Final Rule: Computing a Supplemental Payment in States
AT-86-17
ACTION TRANSMITTAL
OCSE-AT-86-17
DATE: September 8, 1986
TO: State agencies administering child support enforcement plans approved under title IV-D of the Social Security Act and other interested individuals
SUBJECT: Computing a Supplemental Payment in States Required To Do So by Section 402(a)(28) of the Social Security Act - Final Rule
REGULATION REFERENCE: 45 C.F.R. Parts 232 and 233
ATTACHMENT: Attached are final regulations , issued by the Office of Family Assistance which implement section 402(a)(28) of the Social Security Act. Section 402(a)(28) was enacted as a result of the establishment of the title IV-D program in 1975. This statute requires that monthly supplemental payments be made to AFDC recipients who have less disposable income now than they would have had in July, 1975 because child support is paid to the State IV-D agency instead of directly to the family. These regulations provide guidance on how to compute a monthly supplemental payment for AFDC recipients in States required by this statutory provision to pay a supplement.
EFFECTIVE DATE: February 11, 1987
SUPERSEDED MATERIAL: OCSE-AT-80-03
INQUIRIES TO: OCSE Regional Representatives
Deputy Director
Office of Child Support Enforcement
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Family Assistance
45 CFR Parts 232 and 233
Aid to Families With Dependent Children and Child Support Enforcement Program; Computing a Supplemental Payment in States Required To Do So by Section 402(a)(28) of the Social Security Act
AGENCY: Family Support Administration and Office of Family Assistance, HHS.
ACTION: Final rule.
SUMMARY: These final regulations implement section 402(a)(28) of the Social Security Act. They provide guidance on how to compute a monthly supplemental payment for AFDC recipients in States required by this statutory provision to pay a supplement.
In July 1975, the Child Support Program began when Congress enacted part D of title IV of the Social Security Act (the Act).
As a result of that new program, child support payments which had been paid directly to the family by an absent parent are paid instead to the State Child Support Enforcement Agency. Section 402(a)(28) of the Act requires that monthly supplemental payments be made to AFDC recipients who have less disposable income now, because of this diversion of support payments, than they would have had in July 1975. States which had a provision in their plan in July 1975 that would have required a supplemental payment, but which have removed that provision, need not provide a supplemental payment.
These regulations affect assistance payments in State which did not, in July 1975, and which do not now, subtract from a family's assistance payment, "dollar-for-dollar", the amount of any income received.
The provision applies in States that (1) use a method for determining the assistance payment in which all or part of the countable income does not effect an equal reduction in the assistance payment, and (2) also employed such a method in July 1975. The method that the State now uses does not have to be the same as the one in effect in July 1975.
EFFECTIVE DATE: This regulation is effective February 11, 1987.
FOR FURTHER INFORMATION CONTACT: Arleen Gahan, Family Support Administration, Office of Family Assistance, Transportation Building, 2100 Second Street, SW., Washington, DC 20201, telephone (202) 245-2637.
SUPPLEMENTARY INFORMATION:
Timing and Form of Regulations
On February 7, 1980, we published a Notice of Proposed Rulemaking for the Aid to Families with Dependent Children and Child Support Enforcement programs, Computing a Supplemental Payment in States Required to Do So by section 402(a)(28) of the Social Security Act. (See Federal Register, Vol. 45, No. 27, February 7, 1980, pages 8316-8323.)
Background
Prior to enactment of title IV-D of the Social Security Act, which established the Child Support Enforcement Program, child support was paid directly to the family or another person or organization designated by the court. When paid to an AFDC family, this support was counted as income in determining need and the amount of the family's assistance payment. In most States it resulted in a corresponding dollar-for-dollar decrease in the assistance payment received by the family.
Some States, however, have used methods to determine the assistance payment which do not cause a full dollar reduction in the assistance payment for each dollar received as income. These States pay less assistance than their full need standard, and some permit recipients to use their own income to make up all or part of the difference between the payment made by the State and the State's standard of need. This additional income retained by the family increases the total amount of disposable income available to the family in a month.
With the enactment of title IV-D, however, all support payments must be paid to the Child Support Enforcement agency (IV-D agency). In States that had allowed families to keep part of their support payments without those payments causing a corresponding reduction in assistance, families had less disposable income because the child support was paid to the IV-D agency.
To remedy this situation, Congress passed section 202 of Pub. L. 94-88. This section amended title IV-A of the Act by adding section 402(a)(28), which provides that:
In determining the amount of aid to which an eligible family is entitled, any portion of the amounts collected in any particular month as child support pursuant to a plan approved under part D, and retained by the State under section 457, which (under the State plan approved under this part as in effect both during July 1975 and during that particular month) would not have caused a reduction in the amount of aid paid to the family if such amounts had been paid directly to the family, shall be added to the amount of aid otherwise payable to such family under the State plan approved under this part.
The Department interprets this provision to require that families that experience a loss of disposable income, because support payments are made to the IV-D agency, receive a supplemental payment to make up that loss. This interpretation is supported by the report of the House Committee on Ways and Means. The report explains that under the new section 402(a)(28). . . which is directly related to implementation of the new child support and establishment of paternity program, a State plan would have to provide that, in determining the amount of aid to which a family is entitled, any child support collected and retained by the State pursuant to its child support plan under part D of title IV which would not have caused a reduction in aid had the child support been paid directly to the family will be added to the amount of aid otherwise payable to the family. This new requirement would affect States which provide aid to families with dependent children at a rate which is less than their need standard, but permit child support payments to fill the gap between that standard and the actual payment level (H.R. No. 94-368, 94th Cong. 1st Sess. p. 10, (1975)).
Computing the Supplemental Payment
The supplemental payment for each month equals the maximum portion of the support collected on a current month's support obligation less the $50 pass through/disregard and any arrearages collected in that same month that would not make the family ineligible and that would not cause a reduction in the assistance payment if paid directly to the family. It is computed by determining the family's disposable income (including assistance payment and support) two ways, then determining the difference between the two. (Arrearages that are collected from Federal and State Tax refunds are not included in this computation.)
Examples illustrating computations of the supplemental payment and the total assistance payment using six different State payment methods are in Appendix A to this preamble.
In general, the method of computation is described as follows: In following this method, assume that the $50 pass through/disregard of support has been made.
First, the AFDC assistance payment is computed treating the support as income paid to the family. This yields the amount of assistance the family would get under the State's current payment method, if the family received the support payment (instead of the IV-D agency). Then the family's total disposable income under these circumstances is computed. The total disposable income, for purposes of this regulation, is the sum of the assistance payment and the income which is countable in determining the amount of the assistance payment.
Second, the AFDC assistance payment is computed as it is currently done, i.e., treating the support as assigned to the IV-D agency. Then the family's disposable income under these circumstances is computed.
Third, the supplemental payment is computed as the difference between the disposable income under the two prior computations. The final regulation provides that the supplemental payment may be added to the current AFDC assistance payment to make a new total assistance payment for the month or it may be issued separately.
When the family has countable income from one or more sources in addition to child support, all of that other income must be used to reduce the amount of the assistance payment before support is counted. This serves to minimize the size of the supplemental payment and maximize the amount of other income retained. An example illustrating a computation of the supplemental payment and total assistance payment when there is income from a source other than support is provided in Appendix B to this preamble.
The supplemental payment under section 402(a)(28) is an assistance payment under title IV-A and is, therefore, subject to the same regulatory provisions as all other assistance payments. While the computation of the supplemental payment under 45 CFR 232.21 is separate from the computation of the assistance payment under 45 CFR 233.31, both are computed for the same payment month and based on the same set of circumstances. Both payments are subject to the requirements of 45 CFR 233.20(a)(13) for the adjustment of overpayments and underpayments, rounding requirements under 45 CFR 233.20(a)(2)(iv) and the $10 payment limitation under 45 CFR 233.20(a)(3)(viii)(C) and (D). A payment shall not be made to an assistance unit in any month in which the combination of the supplemental payment and the assistance payment is less than $10. Under 45 CFR 233.20(a)(3)(viii)(D), those individuals who are denied a money payment because of this limitation shall be deemed recipients of aid for all other purposes except participation in the Community work Experience Program, regardless of whether the supplemental payment and the assistance payment are issued separately or at the same time.
Recipients of supplemental payments under section 402(a)(28) are entitled to timely and adequate notice and an opportunity for a hearing under 45 CFR 205.10.
Federal Matching Funds
The supplemental payment, whether issued separately or as an addition to the current assistance payment, is an AFDC expenditure for which Federal matching funds are available. As such, the State and Federal governments will be reimbursed for the current assistance payment (and the supplemental payment, if issued separately) out of the collections made on the monthly support obligation under 45 CFR 302.51(b)(2). There are several advantages to making the supplemental payment an AFDC payment rather than a payment made by the IV-D agency. First, assistance recipients who receive a supplemental payment will have existing IV-A program protections, such as hearings and notice rights, which do not currently exist in the IV-D program. The State may issue the payments in the way that is efficient for them. The need for extensive data exchange between the IV-A and IV-D agencies in order to compute the payment is minimized.
The Case of Quarles v. St. Clair
In the Notice of Proposed Rulemaking, the regulations provided that when support collected in a month includes an amount which is a payment of past support obligations, the maximum portion of the total amount collected that would not cause ineligibility would be used to compute the supplemental payment. This was consistent with the decision of the U.S. District Court for the Northern District of Mississippi in the case of Quarles v. St. Clair, et, al. (U.S.D.C., N.D. Miss, No. GC-77-37-K). In that case, plaintiffs challenged the State's policy of applying section 402(1)(28) of the Act only to payment on the current month's support obligations. Plaintiffs contended that, by not applying section 402(a)(28) requirements to arrearages, the State was not placing the family in the same financial position it would have been in prior to the Child Support Enforcement program.
In deciding the case, the court held that the requirements of section 402(a)(28) of the Act apply to support in excess of the current month's support obligation, but only to the extent the payment would not affect the family's AFDC eligibility if received as income.
On August 12, 1983, the Court of Appeals, 711 F. 2d 691 (5th Cir., 1983), upheld the lower court decision. These final regulations are fully consistent with the decision pertaining to section 402(a)(28).
Examples illustrating computations of the assistance payment when the total support collection for a month exceeds the month's obligation are in Appendix C to this preamble.
Discussion of Comments
On February 7, 1980, these regulations were published in the Federal Register as a Notice of Proposed Rulemaking (45 FR 8316) with a 60-day comment period. Comments on the NPRM were received from 12 interested parties. One from the attorney for the plaintiffs in Quarles v. St. Clair and the remainder from State IV-A and IV-D agencies. A discussion of the substantive comments follows.
Comment: Prior to the publication of the NPRM, State agencies were computing the payment required under 402(a)(28) based on the amount collected on the current month's support obligation, and some were making payments from the IV-D collections. Arrearages were not included in the computation.
Some of the commenters complained that the inclusion of arrearages in the computation of the 402(a)(28) payment would reduce the incentive payments that States are entitled to receive under title IV-D.
Another commenter questioned whether the typical assistance unit would benefit from the use of arrearage payments. He stated that out of his State's entire collection and payment record for one month, only one family with active support received a supplemental payment and that payment was $9.72.
One commenter emphasized that the Department must issue regulations for the treatment of arrearages to prevent a recurrence of the situation that existed in Mississippi prior to the Quarles case.
Response: As previously stated in the Preamble to this section, the Department has adopted the opinion in Quarles concerning arrearage payment and has decided to apply it nationally. Accordingly, the largest portion of the arrearage payment (in addition to the amount paid on the monthly support obligation) that would not cause ineligibility must be used in determining the supplemental payment. The amount of arrearages collected must be reported to the IV-A agency by the IV-D agency and included in the computation of the supplemental payment, however, effective with the 1984 Child Support Amendments, incentive payments are based on the total amount of support collected (including arrearages). Therefore, the use of arrearages in the computation of the supplemental payment does not affect the incentive payments to States in any way.
However, Federal tax refund offset amounts must be used first to reimburse the State for assistance payments, pursuant to section 464 of the Social Security Act and section 6402(c) of the Internal Revenue Code. Section 464 of the Social Security Act requires that amounts assigned to the State and collected via Federal tax refund offset must be distributed in accordance with § 457(b)(4) or (d)(3) of the Act. Since this statute was enacted subsequent to section 402(a)(28) of the Act and specifies past-due support collected through intercept of Federal tax refunds is to be used to reimburse past assistance, we have determined that Federal tax refund offset amounts are not applicable to supplemental payments required under section 402(a)(28).
Section 6402(c) of the Internal Revenue Code requires that "a reduction under this subsection shall be applied first to satisfy any past-due support which has been assigned to the State under section 402(a)(26) or 471(a)(17)." Therefore, the IRS will offset amounts which have been assigned to the State before offsetting unassigned past-due support. OCSE policy and regulations follow the distribution order mandated for IRS. OCSE regulations at 45 CFR 303.72(h) require States to apply offset collections to assigned arrearages first.
Section 466(a)(3) of the Act requires States to have procedures for collecting overdue support owed by the absent parent via State tax refund offset. The statute also requires that overdue support assigned to the State pursuant to section 402(a)(26) or 471(a)(17) of the Act and collected via State tax refund offset must be distributed in accordance with section 457(b)(4) or (d)(3) of the Act. These sections of the Act refer to amounts assigned to the State which are in excess of current support and require that such amounts be used to reimburse the State for past assistance. Therefore, support collected under the State tax refund offset cannot be used in the computation of the supplemental payment under section 402(a)(28).
Comment: Under the proposed regulations, the supplemental payment required under section 402(a)(28) is a IV-A payment. Concerns were expressed that because of this requirement existing computer programs within IV-D would be obsolete, and reprogramming of IV-A systems would be required.
Response: The Department recognizes that many State agencies have already implemented the requirements of section 402(a)(28). In most States, the IV-D agency has been entirely responsible for the 402(a)(28) payment, while in others the IV-D agency computes the supplemental payment, but payment is actually issued by the IV-A agency. We further recognize that changing procedures already in place would entail some costs. In this regard, we fully considered several alternatives, including permitting States to have either the IV-A agency or IV-D agency issue the payment.
We have decided to leave the supplemental payment under section 402(a)(28) as an assistance payment under title IV-A as previously discussed in the preamble under "Computing the Supplemental Payment." However, in order to be responsive to the States concerns, we have permitted States some flexibility in the procedural aspects of computing and issuing the supplemental payment.
Under the final regulation, a State IV-A agency must be responsible for the computation and issuance of the supplemental payment. As with any IV-A assistance payment, this means that the AFDC State agency is responsible for certifying that the payment is being made to an eligible individual and in a correct amount.
Accordingly, while the IV-A agency may rely on the IV-D agency for the computation of the supplemental payment, such payment will be authorized and issued by the IV-A agency. We rejected the option of permitting States to have the IV-D agency compute and issue the supplemental payment because of the lack of due process mechanisms. The Child Support Enforcement program has neither statutory nor regulatory authority to hold hearings. To require the establishment of such procedures would duplicate procedures already in place under title IV-A and would not be cost effective.
The Department also considered the possibility of permitting States the flexibility of both computing and issuing the supplemental payment through the IV-D agency, but requiring the IV-A agency to take responsibility for providing hearings under the IV-A State plan. However, since these payments would not be authorized as AFDC payments, they would not be subject to the AFDC regulations governing hearings. The Department believes that the better reading of the statute is that 402(a)(28) payments, like regular assistance payments, should be subject to the notices and hearings provided under 45 CFR 205.10. Therefore, it was determined that the IV-A agency, which has the authority to administer or supervise the administration of the title IV-A plan, including hearings, should be responsible for the issuance of the supplemental payment from title IV-A funds. Moreover, proper and efficient administration of the IV-A plan would be fostered by making the IV-A agency totally responsible for the supplemental payment.
Comment: Several State IV-A agencies expressed concern that the added responsibility of computing and issuing supplemental payments would result in increased quality control errors.
Response: We realize that in those States where the supplemental payment under section 402(a)(28) is currently being computed and/or issued by the IV-D agency, there may be potential for an increase in AFDC quality control errors under these regulations. However, we believe that these rules provide the most efficient procedures for issuing the 402(a)(28) supplemental payments. Since both the mechanism for the issuance of assistance payments and the administrative procedures which guarantee due process rights are already in place in the IV-A agency, we believe that the responsibility in the supplemental payment is best placed with the IV-A agency. In addition, in those States where the supplemental payments are currently the responsibility of the IV-D agency, we provide up to 180 days to make the necessary changes. Furthermore, even if these regulations provided that IV-D agencies are required to compute and issue the supplemental payment, some system of monitoring similar to quality control would be required.
Comment: Several State agencies were concerned about the additional burden on AFDC caseworkers who would be required to compute and issue the supplemental payment.
Response: In response to a prior comment, we explained that the IV-A agency may, if it elects, have the IV-D agency compute the supplemental payment even though the payment must be authorized by the IV-A agency in order to be considered AFDC. This provision could provide some relief for AFDC case workers. However, the commenters are correct in noting that there will be additional responsibilities, such as notices and hearings, which-being an important and necessary part of the IV-A process -cannot be delegated.
Comment: Several State agencies commented that combining the supplemental and the regular assistance payments in one check would cause administrative problems.
Response: We recognize their concern and have revised the final regulation at § 233.21(c) to permit the State agencies to determine the administrative procedure that best meets their needs and structure either by adding the supplemental payment to the regular assistance payment or by issuing it separately. Either way, the 402(a)(28) and the fact that affected State agencies have implemented the requirement in a variety of ways, the final regulations provide and effective date of 180 days from the date of publication. This will allow the affected State agencies sufficient time to make the necessary changes and adjustments in implementing section 402(a)(28) payment is to be considered a payment under the AFDC program and subject to Federal matching and other relevant AFDC requirements.
Comment: Several commenters made the observation that because of the considerable time lapse since the law was enacted in 1975, it is unreasonable to propose rulemaking which imposes significant and new requirements. In the absence of Federal rulemaking, State agencies were forced to individually develop procedures for issuing the supplemental payments.
Response: Because of the delay in the issuance of final regulations to implement section 402(a)(28) and the fact that affected State agencies have implemented the requirement in a variety of ways, the final regulations provides an effective date of 180 days from the date of publication. This will allow the affected State agencies sufficient time to make the necessary changes and adjustments in implementing section 402(a)(28) of the Act in accordance with these rules.
Comment: One State agency commented that the proposed regulations do not address child support payments not required by court order.
Response: Policy on the "Treatment of Contributions and Support Payments in AFDC Budgeting" was developed jointly by the Office of Child Support Enforcement, and issued as Regional Office Directive 79-15, May 31, 1979. The Directive contains policy which provides that voluntary support payments acknowledged - by the mother or father, or absent person making the payments - to be for the purpose of helping to support the child should consider child support. Where voluntary payments meet this criterion of acknowledgement, they are subject to treatment as a child support collection as mandated in 45 CFR 232.20(a)(2) and 233.20(a)(3)(v).
The provisions on computation of the supplemental payment are contained in a new § 232.21.
Conforming and clarifying changes are also made to §§ 232.20 and 233.20.
Summary of Changes From Notice of Proposed Rulemaking
The Notice of Proposed Rulemaking published February 7, 1980 (Vol. 45, No. 27, February 7, 1980, page 8316-8323) provided that States that implemented the $5 disregard of income for future identifiable needs would be required to implement the provisions of section 402(a)(28). These two statutory provisions were eliminated under Pub. L. 97-35, the Omnibus Budget and Reconciliation Act of 1981. Accordingly, the implementing proposed regulations and Appendix C to the preamble have been deleted. (Appendix D in the proposed regulations is now Appendix C.)
Effective October 1, 1984, the supplemental payment under section 402(a)(28) is not computed on the support collected on the monthly support obligation. Under section 2640 of Pub. L. 98-369, The Deficit Reduction Act of 1984, the first $50 of support collected on the monthly support obligation will be paid to the family and will not be counted as income or resources in the determination of need and the assistance payment. The supplemental payment will be computed using the balance of support after the disregarded sum and the largest part of the arrearages collected that will not cause ineligibility.
The amendments to § 302.32(b) that were published in the Notice of Proposed Rulemaking are not published in this final regulation. Those amendments set limits on the exchange of information between IV-A and IV-D agencies in States that are required to implement section 402(a)(28). Because there are now several statutory requirements concerning need and assistance computations with support collections under which information must be exchanged between the IV-A and IV-D agencies, we have eliminated procedural requirements. As previously state in the preamble to the regulations implementing section 2640 of Pub. L. 98-369, the Deficit Reduction Act of 1984, we believe that IV-A and IV-D agencies should consult on the best means of transmitting information required to implement the various provisions where support collections are used in determining eligibility and the amount of assistance.
Minor changes have been made in the preamble, appendices and regulations to include spousal support. Under section 12 of Pub. L. 98-378, the Child Support Enforcement Amendments of 1984, States are required to collect spousal support when it is part of the support order. Spousal support is also subject to the requirement of section 402(a)(28). Therefore, the word, "child", has been deleted to accommodate the statutory change.
Regulatory Procedures
Executive Order 12291
The Department has determined that this final rule is not a "major rule" under Executive Order 12291. Thus, a regulatory impact analysis is not required because it will not:
(1) Have an annual effect on the economy of $100 million or more;
(2) Impose a major increase in costs or prices for consumers, individual industries, Federal, State or local government agencies or geographic regions; or
(3) Result in significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States based enterprises to compete with foreign based enterprises in domestic or export markets.
Paperwork Reduction Act
These regulations impose no reporting or recordkeeping requirements requiring OMB clearance.
Regulatory Flexibility Act
The Department of Health and Human Services has determined that this final rule will not significantly impact on small business and therefore does not require preparation of Regulatory Flexibility Analysis under the Regulatory Flexibility Act, Pub. L. 96-354.
(Secs. 402(a)(7) and (28) and 1102 of the Social Security Act, as amended; 89 Stat. 434, 49 Stat. 647, as amended; 42 U.S.C. 602(a)(7) and (28) and 1302)
(Catalog of Federal Domestic Assistance Programs. No. 13761, Public Assistance - Maintenance Assistance (State Aid); Program No. 13.679, Child Support Enforcement Program)
List of Subjects
45 CFR Part 232
Aid to families with dependent children, Child support, Child welfare, Family Assistance Office, Grant programs-social programs.
45 CFR Part 233
Aid to families with dependent children, Aliens, Family Assistance Office, Grant programs-social programs, Public assistance programs, Reporting and recordkeeping requirements.
Dated: July 28, 1986.
Wayne A. Stanton,
Administrator, Family Support Administration and Director, Office of Child Support Enforcement.
Approved: July 29, 1986.
Otis R. Bowen,
Secretary of Health and Human Services.
Appendix A - Examples of the computation of the total assistance payment using the six methods being implemented by States in July 1975, under which a supplemental payment would have to be determined. The support payment used in these examples is that part remaining after the $50 pass through/disregard.
There were six methods for determining the amount of the assistance payment being implemented by States in July 1975, in which a supplemental payment would have to be determined. These methods are illustrated below:
1. Income is subtracted from the need standard. The payment is the deficit or the maximum by family, size, whichever is less.
Determine assistance payment:
Col. A* Col. B**
Need standard. . . . . . . . . . . . . . $300 $300
Support payment. . . . . . . . . . . . . . -100 -0
Deficit. . . . . . . . . . . . . . . . . 200 300
Maximum by family size. . . . . . . . . 150 150
Assistance payment. . . . . . . . . . . 150 150
*Treat support as income.
**Do not treat support as income.
Determine total disposable income:
Col. A* Col. B**
Assistance payment. . . . . . . . . . . $150 $150
Support payment. . . . . . . . . . . . . +100 +0
Total. . . . . . . . . . . . . 250 150
*Treat support as income.
**Do not treat support as income.
Determine supplemental payment using total disposable income:
Column A. . . . . . . . . . . . . . . . . . . . . . . $250
Column B. . . . . . . . . . . . . . . . . . . . . . . -150
Supplemental payment. . . . . . . . . . . . 100
Determine total assistance payment:
Current assistance payment. . . . . . . . . . . . . . $150
Supplemental payment. . . . . . . . . . . . . . . . . 100
Total assistance payment. . . . . . . . . . 250
2. Income is subtracted from the need standard. The payment is a percent of the deficit.
Determine assistance payment:
Col. A* Col. B**
Need standard. . . . . . . . . . . . . . . $300 $300
Support payment. . . . . . . . . . . . . . -100 -0
Deficit. . . . . . . . . . . . . . . . . . 200 300
Ratable reduction (percent). . . . . . . . x.70 x.70
Assistance payment. . . . . . . . . . . . 140 210
*Treat support as income.
**Do not treat support as income
Determine total disposable income:
Col. A* Col. B**
Assistance payment . . . . . . . . . . . . $140 $210
Support payment. . . . . . . . . . . . . . +100 +0
Total. . . . . . . . . . . . . . 240 210
*Treat support as income.
**Do not treat support as income.
Determine supplemental payment using total disposable income:
Column A. . . . . . . . . . . . . . . . . . . . . . . $240
Column B. . . . . . . . . . . . . . . . . . . . . . . -210
Supplemented payment. . . . . . . . . . . . . . . . . 30
Determine total assistance payment:
Current assistance payment. . . . . . . . . . . . . . $210
Supplemental payment. . . . . . . . . . . . . . . . . +30
Total assistance payment. . . . . . . . . . 240
3. Income is subtracted from the need standard. The payment is a percent of the deficit or the maximum by family size, whichever is less; or
4. Income is subtracted from the need standard. The payment is a percent of the deficit or the maximum on the total money payment, whichever is less.
Determine assistance payment:
Col. A* Col. B**
Need standard. . . . . . . . . . . . . . . $300 $300
Support payment. . . . . . . . . . . . . . -100 -0
Deficit. . . . . . . . . . . . . . . . . . 200 300
Ratable reduction (percent). . . . . . . . x.70 x.70
Total. . . . . . . . . . . . . . 140 210
Maximum***. . . . . . . . . . . . . . . . 150 150
Assistance payment. . . . . . . . . . . . 140 150
*Treat support as income.
**Do not treat support as income.
***Maximum either by family size or on the total money payment.
Determine total disposable income:
Col. A* Col. B**
Assistance payment . . . . . . . . . . . . $140 $150
Support payment. . . . . . . . . . . . . . +100 +0
240 150
*Treat support as income.
**Do not treat support as income.
Determine supplemental payment using total disposal income:
Column A. . . . . . . . . . . . . . . . . . . . . . . $240
Column B. . . . . . . . . . . . . . . . . . . . . . . -150
Supplemental payment. . . . . . . . . . . . . . . . . 90
Determine total assistance payment:
Current assistance payment. . . . . . . . . . . . . . $150
Supplemental payment. . . . . . . . . . . . . . . . . +90
Total assistance payment. . . . . . . . . . . . . . . 240
5. Income is subtracted from a reduced need standard. The payment is the deficit or the maximum by family size, whichever is less.
Determine assistance payment:
Col. A* Col. B**
Need standard. . . . . . . . . . . . . . . $300 $300
Ratable reduction (percent). . . . . . . . x.70 x.70
Reduced standard. . . . . . . . . . . . . 210 210
Support payment. . . . . . . . . . . . . . -100 -0
Deficit. . . . . . . . . . . . . . . . . . 110 210
Assistance payment. . . . . . . . . . . . . 110 150
Maximum by family size. . . . . . . . . . . 150 150
*Treat support as income.
**Do not treat support as income.
Determine total disposable income:
Col. A* Col. B**
Assistance payment . . . . . . . . . . . . $110 $150
Support payment. . . . . . . . . . . . . . +100 +0
Total. . . . . . . . . . . . . . . 210 150
*Treat support as income.
**Do not treat support as income.
Determine supplemental payment using total disposable income assistance payment:
Determine total assistance payment:
Column A. . . . . . . . . . . . . . . . . . . . . . . $210
Column B. . . . . . . . . . . . . . . . . . . . . . . -150
Supplemental Payment. . . . . . . . . . . . . . . . . 60
Determine total assistance payment:
Current assistance payment. . . . . . . . . . . . . . $150
Supplemental payment. . . . . . . . . . . . . . . . . +60
Total assistance payment. . . . . . . . . . 210
6. Income is subtracted from a reduced need standard. The payment is the deficit or the maximum on the total money payment, whichever is less.
Determine assistance payment:
Col. A* Col. B**
Need standard. . . . . . . . . . . . . . . $500 $500
Ratable reduction (percent). . . . . . . . x.70 x.70
Reduced standard. . . . . . . . . . . . . 350 350
Support payment. . . . . . . . . . . . . . -100 -0
Deficit. . . . . . . . . . . . . . . . . . 250 350
Assistance payment. . . . . . . . . . . . . 250 300
Maximum on total money payment . . . . . . 300 300
*Treat support as income.
**Do not treat support as income.
Determine total disposable income:
Col. A* Col. B**
Assistance payment . . . . . . . . . . . . $250 $300
Support payment. . . . . . . . . . . . . . +100 +0
Total. . . . . . . . . . . . . . . 350 300
*Treat support as income.
**Do not treat support as income.
Determine supplemental payment using total disposable income:
Column A. . . . . . . . . . . . . . . . . . . . . . . $350
Column B. . . . . . . . . . . . . . . . . . . . . . . -300
Supplemental payment. . . . . . . . . . . . 50
Determine total assistance payment:
Current assistance payment. . . . . . . . . . . . . . $300
Supplemental payment. . . . . . . . . . . . . . . . . +50
Total assistance payment. . . . . . . . . . 350
Appendix B. - Examples of the computation of the totalassistance payment when there is income from another source in addition to the support collection for a given month and a supplemental payment is to be determined.
The support payment used in these examples is that part remaining after the $50 pass through/disregard.
The regulations provide for the counting of support payments when there is income from another source. All income from any other source is always counted before the support payment in computing the supplemental payment.
1. Income is subtracted from the need standard. The payment is the deficit or the maximum by family size, whichever is less.
Assume that there is $100 support and $50 countable earned income currently to be treated as income.
Determine assistance payment:
Col. A* Col. B**
Need Standard. . . . . . . . . . . . . . . $300 $300
Countable income: support
-$100 + earnings of $50)=. . . . . . 150 -50
Deficit. . . . . . . . . . . . . . . . . 150 250
Col. A* Col. B*
Maximum by family size. . . . . . . . . 150 150
Assistance payment. . . . . . . . . . . 150 150
*Treat support as income.
**Do not treat support as income.
Determine total disposable income:
Col. A* Col. B**
Assistance payment. . . . . . . . . . . . $150 $150
Support payment. . . . . . . . . . . . . . +100 +0
Earned income. . . . . . . . . . . . . . . +50 +50
Total. . . . . . . . . . . . . . 300 200
*Treat support as income
**Do not treat support as income.
Determine supplemental payment using total disposable income:
Column A. . . . . . . . . . . . . . . . . . . . . . . $300
Column B. . . . . . . . . . . . . . . . . . . . . . . -200
Supplemental payment. . . . . . . . . . . . 100
Determine total assistance payment:
Current assistance payment. . . . . . . . . . . . . . $150
Supplemental payment. . . . . . . . . . . . . . . . . 100
Total assistance payment. . . . . . . . . . 250
The recipient will have the same amount of disposable incomes as in Column A - $250 total assistance payment and $50 earned income for $300 total disposable income.
2. In the first example, neither the $100 support payment nor the $50 earned income reduced the amount of the assistance payment. Therefore, the recipient receives a $150 assistance payment and a supplemental payment of $100 for a total assistance payment of $250. The recipient retains the $50 earned income and has total disposable income of $300. An increase in the amount of earned income from $50 to $75 will reduce the amount of the supplement assistance payment, thus:
Determine assistance payment:
Col. A* Col. B**
Need Standard. . . . . . . . . . . . . . . $300 $300
Countable income: (support
-$100 + earnings of $75)=. . . . . . -175 -75
Deficit. . . . . . . . . . . . . . . . . 125 225
Maximum by family size. . . . . . . . . 150 150
Assistance payment. . . . . . . . . . . 125 150
*Treat support as income.
**Do not treat support as income.
Determine total disposable income:
Col. A* Col. B**
Assistance payment. . . . . . . . . . . . $125 $150
Support payment. . . . . . . . . . . . . . +100 +0
Earned income. . . . . . . . . . . . . . . +75 +75
Total. . . . . . . . . . . . . . 300 225
*Treat support as income
**Do not treat support as income.
Determine supplemental payment using total disposable income:
Column A. . . . . . . . . . . . . . . . . . . . . . . $300
Column B. . . . . . . . . . . . . . . . . . . . . . . -225
Supplemental payment. . . . . . . . . . . . 75
Determine total assistance payment:
Current assistance payment. . . . . . . . . . . . . . $150
Supplemental payment. . . . . . . . . . . . . . . . . -75
Total assistance payment. . . . . . . . . . 225
The recipient will have the same amount of disposable income as in Column A - $225 total assistance payment and $75 earned income for a total of $300 total disposable income.
Appendix C. - Examples of the computation of the total assistance payment when the total support collection for a month includes payment on arrearages.
In computing "the total assistance payment for a month", use the support collected on the current month's support obligation, subtract the $50 pass through/disregard and add the largest part of the total arrearages collected in that same month that will not cause ineligibility. This is "the total support collection."
The instructions are presented in the regulations and provide that when a total support collection for a month includes payment on arrearages, the largest portion of that total collection that would not cause ineligibility if paid to the family shall be used to compute the supplemental payment under section 402(a)(28). The first example illustrates a total support collection for a month (support obligation and payment on arrearages) that would not cause ineligibility. The second example illustrates a total support collection for a month (support obligation and payment on arrearages) that would cause ineligibility. The largest part of this collection that would not cause ineligibility if paid directly to the family is used as countable income.
1. Income is subtracted from the need standard. The payment is the deficit or the maximum by family size, whichever is less.
Assume that the support obligation for the month is $200 and that the absent parent paid $50 arrearages. The total support collection for the month is $250.
Determine assistance payment:
Col. A* Col. B**
Need Standard. . . . . . . . . . . . . . . $300 $300
Support payment. . . . . . . . . . . . . . 250*** -0
Deficit. . . . . . . . . . . . . . . . . 50 300
Maximum by family size. . . . . . . . . 150 150
Assistance payment. . . . . . . . . . . 50 150
*Treat support as income.
**Do not treat support as income.
***None of the $250 collection would cause ineligibility if paid directly to the family, therefore, all of it is used to compute the supplemental payment.
Determine total disposable income:
Col. A* Col. B**
Assistance payment. . . . . . . . . . . . $50 $150
Support payment. . . . . . . . . . . . . . +250 +0
Total. . . . . . . . . . . . . . 300 150
*Treat support as income
**Do not treat support as income.
Determine supplemental payment using total disposable income:
Column A. . . . . . . . . . . . . . . . . . . . . . . $300
Column B. . . . . . . . . . . . . . . . . . . . . . . -150
Supplemental payment. . . . . . . . . . . . 150
Determine total assistance payment:
Current assistance payment. . . . . . . . . . . . . . $150
Supplemental payment. . . . . . . . . . . . . . . . . +150
Total assistance payment. . . . . . . . . . 300
2. Income is subtracted from the need standard. The payment is the deficit or the maximum by family size, whichever is less.
Assume that the support obligation for the month is $200 and that the absent parent also paid $300 arrearages. The total support collection for the month is $500.
Determine assistance payment:
Col. A* Col. B**
Need Standard. . . . . . . . . . . . . . . $300 $300
Support payment. . . . . . . . . . . . . . -290*** -0
Deficit. . . . . . . . . . . . . . . . . 10 300
Maximum by family size. . . . . . . . . 150 150
Assistance payment. . . . . . . . . . . 10 150
*Treat support as income.
**Do not treat support as income.
***This is the largest portion of the $500 total support collection for the month that would not cause ineligibility.
Determine total disposable income:
Col. A* Col. B**
Assistance payment. . . . . . . . . . . . $10 $150
Support payment. . . . . . . . . . . . . . +290 +0
Total. . . . . . . . . . . . . . 300 150
*Treat support as income
**Do not treat support as income.
Determine supplemental payment using total disposable income:
Column A. . . . . . . . . . . . . . . . . . . . . . . $300
Column B. . . . . . . . . . . . . . . . . . . . . . . -150
Supplemental payment. . . . . . . . . . . . 150
Determine total assistance payment:
Current assistance payment. . . . . . . . . . . . . . $150
Supplemental payment. . . . . . . . . . . . . . . . . +150
Total assistance payment. . . . . . . . . . 300
3. Income is subtracted from a reduced need standard. The payment is the deficit or the maximum by family size, whichever is less.
Assume payment of $200 current support obligation plus $300 in arrearages, for a total of $500.
Determine assistance payment:
Col. A* Col. B**
Need standard. . . . . . . . . . . . . . . $300 $300
Ratable reduction (percent). . . . . . . . x.70 x.70
Reduced standard. . . . . . . . . . . . . 210 210
Support payment. . . . . . . . . . . . . . 200*** 0
Deficit. . . . . . . . . . . . . . . . . . 10 210
Maximum by family size. . . . . . . . . 150 150
Assistance payment. . . . . . . . . . . 10 150
*Treat support as income.
**Do not treat support as income.
***This is the largest portion of the $500 total child support collection for the month that would cause ineligibility.
Determine total disposable income:
Col. A* Col. B**
Assistance payment. . . . . . . . . . . . $10 $150
Support payment. . . . . . . . . . . . . . +200 +0
Total. . . . . . . . . . . . . . 210 150
*Treat support as income
**Do not treat support as income.
Determine supplemental payment using total disposable income:
Column A. . . . . . . . . . . . . . . . . . . . . . . $120
Column B. . . . . . . . . . . . . . . . . . . . . . . -150
Supplemental payment. . . . . . . . . . . . 60
Determine assistance payment:
Current assistance payment. . . . . . . . . . . . . . $150
Supplemental payment. . . . . . . . . . . . . . . . . +60
Total assistance payment. . . . . . . . . . 210
PART 232 - [AMENDED]
Part 232 of Chapter II, Title 45, Code of Federal Regulations is amended as set forth below:
1. The authority citation for Part 232 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 1302).
2. Section 232.20 is amended by revising paragraph (b)(1) to read as follows:
§ 232.20 Treatment of child support collections made in the Child Support Enforcement Program as income and resources in the Title IV-A Program.
* * * * *
(b)* * *
(1) Upon notification by the IV-D agency of the amount of a support collection, the IV-A agency will use such amount to review eligibility of the assistance unit under section 206.10(a)(9)(ii). This use of these amounts so collected shall not be later than the second month after the month in which the IV-A agency received a report of the monthly collections from the IV-D agency. In determining whether a support collection made by the State's IV-D agency, which represents support amounts for a month as determined pursuant to § 302.51(a) of this title, is sufficient to make the family ineligible for an assistance payment for the month to which the redetermination applies, the State will determine if such collection, when treated as if it were income, makes the family ineligible, for an assistance payment. If such treatment makes the family ineligible, the IV-A agency will notify the family and the IV-D agency of the effective date of the family's ineligibility. The IV-D agency will treat the support collection that caused ineligibility in accordance with § 302.32. If such treatment does not make the family ineligible for an assistance payment, the assistance payment will be calculated without regard to such collection except that, when required under § 232.21 supplemental payments must be calculated and issued.
* * * * *
2. A new section 232.21 is added to read as follows:
§ 232.21 Computation of a supplemental payment when there is a support payment.
(a) The purpose of this section is to provide for the computation of a supplemental payment under section 402(a)(28) of the Social Security Act. When used in this section-
"Countable income" means the amount of the recipient's gross income that is used in the computation of the assistance payment after application of all disregards, including work-related expenses.
"Countable support payment" means the support collected on the current month's support obligation less an amount not in excess of the first $50 collected on that obligation. It also means the excess payments paid to the recipient by the IV-D agency under 45 CFR 302.51(b)(3) and (5).
"Disposable income" means the sum of the assistance payment, and the countable income used in determining the amount of the payment.
"Arrearages" means all collections of past due support exclusive of those made through the Federal and State income tax refund offset.
(b) The State plan must provide that, if the redetermination under § 232.20 indicates that the support payment made on the current month's support obligation would not cause ineligibility, and the State permitted recipients during July 1975 to retain countable income without an equal reduction in their assistance payment, and if currently has such a policy in effect, a supplemental payment will be computed for the current month.
(1) The supplemental payment for a month shall equal the maximum portion of the total support collected in that month which would not reduce the assistance payment if paid directly to the family. In determining this amount, the State agency will - (i) First consider income from sources other than the support collection; and
(ii) Include in the amount of support collected the maximum amount of any arrearages paid which would not cause ineligibility if paid directly to the family.
(2) The supplemental payment will be computed as follows:
(i) The State IV-A agency determines the assistance payment which would result from treating as income to the family the largest amount of the month's child support collection, including arrearages, that will not cause ineligibility. Using that assistance payment, and using that amount of the support collection as countable income, disposable income is computed.
(ii) The State agency then determines the amount of the assistance payment for which the family would be eligible if there were no support collection. Using that assistance payment, disposable income is again computed.
(iii) The supplemental payment is the amount of disposable income as computed in step (i) less the amount of disposable income as computed in step (ii).
(iv) Examples:
Example 1. The State computes the assistance payment by subtracting income from the need standard and pays the deficit or a maximum by family size, whichever is less: (All figures are assumed and do not include income from any other source.)
Step (i): Treating countable support payment as income. Subtract a countable support payment of $100 from a need standard of $300. The deficit is $200. Assume the State's maximum for this family size is $150; therefore, the assistance payment would be $150. The assistance unit would have a $150 assistance payment and the $100 countable support payment for a total disposable income of $250.
Step (ii): Not treating countable support payment as income. There is no income to subtract from the need standard. Thus the assistance payment would be the maximum of $150 for this family size, which would also be the disposable income.
Step (iii): Taking the difference. The supplemental payment is the difference between the disposable income computed under steps (i) and (ii), $250 minus $150, or $100.
Example 2. The State computes the assistance payment by subtracting income from a reduced need standard and pays the deficit or a maximum by family size, whichever is less. Assume a need standard of $400, a ratable reduction of 70%, and a maximum assistance payment of $200. Also assume a $500 total child support collection for the month, $200 of which is the current month's support obligation. The State's minimum payment is $5.
Step (i): Treating countable support payments as income. Determine the largest part of the $500 child support collection which would not cause ineligibility if counted as income to the assistance unit. This would be $279 because the State's reduced need standard is $280 (70% of $400) and any amount of income over $279 would make the family ineligible. The deficit would be $1. The assistance unit would not receive an assistance payment, however, they would have the $279 support payment as disposable income. No assistance payment is made but the family remains eligible under § 233.20(a)(3)(viii)(C) and (D).
Step (ii): Not treating countable support payment as income. There is no income to subtract from the reduced need standard, thus the assistance payment would be the maximum of $200 for this family size, which would also be the disposable income.
Step (iii): Taking the difference. The supplemental payment is the difference between the disposal income computed under steps (i) and (ii), $280 minus $200, or $80.
(c) A supplemental payment under this section may either be added to the assistance payment for which the unit is otherwise eligible, to make a new total assistance payment for the month or be issued separately. In the examples in paragraph (b)(2)(iv) of this section, the new total assistance payments would be $250 ($150 plus $100) in Example 1, and $280 ($200 plus $80) in Example 2.
PART 233 - [AMENDED]
Part 233 of Chapter II, Title 45, Code of Federal Regulations is amended as set forth below:
1. The authority citation for Part 233 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42) U.S.C. 1302.
2. Section 233.20 is amended by revising paragraph (a)(3)(v) to read as follows:
§ 233.20 Need and amount assistance.
(a)* * *
(3)* * *
(v) Provide that agency policies will assure that:
(A) In determining eligibility for an assistance payment, support payments assigned under § 232.11 of this chapter will be treated in accordance with § 232.20 and § 232.21 of this chapter; and
(B) In determining the amount of an assistance payment, assigned support payments retained in violation of § 232.12(b)(4) of this chapter, will be counted as income to meet need unless the approved IV-A State plan provides that such support payments are subject to IV-D recovery under §§ 302.31(a)(3) and 303.80 of this title or unless such payments are sufficient to render the family ineligible as provided at § 232.20 of this chapter.
* * * * *
[FR Doc. 86-17882 Filed 8-14-86; 8:45 am]
BILLING CODE 4190-11-M