6114 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations

or exceed the amount set forth in

§ 15.03.

PART 18—REPORTS BY TRADERS

4. The authority citation for part 18

continues to read as follows:

Authority: 7 U.S.C. 2, 4, 6a, 6c, 6f, 6g, 6i,

6k, 6m, 6n, 12a, and 19; 5 U.S.C. 552 and

552(b) unless otherwise noted.

5. Part 18 is amended by adding a

new § 18.03 as follows:

§ 18.03 Delegation of authority to the

Director of the Division of Economic

Analysis.

The Commission hereby delegates,

until the Commission orders otherwise,

the authority to make special calls on

traders for information as set forth in

§§ 18.00, 18.04 and 18.05 to the Director

of the Division of Economic Analysis to

be exercised by the Director or by such

other employee or employees of the

Director as may be designated from time

to time by the Director. The Director of

the Division of Economic Analysis may

submit to the Commission for its

consideration any matter which has

been delegated in this paragraph.

Nothing in this paragraph prohibits the

Commission, at its election, from

exercising the authority delegated in

this paragraph.

6. Section 18.04 is amended by

removing paragraph (d) and by revising

the introductory text to read as follows:

§ 18.04 Statement of reporting trader.

Every trader who holds or controls a

reportable options or futures position

shall after a special call upon such

trader by the Commission or its

designee file with the Commission a

‘‘Statement of Reporting Trader’’ on the

Form 40 at such time and place as

directed in the call. All traders shall

complete part A of the Form 40 and, in

addition, shall complete:

Part B—If the trader is an individual, a

partnership or a joint tenant.

Part C—If the trader is a corporation or

type of trader other than an individual,

partnership, or joint tenant.

* * * * *

PART 19—REPORTS BY PERSONS

HOLDING BONA FIDE HEDGE

POSITIONS PURSUANT TO § 1.3(z) OF

THIS CHAPTER AND BY MERCHANTS

AND DEALERS IN COTTON

7. The authority section for part 19

continues to read as follows:

Authority: U.S.C. 6g(a), 6i, and 12a(5),

unless otherwise noted.

8. Section 19.00 is amended by

revising paragraph (a)(1) to read as

follows:

§ 19.00 General provisions.

(a) * * *

(1) All persons holding or controlling

options or futures positions that are

reportable pursuant to § 15.00(b)(1)(ii) of

this chapter and any part of which

constitute bona fide hedging positions

as defined in § 1.3(z) of this chapter,

* * * * *

Issued in Washington, D.C., January 31,

1997 by the Commission.

Catherine D. Dixon,

Assistant to the Secretary of the Commission.

[FR Doc. 97–3395 Filed 2–10–97; 8:45 am]

BILLING CODE 6351–01–P

SOCIAL SECURITY ADMINISTRATION

20 CFR Part 404

RIN 0960–AE31

Cycling Payment of Social Security

Benefits

AGENCY: Social Security Administration

(SSA).

ACTION: Final rules.

SUMMARY: Historically, Social Security

benefits generally have been paid on the

3rd of each month. As a result of our

ongoing efforts to improve service to our

customers, we are establishing

additional days throughout the month

on which Social Security benefits will

be paid. Current beneficiaries are not

affected.

EFFECTIVE DATE: These final rules are

effective May 1, 1997.

FOR FURTHER INFORMATION CONTACT: Lois

Berg, Legal Assistant, Division of

Regulations and Rulings, Social Security

Administration, 6401 Security

Boulevard, Baltimore, MD 21235, (410)

965–1713. For information on

eligibility, claiming benefits, or coverage

of earnings, call our national toll-free

number, 1–800–772–1213.

SUPPLEMENTARY INFORMATION:

Background

The second phase of the National

Performance Review (NPR), the Federal

Reinventing Government effort, was

announced by the President and Vice

President on December 19, 1994. It was

designed to focus attention on what

each agency does, examining its mission

and looking at its programs and

functions to see if there are ways to

provide better service to the public and,

at the same time, do business in a more

cost-effective manner, i.e., ‘‘make

government work better and cost less.’’

Each agency was asked to assemble a

team to review its own programs and

functions. SSA’s team worked closely

with a team of representatives from NPR

and the Office of Management and

Budget (OMB) to develop

recommendations for the Vice

President’s consideration.

On April 11, 1995, the White House

formally approved SSA’s reinvention

proposals and officially announced

them the next day. One of these

proposals was to cycle the payment of

benefits.

Recipients of Old-Age, Survivors and

Disability Insurance (OASDI) benefits

and Supplemental Security Income

(SSI) payments currently are paid in the

first few days of each month. While

these specific payment days have never

been required by the Social Security Act

(the Act), which in §§ 205(i) and

1631(a)(1) commits the time for making

benefit payments to the discretion of the

Commissioner of Social Security, it has

been our longstanding administrative

practice to make payment on these days.

Monthly benefits are paid to all OASDI

beneficiaries on the same day (generally

the 3rd day of each month for the

preceding month) and to all SSI

beneficiaries on the same day (generally

the 1st day of each month for which the

payment is due).

Over the years, a trend has developed

that has resulted in deterioration of

services we provide face-to-face or over

the telephone on and around our

payment days. This phenomenon is

described fully below and is of

particular concern to us in light of the

Agency’s commitment to provide

‘‘world class’’ service to our

beneficiaries and customers.

Executive Order 12862, issued on

September 11, 1993, mandates that the

standard of quality for services provided

to the public for all government

agencies shall be ‘‘customer service

equal to the best in the business.’’ This

standard has been incorporated into

SSA’s goal of providing ‘‘world class’’

public service. For example, when you

conduct business with us, we have set

as goals that:

• When you make an appointment to

talk with someone at one of our field

offices, we will serve you within 10

minutes to the scheduled time.

• When you call our toll-free 800

number, you will get through to it

within 5 minutes of your first try.

SSA’s current practice of paying 47

million beneficiaries within the first 3

days of each month results in a large

surge of work during the first week of

each month. This surge includes a large

number of visitors to field offices and

calls to our toll-free 800 number to

report nonreceipt of a check, question

the amount paid, or ask about other

payment-related issues. Approximately
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations 6115

9 percent of all calls during check week

concern nonreceipt, compared to 3

percent during the rest of the month. As

an example of the surge that occurs

around the current payment days, on

April 3, 1995, 1,091,282 calls were

placed to SSA’s 800 number. On April

14, 1995, the number of calls placed to

our 800 number decreased to 229,022.

It is important to beneficiaries and

customers to be able to reach SSA with

fewer busy signals, and we have

pledged to enable callers to get through

to the 800 number within 5 minutes of

their original attempt. However, in fiscal

year (FY) 1994, during peak periods,

customers encountered busy signals on

SSA’s 800 number 40–63 percent of the

time and had to wait more than 5

minutes to get through about 30 percent

of the time. This delay often occurs at

a time when it may be the most critical

for the individual to reach us, to report

a lost check, for example. Anyone who

experiences a delay in reaching us to

report a lost check also faces a delay in

receiving a replacement check. Since

many beneficiaries rely solely on their

Social Security benefits, this can be a

real hardship for them.

Our goal is for our customers to have

minimal waits for service when visiting

a Social Security field office. Today,

SSA does not always meet this goal. In

FY 1994 there were 24 million visitors

to our field offices. While the average

wait during check week for individuals

with an appointment was 8 minutes,

some individuals with appointments

had to wait over 2 hours. Thirty-two

percent of the visitors to our offices

without appointments in FY 1994

(typically people who have questions

related to their payments or who want

to report payment delivery problems)

had to wait more than 30 minutes after

arriving to be served. The average wait

during check week for individuals

without appointments was 16 minutes,

although some individuals without

appointments had to wait over 3 hours.

This can be a particular hardship to

those who are elderly or disabled, as

well as to people who might take off

from work to come to our offices.

The demographic and resource

challenges we will face over the next 25

years will make it even more difficult

for us to meet our service-delivery

objectives. Currently, we pay 47 million

OASDI and SSI beneficiaries within the

first three days of each month. Due to

the aging of the ‘‘baby boomer’’

generation, by the year 2020, we will be

paying about 75 million beneficiaries, a

60 percent increase over today’s

beneficiary population. This will place

an unprecedented demand on our

benefit delivery system.

We are concerned that, in the next 25

years, with the prospect of about 75

million beneficiaries all receiving their

payments on single days, there will be

a serious deterioration in our service to

the public, and we will not be able to

provide the kind of service to which we

are committed. The growth in

beneficiary population is expected to

place an even greater strain on SSA’s

resources at the beginning of the month.

At the same time that the number of

SSA customers is growing, SSA’s

resources are being reduced. Public Law

103–226 mandates an overall 12 percent

reduction of Federal staffing levels by

1999, and this will impact SSA’s

resources. As a result, we are

particularly concerned that we will not

be able to cope with the monthly

workload peaks and still maintain our

goal of being readily accessible to the

public unless we make significant

changes in the way in which we deliver

service.

In the future, the increased number of

beneficiaries and customers plus the

mandated reduction of Federal staffing

levels will have a real impact on the

public’s ability to contact us. This will

be especially hard on individuals during

check week (currently the first week in

each month that benefits are paid) when

the system will be overloaded. Check

week is the time that beneficiaries often

have the most urgent need to reach us

to report nonreceipt or other problems

related to their payment, and to request

a replacement check.

Each attempted phone contact by an

SSA beneficiary, whether over or under

age 65, may represent a personal crisis

due, for example, to nonreceipt of

benefits. Social Security benefits affect,

in particular, nearly all individuals age

65 and over in the United States (U.S.).

For a significant proportion of

individuals over age 65, the benefits

represent 90 percent or more of their

total income. For these beneficiaries,

nonreceipt is not an abstract concept or

statistic. It may represent the difference

between paying rent or mortgage

payments on time or late. It may mean

the ability to purchase food. It may

represent lack of gasoline or busfare to

get to a medical appointment. A phone

contact or visit may be by a recent

widow(er) who is reporting the death of

her/his spouse. One successful

telephone call may be all that is

necessary to enable SSA to convert

retirement benefits as a spouse into

higher widow(er)’s benefits. An

unsuccessful phone contact could

prevent us from holding back payments

to the deceased individual and

scheduling benefits to the newly

widowed beneficiary. When individuals

are unsuccessful at reaching us by

telephone, either they, or a friend or

family member, may take time off from

work to come into a field office. Any

additional delay waiting in the field

office causes them to lose even more

time from work.

Today, we are attempting to cope with

the uneven workload pattern in order to

maintain our level of service through a

series of administrative and

management initiatives. For example, at

the beginning of the month, we redeploy

staff from other work to handle the

increase in telephone inquiries which

sometimes exceeds two million calls a

day. While this practice has been

generally successful so far, it will not

continue to be as effective in the future

when the number of beneficiaries

increases substantially and our staffing

decreases.

We are considering all our options in

preparing for this increase in SSA’s

workloads and staff reductions and,

accordingly, are looking for ways to

reengineer our various processes to

allow us to achieve our world class

customer service goals and, at the same

time, increase efficiency and

productivity to the maximum extent

possible. It is clear, though, that SSA’s

goal to achieve a level of world class

customer service cannot be realized

unless our workloads are evened out.

This is critical to providing better access

to SSA’s services for our beneficiaries

and customers.

The release of all OASDI and SSI

payments on single days also has an

adverse effect on certain sectors of the

economy. Based on meetings we held

with representatives of the banking and

business community, the Department of

the Treasury (DT), the Federal Reserve

System (FRS) and the U.S. Postal

Service (USPS), it is clear that the large,

once-a-month OASDI and SSI payment

files are creating many problems. The

banking and business community, the

DT, FRS and the USPS all have to bear

the expense of providing sufficient

resources and processing capacity to

deal with OASDI and SSI payments as

they flow through the national payment

system at the beginning of the month.

This capacity is not needed throughout

the remainder of the month.

Equally significant is the growing

operational risk that is associated with

SSA’s current payment pattern.

Representatives from several large

financial institutions made it clear that

when the Social Security direct deposit

payment file becomes available for

processing from FRS, they stop all other

business and devote their entire

operation to ensuring the file is

processed quickly and accurately.
6116 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations

Because of the inordinately large

number of payments involved, these

institutions must ensure that nothing

goes wrong as the file passes through

the national payment system and is

deposited into individual customers’

accounts. Any event that adversely

affects the operational capacity of DT,

FRS or a large financial institution in

the 1 to 4 day window prior to the 3rd

of the month may result in the delay or

nonreceipt of literally millions of Social

Security benefit payments which could

create hardship for SSA beneficiaries.

Leveling the Social Security payment

files through cycling will help prevent

this operational risk and resulting

hardship.

In order to improve our service to the

public, both now and in the future, we

will spread the payment of OASDI

benefits throughout the month, rather

than continue to make all benefit

payments on single days at the

beginning of the month. That is, we will

establish several additional payment

days for each month, and pay the full

monthly benefit to some beneficiaries

on the first of those payment days, to

other beneficiaries on the second of

those payment days, and so forth. The

payment day, or cycle, on which a

beneficiary is paid generally will not be

changed, so that if you are paid on the

second payment day in one month you

will be paid on the second payment day

in each succeeding month as well. This

approach, which we call ‘‘cycling of

payments,’’ will level the workload

peaks associated with our current

practice of paying all benefits on the

same day. Since calls and visits

associated with receipt of the monthly

benefit payment will be distributed

throughout the month, rather than

concentrated in a few days, there will be

shorter waiting times for assistance and

we will be able to achieve or sustain our

world class service to the public.

It is important to note that payment

cycling will not change the way benefits

are computed. We will continue to

follow the same rules in determining

month of entitlement and the payment

amount. People whose benefits are

cycled will receive the same amount

they would receive if they were paid on

the 3rd of the month.

The benefits to society of

implementing payment cycling are

potentially significant but extremely

difficult to estimate. Cycling will benefit

members of the public in that they will

have better access to SSA services,

including shorter waiting times in field

offices and when calling the 800

number, as SSA’s workloads increase in

the future. Cycling will benefit the

business and banking communities in

that they will be better able to utilize

their resources throughout the month,

processing Social Security payments on

a weekly basis. Cycling will also reduce

the risk involved in processing large

once-a-month files. If we continue to

pay all beneficiaries on single days

once-a-month, SSA’s service to the

public will deteriorate, and the adverse

impact that the once-a-month payments

have on the business and financial

community will continue, as will the

growing operational risk that goes along

with processing all benefit payments at

one time.

After considering how best to

implement the reinvention proposal to

cycle the timing of benefit payments, we

have decided the following:

1. We will establish three additional

payment days throughout the month

(i.e., the second, third and fourth

Wednesdays of the month) on which

individuals may be paid. This schedule

will alleviate to the maximum extent

possible the current Monday workload

peak which is also now being

experienced by SSA’s toll-free 800

number and field offices when the

payment day falls on Friday, Saturday,

Sunday or Monday, which occurs more

than half of the time.

2. We will implement payment

cycling prospectively only for new

OASDI beneficiaries whose claims are

filed on or after May 1, 1997. Payments

to current beneficiaries will not be

cycled, as they are already in the

established pattern of receiving their

benefits on the third of the month.

In the notice of proposed rulemaking

(NPRM) we indicated that we proposed

to implement payment cycling by

January 1997. However, we are delaying

implementation because we anticipate

heavy workloads between December

1996 and March 1997 due to recently

enacted legislation, and we believe it

would be unwise to begin payment

cycling during that time. The May 1,

1997 implementation date was also

selected to allow SSA, DT and FRS, who

share responsibility for delivery of

SSA’s payments, sufficient time to

complete the essential modifications

required before cycling can begin.

Moreover, publishing the final

regulation several months in advance of

the implementation date allows the

business and financial community lead

time to prepare for cycling.

3. We will assign one of the newly

established payment days to each new

OASDI beneficiary based on the date of

birth of the person on whose record

entitlement is established (the insured

individual). Generally, new OASDI

beneficiaries who receive auxiliary or

survivors benefits on an insured

individual’s record will be assigned to

the payment day based on the insured

individual’s date of birth. Insured

individuals born on the 1st through the

10th of the month will be paid on the

second Wednesday of each month.

Insured individuals born on the 11th

through the 20th of the month will be

paid on the third Wednesday of each

month. Insured individuals born after

the 20th of the month will be paid on

the fourth Wednesday of each month.

With the few exceptions described

below, no new OASDI beneficiaries will

receive payments on the 3rd of the

month.

Individuals who are being paid

benefits on one record on the 3rd of the

month, and who become entitled on

another record after April 30, 1997

without a break in entitlement, will

continue to receive all benefits on the

3rd of the month.

After April 30, 1997, individuals who

become entitled on one record and later

entitled on another record, without a

break in entitlement, will be paid all

benefits to which they are entitled no

later than their current payment day.

They will not be assigned a later

payment day as long as they remain

continuously entitled. We believe this

change from our proposed rule is

desirable to ensure that those

individuals who have become

accustomed to receiving their payments

on a certain day are not required to wait

an additional 1 to 2 weeks for payment

when the second entitlement begins. We

have had to establish an interim process

to implement this change until such

time as systems enhancements can fully

support a permanent process. Under the

interim process, these individuals will

be assigned a payment day based on the

new entitlement situation or, if that is

later than the current payment day, they

will be paid on the 3rd of the month.

Under the permanent process,

individuals will be assigned whichever

payment day is earlier: the current

payment day or the payment day which

would be assigned based on the new

entitlement situation.

4. We may accommodate some

beneficiaries currently being paid on the

3rd of the month who voluntarily wish

to change to the payment day that

would be selected by the date of birth

criteria described above, in order to

accelerate the workload leveling effect

of cycling. For example, we plan to

allow them to volunteer to switch if

only one person is being paid on the

record or, if there are other beneficiaries

being paid on the same record, all others

agree, in writing, to the change.

However, once a volunteer is assigned

to a new payment day, that day will be
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations 6117

permanent and the person will not be

allowed to change back to the 3rd of the

month. We will not allow beneficiaries

being paid on one of the three new days

to switch to a different payment day.

5. We will not include persons

receiving SSI payments, and persons

concurrently entitled to both OASDI

and SSI benefits, in payment cycling.

Since SSI is a needs-based program, we

believe we should continue to pay these

individuals as early in the month as

possible. Concurrently entitled

individuals who lose eligibility for SSI

will continue to be paid on the 3rd.

6. We will not apply payment cycling

to OASDI beneficiaries whose income is

deemed to SSI beneficiaries. The reason

is that most deeming cases involve

family members who receive Federal

income maintenance benefits. Those

family units should continue to receive

payments as early in the month as

possible. Likewise, payment cycling

will not apply to OASDI beneficiaries

who, due to their income and/or

resources, are not entitled to SSI but the

State in which they live covers their

Medicare premium. The Health Care

Financing Administration requested

that these OASDI beneficiaries be paid

early in the month.

7. Payment cycling will not apply to

beneficiaries living in a foreign country.

For those beneficiaries who will be paid

by check because SSA does not have

direct deposit arrangements with the

country in which they reside, foreign

check delivery is often unreliable.

However, with one delivery day on the

3rd of the month it is easier to target

when checks should be received than if

they were sent four times throughout

the month. Also, since foreign

beneficiaries do not have access to the

800 number or to SSA’s field offices in

the country where they reside, these

facilities will not be adversely affected

if we continue to pay foreign

beneficiaries on the 3rd of the month.

The presence of a foreign address for

any beneficiary on a Social Security

record will mean that all beneficiaries

on that record will be paid on the 3rd

of the month. The reason is that, for

operational purposes, we are assigning a

single payment day for all individuals

who receive benefits on the earnings

record of a particular individual. Once

a beneficiary has reported a foreign

address and all individuals receiving

benefits on that account are changed to

the 3rd of the month, the payment day

for all of them will remain the 3rd of the

month even if the person with the

foreign address returns to the U.S. This

is to prevent potential confusion caused

by beneficiaries frequently leaving and

entering the U.S.

8. We will notify affected

beneficiaries in writing of the particular

monthly payment day that is assigned to

them. However, the assignment of a

payment day is not an initial

determination and is not appealable.

Beneficiaries have never been able to

choose their payment day and will not

be able to choose a payment day under

payment cycling except under very

specific and limited circumstances.

Early Consultations

Prior to publishing the NPRM, we

conducted 10 focus group meetings at 5

locations around the country to solicit

comments and obtain reaction from the

public to cycling payments throughout

the month. Two meetings were held in

each location: one with current

beneficiaries age 21 and over and one

with future beneficiaries age 21 and

over. After we described our future

workload projections and resultant

service delivery deterioration, the vast

majority of future beneficiaries with

whom we met said they would not mind

being paid later in the month.

We also conducted a series of separate

meetings with stakeholders including

representatives from the business

community, financial community, other

government agencies and advocacy

groups. The overwhelming consensus of

opinion among all stakeholders who

participated was that SSA should

implement some form of payment

cycling.

Comments on NPRM

On January 26, 1996, we published

proposed regulations in the Federal

Register at 61 FR 2654 and provided a

60-day period for interested individuals

to comment. On February 15, 1996 we

held an informational briefing for

representatives of groups and

organizations, and any others, who were

interested in attending, to provide

details and to answer questions on how

SSA proposed to implement payment

cycling.

In response to the NPRM, we received

comments from 17 commenters. Most of

the comments came from financial

institutions, financial trade associations,

and State and local human services

agencies, as well as DT. Several

comments came from individuals who

did not identify themselves as

representing any particular organization

or advocacy group.

The comments on the proposed rules

were overwhelmingly favorable. Fifteen

commenters, including both

organizations and individuals, fully

supported payment cycling. Only two

individuals expressed opinions against

the proposed change. The majority of

commenters also agreed with SSA’s

decision not to cycle current

beneficiaries.

Most of the financial institutions who

commented indicated that payment

cycling would help them to provide

better customer service on or around

payment days. One also mentioned

payment cycling easing concerns they

currently have for the safety of bank

employees and customers on payment

days due to the large amount of cash

they have on hand on those days.

One commenter who identified

herself as a future beneficiary who

would be covered by payment cycling

said she supported it because she wants

SSA to be able to provide the best

possible service for current beneficiaries

and for her when she is eligible to file

for benefits. A human services agency

that supported payment cycling said it

is aware of the problems clients

currently encounter getting through to

SSA on or around payment days. The

agency also mentioned cycling as being

a crime deterrent, since it is well known

that checks arrive on the 3rd.

Only two commenters from the

financial community responded to

SSA’s request for information from the

business and financial community about

the incremental cost or savings to them.

One of these two commenters, who fully

supported payment cycling, said ‘‘* * *

gradual enrollment of beneficiaries and

anticipated increase in the number of

beneficiaries make it difficult to

determine the costs the banking

industry will be able to avoid as a result

of the adoption of this policy.’’ This

commenter said, ‘‘In addition to

eventual long-term cost savings, there

are also payment system risk reduction

effects flowing from this proposal.’’ The

other commenter who responded to this

request from SSA, and who also fully

supported payment cycling, said since it

applies prospectively to new

beneficiaries, it will not reduce their

current expenses and that it is difficult

to quantify future savings at this time.

Some of those who supported

payment cycling suggested changes in

some of the specific details about

cycling. One of the two individuals who

were not in favor of payment cycling

also submitted comments. Following are

summaries of those suggested changes

and comments and our responses to

them:

Comment: One commenter said that

instead of SSA’s toll free 800 number

being busy at the beginning of the

month (and SSA having the rest of the

month to get caught up with its other

work), the toll free 800 number will be

consistently busy throughout the month.
6118 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations

This will make it more difficult for SSA

to get caught up with its work.

Response: In cycling benefit

payments, SSA’s objective is to improve

public service by reducing the

inordinate workload peak that now

occurs when all payments are delivered

at the beginning of the month. By

leveling SSA’s workload, the public will

be able to get a consistent level of

quality service at any time of the month.

It is true that eventually payment

cycling will have an effect upon SSA’s

workforce. Employees may receive more

telephone inquiries and field office

contacts in the last 2 weeks of the

month than occur today. Again, this is

the purpose of payment cycling. By

leveling workloads, the public is better

served because it consistently has better

access to SSA services. At the same

time, SSA is in a position to make better

use of its available resources.

Comment: The same commenter was

concerned that there will be additional

work and expense for SSA because

someone who now receives two types of

benefits (one on his/her own record and

one on a spouse’s record) will now

receive two checks. Receiving one check

later in the month will cause more

people to call with inquiries about

receipt of the second check. This will

also cost SSA more (i.e., the costs

associated with disbursing two checks).

Response: SSA’s intent is to pay each

entitled beneficiary all monies due on

one day regardless of whether they are

dually entitled on their own work

record and that of a spouse. For

example, a woman who receives

benefits on her husband’s record, but is

also entitled on her own work record,

would receive benefits on the payment

date assigned based on her birth date.

On that date, she would receive a

payment reflecting the combined

amount of her own benefits and the

excess due for the ‘‘wife’s benefit.’’

Comment: This same commenter was

concerned that payment cycling is more

favorable to someone whose birthday is

earlier in the month. Some people will

not receive their payment until 3 or 4

weeks after the month for which they

are due, whereas someone whose

payment is not cycled receives it only

3 days after the month for which it is

due.

Response: There are two issues

mentioned. First, it is true that in using

the method of cycling based on birth

dates, individuals born early in the

month receive their benefits earlier each

month. But any formula designed to

evenly distribute future beneficiaries’

payments throughout the month (e.g.,

using the last 2 digits of a person’s

social security number) will produce the

same result. The birth date formula was

unanimously favored by members of the

public who participated in SSA’s focus

groups in that it was the easiest for them

to relate to and understand.

Second, this raises an issue of

perception. Beneficiaries who are paid

on the second, third and fourth

Wednesdays of the month for the

previous month’s entitlement may

perceive that they are not receiving the

same level of service as someone who is

paid on the 3rd of the month. This was

not an issue that concerned participants

in SSA’s focus groups. These

individuals indicated that because they

had not yet begun receiving Social

Security benefits, it was not of concern

whether their future benefits were paid

on the 3rd of the month or on the

second, third or fourth Wednesdays

because once their payments start, they

would be paid consistently at the same

monthly interval. Further, these same

focus group participants recognized that

unless SSA did something to level

workloads that now occur at the

beginning of the month, their ability to

file a claim, have a question answered

or otherwise receive prompt service was

being jeopardized as the Agency’s

workloads increased.

Comment: The above commenter also

believed it is unfair to pay SSI

recipients and OASDI beneficiaries who

qualify for Qualified Medicare

Beneficiary (QMB) payments early in

the month while paying all other OASDI

beneficiaries later in the month,

particularly since some of these OASDI

beneficiaries miss qualifying for SSI by

a small amount. In a similar vein,

another commenter recommended that

two additional groups of individuals be

excluded from payment cycling: those

living below 200% of the poverty level

and those who would face ‘‘undue

hardship’’ if they received their benefits

after the 3rd of the month.

Response: SSA can readily identify

SSI recipients as those individuals of

limited means. Accordingly, we will

exempt anyone who receives SSI from

having their payment cycled. However,

we have no information relating to the

economic circumstances of anyone

receiving OASDI benefits to enable us to

determine who is of limited means.

Even if we did, we would have to

establish a benchmark at some level.

Whatever benchmark SSA established,

there would be individuals who fall just

below the mark and those who fall just

above the mark. Therefore, we continue

to believe that the use of the SSI means

test is appropriate from both a policy

and operational perspective.

We do not believe that creating

additional criteria for an ‘‘undue

hardship’’ test is necessary. Indeed,

people who otherwise would have been

paid on the 3rd of the month will now

be paid later in the month as a result of

payment cycling. However, we believe

the improved access to SSA’s services

for all beneficiaries and customers, as

well as the benefits to the banking and

business community which will enable

them to provide better customer service,

and the reduction of the risk involved

in processing large once-a-month files

outweigh the effects of being paid later

in the month. Moreover, as mentioned

by many of the focus group participants,

individuals paid consistently on the

second Wednesday of the month from

the inception of their entitlement are

receiving the same level of service as

individuals paid on the 3rd of the

month from the inception of their

entitlement. In addition, already limited

SSA staff and resources would have to

be assigned to administer an ‘‘undue

hardship’’ test.

Comment: One commenter thought

SSA should assign the payment day for

cycled payments based on something

other than the date of birth. The

commenter believed using the date of

birth means banks would need to know

the customer’s date of birth in order to

process customer inquiries. The

commenter also indicated the banking

industry does not know a customer’s

date of birth and some customers will

not give out that information or do not

know it. A suggestion was to use the

first initial of the customer’s last name

to assign the payment day. However,

another commenter said that using

birthdays to determine distribution

‘‘makes a great deal of sense in evening

out the workload.’’ And still another

commenter suggested giving

beneficiaries a sticker showing the

payment day which they could place in

a prominent place in their house so the

date would be easily available.

Response: SSA considered a number

of options in developing a means of

evenly distributing payments

throughout the month. In addition to the

alpha formula suggested in this

comment, SSA considered using the last

2 digits of the individual’s Social

Security number. Any of these methods

would result in a random distribution of

payments. However, the fact that

people’s surnames often change makes

using the alpha formula more complex.

SSA selected the birth date formula

based on the unanimous endorsement of

this method by those members of the

public who participated in the Agency’s

focus groups. All participants expressed

their belief that the public would relate

best to a formula based on a person’s

date of birth.
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations 6119

To do all it can to minimize potential

problems like those cited in this

comment, SSA plans to provide all new

beneficiaries with a written notice

informing the individual of his or her

assigned payment date. Included with

the written notice will be a pamphlet

explaining payment cycling and a

calendar providing the individual with

the scheduled payment dates.

Comment: Several commenters urged

SSA to consider requiring all benefits to

be paid by direct deposit.

Response: Since these comments were

made, Public Law 104–134, the

Omnibus Consolidated Rescissions and

Appropriations Act of 1996, has been

signed. This law requires, with limited

exceptions, anyone who files for

government benefits after July 25, 1996,

to be paid by direct deposit. In addition,

with certain limited exceptions, the

legislation requires that by 1999, all

government benefits be paid by direct

deposit, even for those who began

receiving payments before July 26, 1996.

However, without payment cycling,

SSA and the financial community will

still experience workload surges the first

10 days of the month in terms of direct

deposits all occurring at the same time,

calls to SSA and to the financial

institutions concerning crediting of the

direct deposit, the amount of the

deposit, or many other issues related to

the benefit, as well as bank customers

wanting to make withdrawals as soon as

the direct deposit is made.

Comment: Several commenters

thought SSA should schedule the

delivery of cycled benefits on assigned

payment dates rather than the planned

Wednesday schedule. They believed

this would be less confusing for

customers than having to remember

which Wednesday is their payment day.

However, another commenter, a nonprofit electronic banking trade

association, said its members supported

paying on Wednesdays. The commenter

said many beneficiaries currently

become confused about when they will

receive their payments if the 3rd is on

a holiday or weekend. The commenter

believed Wednesday payments will

clear up this confusion.

Response: SSA gave the payment

schedule under cycling a great deal of

consideration. We decided on the

Wednesday schedule for the following

reasons:

• If the objective of payment cycling

is to improve service by providing the

public with better access to SSA

through a leveling of workloads, then

Wednesday payments offer the best

opportunity to achieve this. Any fixed

date schedule (e.g., the 10th, 17th and

24th of the month) will fall on a Friday,

Saturday, Sunday or Monday 57 percent

of the time. This is likely to exacerbate

the workload peaks now experienced by

SSA every Monday;

• A Wednesday schedule avoids the

problem of having to adjust payment

dates because the date coincides with a

Saturday or Sunday; and

• A Wednesday schedule avoids the

problem of having to adjust payment

dates because the date coincides with a

Federal holiday to the maximum extent

possible.

Again, SSA plans to provide payment

schedules to both the financial

community and the public to minimize

questions or confusion regarding the

date on which beneficiaries will be

paid.

Comment: One commenter said that

SSA should clarify how these payments

should be counted for means-tested

programs, such as AFDC, food stamps

and AFDC-related Medicaid.

Response: We do not issue rules

governing these other programs and

have no authority to decide how our

payments should be counted for those

programs. It is not clear, however, that

any changes are necessary. Certainly,

SSA will provide any additional

guidance to State and local governments

that may be needed about our

procedures. As it has done for the past

56 years, Social Security will continue

to pay future OASDI beneficiaries in the

month following the month of

entitlement.

Comment: Two commenters wanted

an appeals process available for those

beneficiaries for whom receiving their

benefit payment later in the month

creates a hardship.

Response: The payment date has

never been appealable and SSA does not

plan to make it appealable or establish

a new appeals process. This decision is

based on a number of considerations.

First, all individuals of limited means

(i.e., those identified at or below the

poverty level through their entitlement

to SSI) will not be affected by payment

cycling. Accordingly, they will receive

both their SSI and Social Security

benefits at the beginning of the month.

It is true that people who otherwise

would have been paid on the 3rd of the

month will now be paid later in the

month as a result of payment cycling.

However, we believe the improved

access to SSA’s services for all

beneficiaries and customers, as well as

the benefits to the banking and business

community which will enable them to

provide better customer service, and the

reduction of the risk involved in

processing large once-a-month files

outweigh the effects of being paid later

in the month. Moreover, SSA’s decision

reflects the advice given by members of

the public who participated in the

Agency’s focus groups. These

individuals expressed a strong belief

that someone who has not yet begun to

receive Social Security benefits is not

disadvantaged if they receive their

payment on any of the assigned

Wednesdays from the outset of their

entitlement.

Establishing an appeals process

would place an undue administrative

burden on SSA and could defeat the

purpose of payment cycling.

Comment: One commenter indicated

disapproval of payment cycling but gave

no reasons. Therefore, we cannot

respond.

Comment: One commenter said that

in some States, individuals can be

eligible for State payment of their

Medicare premium under the QMB and

Specified Low Income Medicare

Beneficiary programs but not eligible for

Medicaid. Therefore, the commenter

said the regulations should be clarified

to make certain that all individuals

whose Medicare premium is paid by the

State are excluded from payment

cycling.

Response: We are adopting this

comment and revising § 404.1807(c)(4)

to clarify that all OASDI beneficiaries

whose Medicare premiums are paid by

the State in which they live are

excluded from payment cycling.

Comment: One commenter urged SSA

to include current beneficiaries in

payment cycling by splitting current

recipients into two groups that would be

processed as two primary cycles and to

add new beneficiaries to two secondary

cycles on alternate weeks.

Response: Prior to publishing the

NPRM, SSA considered including

current beneficiaries in payment

cycling. We rejected this option because

shifting the payment date of one half of

current beneficiaries one week later

would disrupt monthly payment

arrangements for 22 million current

OASDI recipients. Further, without a

one-time ‘‘bridge payment’’ (a one-time

additional payment which would cover

the period of time from the 3rd of the

month to their first payment day) of up

to $3.3 billion, affected beneficiaries

would be required to wait more than 5

weeks between benefit payments during

the month of transition. Without

legislation, SSA does not have authority

to issue this type of special adjustment

payment. Current beneficiaries who

participated in focus groups were

unanimous in their opinion that SSA

should not change the monthly payment

patterns of beneficiaries currently on the

rolls. Finally, the majority of
6120 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations

commenters agreed with SSA’s decision

not to cycle current beneficiaries.

Comment: One commenter

recommended that SSA launch a

comprehensive educational program to

advise all stakeholders of the new

payment dates once adopted.

Response: Individual beneficiaries

whose benefits are cycled will receive

an informational pamphlet explaining

payment cycling and a calendar

providing them with the scheduled

payment dates. Also, SSA is putting

together informational material about

payment cycling which will be made

available to financial institutions and

businesses to help them respond to any

concerns raised by their customers.

After considering the comments on

the proposed regulations, we have

changed § 404.1807(c)(4), as discussed

above in the response to the public

comment. Also, upon further

consideration, we have decided to

revise § 404.1807(c)(5) to show that

individuals who become entitled on one

record and later entitled on another

record, without a break in entitlement,

will be paid all benefits to which they

are entitled no later than their current

payment day. In addition, we have

made several nonsubstantive changes to

the proposed regulations. We are,

therefore, publishing these regulations

as final regulations.

Regulatory Procedures

Executive Order 12866

We have determined that these final

regulations meet the criteria for a

significant regulatory action under

Executive Order 12866. Therefore, we

prepared and submitted to OMB an

assessment of the potential benefits and

costs of this regulatory action. This

assessment also contains an analysis of

alternative policies we considered and

chose not to adopt. It is available for

review by members of the public by

contacting SSA.

Regulatory Flexibility Act

These final regulations affect when

Social Security recipients receive their

payments. Recipients are not small

entities within the definition of the

Regulatory Flexibility Act. Therefore,

these final regulations will not have a

significant impact on a substantial

number of small entities.

Paperwork Reduction Act

These final regulations impose no

reporting/recordkeeping requirements

necessitating clearance by OMB.

(Catalog of Federal Domestic Assistance

Program Nos. 96.001 Social SecurityDisability Insurance; 96.002 Social SecurityRetirement Insurance; 96.003 Social SecuritySpecial Benefits for Persons Aged 72 and

Over; 96.004 Social Security-Survivors

Insurance)

List of Subjects in 20 CFR Part 404

Administrative Practice and

Procedure, Blind benefits, Old-Age,

Survivors and Disability Benefits;

Reporting and recordkeeping

requirements; Social Security.

Dated: January 28, 1997.

Shirley S. Chater,

Commissioner of Social Security.

For the reasons set forth in the

preamble, subparts J and S of part 404

of chapter III of title 20 of the Code of

Federal Regulations are amended as set

forth below.

PART 404—FEDERAL OLD-AGE,

SURVIVORS AND DISABILITY

INSURANCE (1950– )

Subpart J—[Amended]

1. The authority citation for subpart J

of part 404 continues to read as follows:

Authority: Secs. 201(j), 205(a), (b), (d)–(h),

and (j), 221, 225, and 702(a)(5) of the Social

Security Act (42 U.S.C. 401(j), 405 (a), (b),

(d)–(h), and (j), 421, 425 and 902(a)(5)); 31

U.S.C. 3720A; sec. 5, Pub. L. 97–455, 96 Stat.

2500 (42 U.S.C. 405 note); secs. 5, 6 (c)–(e),

and 15, Pub. L. 98–460, 98 Stat. 1802 (42

U.S.C. 421 note).

2. Section 404.903 is amended by

removing the word ‘‘and’’ at the end of

paragraph (q), and by removing the

period at the end of paragraph (r) and

adding a semicolon and the word ‘‘and’’

in its place, and adding paragraph (s) to

read as follows:

§ 404.903 Administrative actions that are

not initial determinations.

* * * * *

(s) The assignment of a monthly

payment day (see § 404.1807).

Subpart S—[Amended]

3. The authority citation for subpart S

of part 404 is revised to read as follows:

Authority: Secs. 205 (a) and (n), 207,

702(a)(5), and 708(a) of the Social Security

Act (42 U.S.C. 405 (a) and (n), 407, 902(a)(5)

and 909(a)).

4. Section 404.1805 is amended by

revising paragraph (a)(3) to read as

follows:

§ 404.1805 Paying benefits.

(a) * * *

(3) The time at which the payment or

payments should be made in accordance

with § 404.1807.

* * * * *

5. Section 404.1807 is added to read

as follows:

§ 404.1807 Monthly payment day.

(a) General. Once we have made a

determination or decision that you are

entitled to recurring monthly benefits,

you will be assigned a monthly payment

day. Thereafter, any recurring monthly

benefits which are payable to you will

be certified to the Managing Trustee for

delivery on or before that day of the

month as part of our certification under

§ 404.1805(a)(3). Except as provided in

paragraphs (c)(2) through (c)(6) of this

section, once you have been assigned a

monthly payment day, that day will not

be changed.

(b) Assignment of payment day. (1)

We will assign the same payment day

for all individuals who receive benefits

on the earnings record of a particular

insured individual.

(2) The payment day will be selected

based on the day of the month on which

the insured individual was born.

Insured individuals born on the 1st

through the 10th of the month will be

paid on the second Wednesday of each

month. Insured individuals born on the

11th through the 20th of the month will

be paid on the third Wednesday of each

month. Insured individuals born after

the 20th of the month will be paid on

the fourth Wednesday of each month.

See paragraph (c) of this section for

exceptions.

(3) We will notify you in writing of

the particular monthly payment day that

is assigned to you.

(c) Exceptions. (1) If you or any other

person became entitled to benefits on

the earnings record of the insured

individual based on an application filed

before May 1, 1997, you will continue

to receive your benefits on the 3rd day

of the month (but see paragraph (c)(6) of

this section). All persons who

subsequently become entitled to

benefits on that earnings record will be

assigned to the 3rd day of the month as

the monthly payment day.

(2) If you or any other person become

entitled to benefits on the earnings

record of the insured individual based

on an application filed after April 30,

1997, and also become entitled to

Supplemental Security Income (SSI)

benefits or have income which is

deemed to an SSI beneficiary (per

§ 416.1160), all persons who are or

become entitled to benefits on that

earnings record will be assigned to the

3rd day of the month as the monthly

payment day. We will notify you in

writing if your monthly payment day is

being changed to the 3rd of the month

due to this provision.

(3) If you or any other person become

entitled to benefits on the earnings

record of the insured individual based

on an application filed after April 30,
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations 6121

1997, and also reside in a foreign

country, all persons who are or become

entitled to benefits on that earnings

record will be assigned to the 3rd day

of the month as the monthly payment

day. We will notify you in writing if

your monthly payment day is being

changed to the 3rd of the month due to

this provision.

(4) If you or any other person become

entitled on the earnings record of the

insured individual based on an

application filed after April 30, 1997,

and are not entitled to SSI but are or

become eligible for the State where you

live to pay your Medicare premium

under the provisions of § 1843 of the

Act, all persons who are or become

entitled to benefits on that earnings

record will be assigned to the 3rd day

of the month as the monthly payment

day. We will notify you in writing if

your monthly payment day is being

changed to the 3rd of the month due to

this provision.

(5) After April 30, 1997, all

individuals who become entitled on one

record and later entitled on another

record, without a break in entitlement,

will be paid all benefits to which they

are entitled no later than their current

payment day. Individuals who are being

paid benefits on one record on the 3rd

of the month, and who become entitled

on another record without a break in

entitlement, will continue to receive all

benefits on the 3rd of the month.

(6) If the day regularly scheduled for

the delivery of your benefit payment

falls on a Saturday, Sunday, or Federal

legal holiday, you will be paid on the

first preceding day that is not a

Saturday, Sunday, or Federal legal

holiday.

[FR Doc. 97–3205 Filed 2–10–97; 8:45 am]

BILLING CODE 4190–29–P

DEPARTMENT OF VETERANS

AFFAIRS

38 CFR Part 17

RIN 2900–AH89

VA Homeless Providers Grant and Per

Diem Program Clarification of Per

Diem Eligibility

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

SUMMARY: This document amends the

regulations implementing the VA

Homeless Providers Grant and Per Diem

Program concerning per diem assistance

by: Establishing more detailed criteria

for determining which entities are

eligible for obtaining per diem

assistance; establishing a priority for

funding eligible entities: Clarifying the

requirements for continued receipt of

per diem payments; and clarifying the

maximum amount payable for per diem

assistance. This rule is designed to

ensure that the appropriate entities

receive the appropriate amount of per

diem assistance under fair and objective

procedures.

EFFECTIVE DATES: March 13, 1997.

FOR FURTHER INFORMATION CONTACT:

Roger Casey, VA Homeless Providers

Grant and Per Diem Program, Mental

Health Strategic Health Group (116E),

Department of Veterans Affairs, 810

Vermont Avenue, NW, Washington, DC

20420; (202) 273–8442. (This is not a

toll-free number.)

SUPPLEMENTARY INFORMATION: In the

Federal Register of July 16, 1996 (61 FR

37024), VA published a proposal to

amend the regulations implementing the

VA Homeless Providers Grant and Per

Diem Program. Interested persons were

invited to submit written comments on

or before September 16, 1996. No

comments were received. The

information presented in the proposed

rule document still provides a basis for

this final rule. Therefore, based on the

rationale set forth in the proposed rule

document, we are adopting the

provisions of the proposed rule as a

final rule with changes discussed below

and with nonsubstantive changes.

Paperwork Reduction Act

Information collection and

recordkeeping requirements associated

with this final rule concerning VA

Homeless Providers Grants (38 CFR

17.710–17.714) have been approved by

OMB under the provisions of the

Paperwork Reduction Act (44 U.S.C.

3501–3520) and have been assigned

OMB Control Number 2900–0554. The

regulations require that the application

for VA Homeless Providers Grants be

submitted on VA forms included in the

application package. The corresponding

form numbers are included in the text

of the rule.

Information collection and

recordkeeping requirements associated

with this final rule concerning the VA

Homeless Providers Per Diem have not

been approved by OMB under the

provisions of the Paperwork Reduction

Act. OMB has withheld approval

pending review of any comments

received. VA intends to obtain OMB

control numbers for the information

collection requirements concerning VA

Homeless Providers Per Diem. Once

OMB approval is received, OMB control

numbers will be announced by a

separate Federal Register document.

VA is not authorized to impose a

penalty on persons for failure to comply

with information collection

requirements which do not display a

current OMB control number, if

required.

Regulatory Flexibility Act

The Secretary hereby certifies that the

provisions of the final rule will not have

a significant economic impact on a

substantial number of small entities as

they are defined in the Regulatory

Flexibility Act (RFA), 5 U.S.C. 601–602.

In all likelihood, only similar entities

that are small entities will participate in

the Homeless Providers Grant and Per

Diem Program, therefore, pursuant to 5

U.S.C. 605(b), this final rule is exempt

from the initial and final regulatory

flexibility analysis requirement of

sections 603 and 604.

The Catalog of Federal Domestic

Assistance program number is 64.024.

List of Subjects in 38 CFR Part 17

Administrative practice and

procedure, Alcohol abuse, Alcoholism,

Claims, Day care, Dental health, Drug

abuse, Foreign relations, Government

contracts, Grant programs-health, Grant

programs-veterans, Health care, Health

facilities, Health professions, Health

records, Homeless, Medical and dental

schools, Medical devices, Medical

research, Mental health programs,

Nursing homes, Philippines, Reporting

and record-keeping requirements,

Scholarships and fellowships, Travel

and transportation expenses, Veterans.

Approved: January 31, 1997.

Jesse Brown,

Secretary of Veterans Affairs.

For the reasons set forth in the

preamble, 38 CFR part 17 is amended as

set forth below:

PART 17—MEDICAL

1. The authority citation for part 17

continues to read as follows:

Authority: 38 U.S.C. 501, 1721, unless

otherwise noted.

§ 17.700 [Amended]

2. In § 17.700, paragraph (a) is

amended by removing ‘‘17.715(a)’’ and

adding, in its place, ‘‘17.716’’.

3. Sections 17.710 through 17.719 are

revised to read as follows:

§ 17.710 Application requirements.

(a) General. Applications for grants

must be submitted in the form

prescribed by VA in the application

package, must meet the requirements of

this part, and must be submitted within

the time period established by VA in the

notice of fund availability under