmless" formula (APL less "SSI benefit plus other income" equals protected State payment). In cases where an individual's countable income is high enough that he or she is not eligible for any Federal SSI benefit but is eligible for an optional State supplement payment, so that a cost-of-living or general increase will yield only a small Federal SSI benefit, or none at all, the cost-of-living or general increase will be subtracted first from the SSI benefit if any and any excess will then be subtracted from the countable income portion of the "hold-harmless" formula, dollar for dollar. In this manner, the State will continue to receive the full "hold-harmless" protection which was intended.

FURTHER INFORMATION:

This exclusion of cost-of-living or general increases from the calculation of protected State payments can be accomplished by adding the maximum amount of each such increase to each APL. No States other than the three named above are affected by these laws at this time. This policy has no effect on States which administer their own supplements. Of the States with Federal administration, all but Hawaii, Massachusetts, and Wisconsin are currently spending less than they spent for the nonfederal share of expenditures in 1972 according to the "hold-harmless" formula in Section 401(a)(2) of the Social Security Amendments of 1972. Appropriate amendments will be made to Regulations No. 16, Subpart T.

Final regulations covering the policies in this Program Policy Statement were published in the Federal Register on August 18, 1980, at 45 FR 54742.


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