We consider your activities and their value to your business to decide whether you have engaged in substantial gainful activity. To determine whether you have engaged in substantial gainful activity, we apply three tests. If you have not engaged in substantial gainful activity under test one, then we will consider tests two and three. The tests are as follows:
(1) Test One: You have engaged in substantial gainful activity if you render services that are significant to the operation of the business and receive a substantial income from the business. (See Sec. 404.1575(b) and (c) for an explanation of what we mean by significant services and substantial income for purposes of this test.) (2) Test Two: You have engaged in substantial gainful activity if your work activity, in terms of factors such as hours, skills, energy output, efficiency, duties, and responsibilities, is comparable to that of unimpaired individuals in your community who are in the same or similar businesses as their means of livelihood.
(3) Test Three: You have engaged in substantial gainful activity if your work activity, although not comparable to that of unimpaired individuals, is clearly worth more than the substantial gainful activity amount when considered in terms of its value to the business, or when compared to the salary that an owner would pay to an employee to do the work you are doing.
Under existing rules, when will your performance of substantial gainful activity affect whether you continue to be disabled?

If you are entitled to Social Security benefits based on disability and you are working, the work you do may show that you are able to do substantial gainful activity and are, therefore, no longer disabled. If you are engaging in substantial gainful activity, before we determine whether you are no longer disabled because of your work activity, we will consider whether you are entitled to a trial work period under Sec. 404.1592. We will find that your disability has ceased in the month in which you demonstrated your ability to engage in substantial gainful activity following completion of any applicable trial work period. See Sec. 404.1594(d)(5) and (f)(1) of our regulations. Our determination that your disability has ceased because you demonstrated the ability to engage in substantial gainful activity is not a determination of whether you continue to have a disabling impairment (see Sec. 404.1511) for purposes of eligibility for a reentitlement period (see Sec. 404.1592a) following completion of a trial work period. If you work during your reentitlement period and we determine that your disability has ceased because your work is substantial gainful activity, we will stop your benefits. If you later stop engaging in substantial gainful activity and you are still within your reentitlement period, we will start paying your benefits again. In determining whether you do substantial gainful activity in a month for purposes of stopping or starting benefits during the reentitlement period, we will consider your work in, or earnings for, that month (see Sec. 404.1592a(a)(2)(i)).

If you are receiving SSI benefits based on disability, your performance of substantial gainful activity does not affect your disability status for purposes of eligibility for SSI benefits. This is because of an SSI work incentive provision in section 1619 of the Act. What does section 221(m) of the Act provide?

Above, we described what typically happens during a continuing disability review. However, section 221(m) of the Act provides for special exceptions for specified individuals under specific circumstances.

Section 221(m) contains two paragraphs. Paragraph (1) provides that, if you are entitled to disability insurance benefits under section 223 of the Act or to other monthly insurance benefits based on disability under section 202 of the Act,\1\ and you have received such benefits for at least 24 months:
\1\ The other monthly insurance benefits based on disability under section 202 of the Act are:

Paragraph (2) explains that, if you are an individual described in paragraph (1):

What revisions are we making, and why?

As a result of section 221(m) of the Act, we are revising several of our rules in subparts J and P of part 404 and subparts I and N of part 416 of our regulations:

In addition, we are also revising several of our rules in subparts J and P of part 404 and subparts I and N of part 416 of our regulations:

Although section 221(m) applies only if you receive disability benefits under title II of the Act, we are making changes to our title XVI regulations that will apply to you if:

If you meet these criteria, we will use the same rules for starting continuing disability reviews under title XVI as we will use under title II. Also, when we do conduct a continuing disability review, we will use the same rules on how we consider the activities from your work in a continuing disability review under title XVI as we will use in a continuing disability review under title II. If we did not make these changes to the title XVI regulations, we would have rules under which we could start a continuing disability review based solely on your work activity to determine whether your disability continues or ends under title XVI even though we could not start a continuing disability review on that basis to determine whether your disability continues or ends under title II. Also, when we do conduct continuing disability reviews for both title II and title XVI purposes, we would have different rules on how we consider the activities from your work for title II and title XVI purposes. As a result, we could determine that your disability continues under title II but that your disability has ended under title XVI. For these reasons, we are making the aforementioned changes to the title XVI regulations that will apply to you if you are a recipient of SSI benefits based on disability or blindness and also are a Social Security disability beneficiary who is covered by section 221(m) of the Act. We concluded that this is a reasonable interpretation of the statute and the most logical, equitable, and administratively efficient way to implement section 221(m) if you receive both types of benefits.

We do not interpret section 221(m) of the Act to apply to you if you are a recipient of SSI benefits only. Section 221(m) provides that, for you to be covered by that section, you must be entitled to and have received Social Security disability benefits under title II. Therefore, these final rules do not extend the provisions of section 221(m) to you if you receive only SSI disability or blindness payments.

We are also revising our disability regulations to include rules that are already in subpart C of part 411 of our regulations and that apply to you if you are in the Ticket to Work program and using your ticket. These rules provide that we will not start a continuing disability review for you during the period in which you are using a ticket. However, they also explain that we can still do a review to determine if your disability has ended under title II because you have demonstrated your ability to engage in substantial gainful activity, as defined in Sec. Sec. 404.1571404.1576 of our regulations.

We are also clarifying in these final rules that if you are entitled to Social Security disability benefits under title II or eligible for SSI disability payments under title XVI, we will not consider the work that you are doing or have done during your current period of entitlement or eligibility based on disability to be past relevant work or past work experience at the last two steps of the applicable medical improvement review standard sequential evaluation process. We are also amending our rules to provide a comparable rule if you are requesting expedited reinstatement of benefits under section 223(i) or 1631(p) of the Act. The rule will apply at the last two steps to work you do during or after your previous period of entitlement or eligibility which terminated and which is the basis for your request for expedited reinstatement.

The following is an explanation of the specific changes we are making and our reasons for making these changes.
Sections 404.903 and 416.1403 Administrative Actions That Are Not Initial Determinations

We are adding a new paragraph (x) to Sec. 404.903 and a new paragraph (a)(22) to Sec. 416.1403 to explain that the action of starting or discontinuing a continuing disability review is not an initial determination. As explained in existing Sec. Sec. 404.903 and 416.1403(a), administrative actions that are not initial determinations may be reviewed by us, but they are not subject to the administrative review process provided by subpart J of part 404 or subpart N of part 416 of our regulations, and they are not subject to judicial review. If we start a continuing disability review based solely on your work activity, we will provide an opportunity for you to request that we review that action if you believe that you are protected by the section 221(m)(1)(A) provision and that the medical review should not have been started. We will inform you of this opportunity when we send you a letter telling you that we are starting a medical continuing disability review. If we review the action and conclude that the initiation of the continuing disability review was in error because section 221(m)(1)(A) of the Act applies, we will discontinue processing the continuing disability review. In addition, as we explain later in this preamble, if we process the continuing disability review to completion and make a medical cessation determination, we are amending our
[[Page 66845]]
rules in Sec. Sec. 404.1590 and 416.990 to provide a procedure under which we will vacate the medical cessation determination if, within a prescribed time period, we receive evidence from you that establishes that the start of your continuing disability review was in error because of section 221(m)(1)(A) of the Act.
Sections 404.1574 and 416.974 Evaluation Guides if You Are an Employee

We are revising Sec. Sec. 404.1574(b) and 416.974(b) to remove the rules relating to the use of the secondary substantial gainful activity amount for evaluating work activity you performed as an employee prior to January 2001. This change will eliminate the difference that exists between the way we evaluate work you performed as an employee before January 2001 and the way we evaluate work you performed as an employee in months beginning with January 2001 in cases in which your average monthly earnings from your work are equal to or less than the applicable primary substantial gainful activity amount.

On December 29, 2000, we published final rules in the Federal Register (65 FR 82905) to discontinue the use of a secondary substantial gainful activity amount effective for work activity in months beginning with January 2001. We made this change because, as we explained in the preamble to those final rules, ``our experience suggests that the secondary substantial gainful activity amount has not been as useful a tool as we would have liked'' (65 FR 82906). We indicated that our experience suggests that few applicants and beneficiaries would be affected by the change because few employees have been found to have performed substantial gainful activity on the basis of the secondary rules except in those circumstances that would otherwise warrant development of other information beyond earnings. We also explained that ``[d]iscontinuing these complex secondary guidelines will help simplify our rules and facilitate public understanding of the Social Security disability program as well as improve our work efficiency'' (65 FR 82906). For these same reasons, and to provide consistent rules for considering earnings from your work as an employee, without regard to whether the work was performed before January 2001 or in or after January 2001, we are discontinuing the use of the secondary guidelines altogether.

Under this change, if your average monthly earnings from work you performed as an employee before January 2001 are equal to or less than the applicable primary substantial gainful activity amount, we will consider your earnings in the same way we consider earnings from work performed by an employee in or after January 2001 that do not average more than the applicable primary substantial gainful activity amount. That is, we will generally consider that your earnings from your work will show that you have not engaged in substantial gainful activity without considering other information beyond your earnings. We will perform additional development beyond looking at earnings only when circumstances indicate that you may have been engaging in substantial gainful activity or might have been in a position to control when earnings are paid to you or the amount of wages paid to you (for example, if you work for a small corporation run by a relative).

Using the facts from the ``Example'' set out earlier, the following illustrates how we will evaluate your work activity under these final rules, which eliminate the use of the secondary substantial gainful activity guidelines altogether. As in the ``Example'' above, you worked from July 2000 through June 2001, with earnings of $600 per month. For the entire period you worked, your average monthly earnings are less than the applicable primary substantial gainful activity amounts ($740 per month for work occurring between January 1, 2001 and January 1, 2002 and $700 per month for work occurring between July 1, 1999 and January 1, 2001). Therefore, we will generally consider that your earnings show that you have not engaged in substantial gainful activity.

To make this change, we are eliminating the rules in existing Sec. Sec. 404.1574(b) and 416.974(b) relating to the use of the secondary substantial gainful activity amount and the distinction between work performed before January 2001 and work performed in or after January 2001. We are replacing existing paragraphs (b)(3) through (b)(6) of Sec. Sec. 404.1574 and 416.974 with a new paragraph (b)(3), Earnings that will ordinarily show that you have not engaged in substantial gainful activity. In new paragraph (b)(3), we are consolidating our existing rules that apply in cases in which average monthly earnings from work performed by an employee (including work performed in a sheltered workshop or comparable facility) in or after January 2001 are equal to or less than the applicable primary substantial gainful activity amount, and are extending the scope of these rules to cover work performed before January 2001 as well as work performed in or after January 2001.

In a new paragraph (b)(3)(i), General, we state the general rule. We explain that if your average monthly earnings are equal to or less than the amount(s) determined under paragraph (b)(2) of Sec. 404.1574 or Sec. 416.974 for the year(s) in which you work, we will generally consider that the earnings from your work activity as an employee (including earnings from work in a sheltered workshop or comparable facility) will show that you have not engaged in substantial gainful activity. We explain that we will generally not consider other information in addition to your earnings except in the circumstances described in new paragraph (b)(3)(ii) of Sec. Sec. 404.1574 and 416.974.

In new paragraph (b)(3)(ii), When we will consider other information in addition to your earnings, we describe those circumstances in which we will ordinarily consider other information beyond your earnings. We explain that we will generally consider other information in addition to your earnings if there is evidence indicating that you may be engaging in substantial gainful activity or that you are in a position to control when earnings are paid to you or the amount of wages paid to you (for example, if you are working for a small corporation owned by a relative).

We also include provisions in new paragraph (b)(3)(ii) that provide examples of other information we may consider. These latter provisions incorporate the provisions of existing paragraph (b)(6)(iii) of Sec. Sec. 404.1574 and 416.974. In new paragraphs (b)(3)(ii)(A) and (B), we explain that other information we may consider includes, for example, whether (A) Your work is comparable to that of unimpaired people in your community who are doing the same or similar occupations as their means of livelihood, taking into account the time, energy, skill, and responsibility involved in the work; and (B) your work, although significantly less than that done by unimpaired people, is clearly worth the amounts shown in paragraph (b)(2) of Sec. 404.1574 or Sec. 416.974, according to pay scales in your community.

The provisions of new Sec. Sec. 404.1574(b)(3)(i) and (ii) and 416.974(b)(3)(i) and (ii) are based on the rules that are stated in the first sentence of existing paragraph (b)(3), the last sentence of existing paragraph (b)(4), existing paragraph (b)(5), and existing paragraphs (b)(6)(ii) and (iii) of Sec. Sec. 404.1574 and 416.974.

In new Sec. 404.1574(b)(3)(iii), we explain that, even if the circumstances described in new Sec. 404.1574(b)(3)(ii) are [[Page 66846]]
present, we will not consider other information in addition to your earnings in evaluating the work you are doing or have done if: (A) At the time you do the work, you are entitled to Social Security disability benefits and you have received such benefits for at least 24 months; and (B) we are evaluating that work to consider whether you have engaged in substantial gainful activity or demonstrated the ability to engage in substantial gainful activity for the purpose of determining whether your disability has ceased because of your work activity. We include crossreferences to the sections of our regulations that concern making substantial gainful activity determinations for purposes of determining whether your disability has ceased.

Since new paragraphs (b)(3)(ii)(A) and (B) require us to consider your work activities, we decided that we could no longer use (b)(3)(ii)(A) and (B)based on section 221(m)(1)(B) of the Actto decide that the work you do after you have received Social Security disability benefits for at least 24 months shows that you are able to engage in substantial gainful activity and are, therefore, no longer disabled. Therefore, in Sec. 404.1574(b)(3), we have included a paragraph (b)(3)(iii), Special rule for considering earnings alone when evaluating the work you do after you have received social security disability benefits for at least 24 months, which provides an exception to the rule in Sec. 404.1574(b)(3)(ii), discussed above. The exception will apply when we are evaluating the work that you perform while you are entitled to Social Security disability benefits and after you have received such benefits for at least 24 months and will apply to you only if you are covered by section 221(m) of the Act. The exception would apply only if we are evaluating that work to decide whether the work shows that you are able to engage in substantial gainful activity for the purpose of determining whether your disability has ceased because of your work activity. In this case, even if the circumstances described in new Sec. 404.1574(b)(3)(ii) are present, we will not consider other information in addition to your earnings. Instead, we will apply the general rule described in new Sec. 404.1574(b)(3)(i). That is, in the case described above, if your average monthly earnings from that work are equal to or less than the amount(s) determined under Sec. 404.1574(b)(2) for the year(s) in which that work occurs, we will find that your earnings from that work will show that you have not engaged in substantial gainful activity.

If you are entitled to Social Security disability benefits and you perform work as an employee after you have received such benefits for at least 24 months, section 221(m)(1)(B) of the Act provides that we may not consider information about the activities you perform in that work (such as the information described in new Sec.
404.1574(b)(3)(ii)(A) and (B)) to determine that the work shows that you are able to engage in substantial gainful activity and are, therefore, no longer disabled, i.e., that your disability has ceased. We may still consider your earnings from that work under the earnings guidelines to decide whether your earnings show that you have engaged in substantial gainful activity for the purpose of determining whether your disability has ceased. Also, we may still consider other information in addition to your earnings in the circumstances described in new Sec. 404.1574(b)(3)(ii) to decide whether that work is substantial gainful activity for purposes other than the purpose of determining whether your disability has ceased. Therefore, after we have determined that your disability has ceased during the reentitlement period because you performed substantial gainful activity, we will continue to make substantial gainful activity determinations to decide whether benefits should be started or stopped for a subsequent month(s) during the reentitlement period and to decide when your entitlement to benefits terminates (see Sec. 404.1592a(a)(2) and (3)). We may use the tests in Sec. 404.1574(b)(3)(ii) that involve looking at your work activities in making these substantial gainful activity determinations because these determinations do not involve deciding that you are no longer disabled.

Also, in new Sec. 404.1574(b)(3), we include a paragraph (b)(3)(iv), When we consider you to have received social security disability benefits for at least 24 months. The provisions of paragraph (b)(3)(iv) apply for purposes of new paragraph (b)(3)(iii) of Sec. 404.1574. In new Sec. 404.1574(b)(3)(iv), we provide a definition of Social Security disability benefits and explain when we will consider you to have received such benefits for at least 24 months.

In response to public comments we received on the proposed rules, we have modified the criteria relating to the 24month requirement in these final rules. We have modified the criteria in Sec.
404.1574(b)(3)(iv) of the final rules to provide that, if you are otherwise due a social security disability benefit for a month, but we withhold your benefit for that month to recover an overpayment, we will count that month toward the 24month requirement. We provide that, in this situation, we will consider you to have constructively received a social security disability benefit for the month for purposes of the 24month requirement. We are making similar changes in final Sec. Sec. 404.1575(e)(2), 404.1590(i)(2)(i), and 416.990(i)(2)(i), which are described later in this preamble.

In final Sec. 404.1574(b)(3)(iv), we explain that we consider you to have received social security disability benefits for at least 24 months beginning with the first day of the first month following the 24th month for which you actually received Social Security disability benefits that you were due or constructively received such benefits. We state that the 24 months do not have to be consecutive. We explain that we do not count months for which you were entitled to benefits but for which you did not actually or constructively receive benefit payments. In addition, we explain that if you also receive SSI payments, months for which you received only SSI payments will not count for the 24 month requirement.

We are including new paragraphs (b)(3)(iii) and (iv) only in our revision of Sec. 404.1574(b). We are not including similar provisions in our revision of Sec. 416.974(b) because the performance of substantial gainful activity is not a basis for determining that disability has ceased under the SSI program.

As we explain above, new paragraph (b)(3) of Sec. Sec. 404.1574 and 416.974 will replace existing paragraphs (b)(3) through (b)(6) of these sections. As a consequence, we have made certain conforming changes to existing paragraphs (b)(1) and (2) of Sec. Sec. 404.1574 and 416.974. We are amending existing paragraph (b)(1) of Sec. Sec. 404.1574 and 416.974 to remove references to paragraphs (b)(4), (5), and (6). We are revising the parenthetical phrase in the introductory text of existing paragraph (b)(2) of Sec. Sec. 404.1574 and 416.974 to read, ``(including earnings from work in a sheltered workshop or a comparable facility especially set up for severely impaired persons),'' to incorporate the description of sheltered work contained in existing paragraph (b)(4) of these sections.

Section 404.1575 Evaluation Guides if You Are SelfEmployed

If you are covered by section 221(m) of the Act and you are self employed, we are revising our rules in existing Sec. 404.1575 to explain how we will evaluate your work activity when
[[Page 66847]]
deciding whether you have engaged in substantial gainful activity following the completion of a trial work period for purposes of determining if your disability has ceased. (We are not amending our rules in Sec. 416.975 because your performance of substantial gainful activity does not affect your disability status for purposes of your continuing eligibility for SSI payments.) As we explained earlier, if you are selfemployed, we consider three tests to determine if you have engaged in substantial gainful activity. Since the three tests require us to consider your activities at work and their value to your business, we decided that we could not use these tests to decide that the work you do after you have received Social Security disability benefits for at least 24 months shows that you are able to engage in substantial gainful activity and are, therefore, no longer disabled. Based on section 221(m)(1)(B) of the Act, we concluded that we needed to provide a different test for considering whether that work is substantial gainful activity for purposes of determining whether your disability has ceased. Therefore, we will use a new evaluation test for that purpose. We refer to this new test as the countable income test.

To explain this new evaluation test and when we will apply it, we are revising existing paragraphs (a) and (c) of Sec. 404.1575 and adding a new paragraph (e). We are retaining all of the provisions of existing paragraph (a). However, we are restructuring the paragraph. We made the first two sentences of existing paragraph (a) the introductory text of paragraph (a) of final Sec. 404.1575. (We revised the first sentence of the paragraph to include a reference to new paragraph (e).) We included the remaining provisions of existing paragraph (a) in a new paragraph (a)(2), General rules for evaluating your work activity if you are selfemployed. Because of this change, we redesignated existing paragraphs (a)(1), (2), and (3) of Sec. 404.1575 as paragraphs (a)(2)(i), (ii), and (iii), respectively, of final Sec. 404.1575.

Following the first two sentences (the introductory text) of paragraph (a) of final Sec. 404.1575, we added a new paragraph (a)(1), How we evaluate the work you do after you have become entitled to disability benefits. In new Sec. 404.1575(a)(1), we explain which rules we will use to evaluate your work activity if you are self employed and you perform the work activity while you are entitled to Social Security disability benefits. (We explain that Social Security disability benefits means disability insurance benefits for a disabled worker, child's insurance benefits based on disability, or widow's or widower's insurance benefits based on disability.) We explain that the way we will evaluate your work activity will depend on whether the work occurs before or after you have received Social Security disability benefits for at least 24 months and on the purpose of the evaluation. We explain in new Sec. 404.1575(a)(1) that we will use the guides in new paragraph (e), which provide for the use of the countable income test, to evaluate the work activity you do after you have received such benefits for at least 24 months to determine whether you have engaged in substantial gainful activity for the purpose of determining whether your disability has ceased. In all other cases in which we evaluate your work activity as a selfemployed person to make a substantial gainful activity determination, we will apply the guides in Sec. 404.1575(a)(2) of these final rules. Section 404.1575(a)(2) of the final rules sets out the three tests we currently use to evaluate the work of a selfemployed person.

We explain in new Sec. 404.1575(a)(1) that we will use the three tests described in Sec. 404.1575(a)(2) to evaluate the work activity you do before you have received Social Security disability benefits for 24 months to determine if you have engaged in substantial gainful activity, regardless of the purpose of the evaluation. We also explain that, after we have determined that your disability has ceased during the reentitlement period because you performed substantial gainful activity, we will use the three tests to determine whether you are doing substantial gainful activity in subsequent months in or after your reentitlement period, whether your work activity occurs before or after you have received Social Security disability benefits for at least 24 months. After we have determined that your disability has ceased due to the performance of substantial gainful activity during the reentitlement period, we make substantial gainful activity determinations to decide whether benefits should be started or stopped for a subsequent month(s) during the reentitlement period and to decide when your entitlement to benefits terminates (see Sec. 404.1592a(a)(2) and (3)). We may use the three tests that involve looking at work activity in making these substantial gainful activity determinations because these determinations do not involve deciding that you are no longer disabled.

We are revising existing Sec. 404.1575(c). In amended Sec. 404.1575(c)(1), Determining countable income, we explain what deductions are applied to your net income to decide the amount of your income we use to determine if you have done substantial gainful activity. We explain that we refer to this amount as your countable income. In amended Sec. 404.1575(c)(2), we explain when we consider your countable income to be substantial.

In new Sec. 404.1575(e), Special rules for evaluating the work you do after you have received social security disability benefits for at least 24 months, we explain the countable income test and when it applies. We explain that we will apply this test to evaluate the work you are doing or have done if, at the time you perform the work, you are entitled to Social Security disability benefits and you have received such benefits for at least 24 months. We explain that we will apply the test only when we are evaluating that work to consider whether you have engaged in substantial gainful activity or demonstrated the ability to engage in substantial gainful activity for the purpose of determining whether your disability has ceased because of your work activity. We explain that, under the countable income test, we will not consider the services you perform in that work to determine that the work you are doing shows that you are able to engage in substantial gainful activity and are, therefore, no longer disabled. However, we may consider the services you perform to determine that you are not doing substantial gainful activity.

In new paragraph (e)(2), The 24month requirement, we explain that we consider you to have received Social Security disability benefits for at least 24 months beginning with the first day of the first month following the 24th month for which you actually received Social Security disability benefits that you were due or constructively received such benefits. We explain that we will consider you to have constructively received a benefit for a month for purposes of the 24 month requirement if you were otherwise due a social security disability benefit for that month and your monthly benefit was withheld to recover an overpayment.

We explain the new evaluation test in new paragraph (e)(3), The countable income test. Under the countable income test, we will compare your countable income to the substantial gainful activity earnings guidelines in Sec. 404.1574(b)(2) to determine if you have engaged in substantial gainful activity. We will consider that you have engaged in substantial gainful activity if your monthly countable income averages more than the amounts in Sec. 404.1574(b)(2) unless the evidence shows that you did not render
[[Page 66848]]
significant services in the month(s). If your average monthly countable income is equal to or less than the amounts in Sec. 404.1574(b)(2), or if the evidence shows that you did not render significant services, we will consider that your work as a selfemployed person shows that you have not engaged in substantial gainful activity.
Sections 404.1590 and 416.990 When and How Often We Will Conduct a Continuing Disability Review

We added two new paragraphs to existing Sec. Sec. 404.1590 and 416.990 to explain when we will and will not start continuing disability reviews if you are in the Ticket to Work program and your ticket is in use (new paragraph (h)), and if you are covered by the provisions of section 221(m) of the Act (new paragraph (i)).

In new Sec. Sec. 404.1590(h) and 416.990(h), If you are participating in the Ticket to Work program, we restate our rules already set out in Sec. Sec. 411.160 and 411.165 that we will not start a continuing disability review for you during the period in which you are using a ticket under the Ticket to Work program. This amendment to existing Sec. Sec. 404.1590 and 416.990 is not a change in policy, but incorporates rules already set out in Sec. Sec. 411.160 and 411.165. In addition, we provide in new Sec. 404.1590(h) that this provision does not apply to the reviews we do under title II using the rules in Sec. Sec. 404.1571404.1576 to determine whether the work you have done shows that you are able to do substantial gainful activity (see Sec. 411.160(b)). (As we have already noted, your performance of substantial gainful activity does not affect your SSI eligibility because of the work incentive provisions of section 1619 of the Act.)

In new Sec. Sec. 404.1590(i) and 416.990(i), If you are working and have received social security disability benefits for at least 24 months, we provide rules for you if you are covered by section 221(m) of the Act. In new paragraph (i)(1), General, we explain that we will not start a continuing disability review based solely on your work activity if you are currently entitled to benefits based on disability under title II of the Act and you have received such benefits for at least 24 months. We also list the types of title II disability benefits that qualify.

Although section 221(m)(1)(A) says that a continuing disability review may not be ``scheduled'' based solely on your work activity, we use the word ``start'' in this provision and the remainder of new paragraph (i) of Sec. Sec. 404.1590 and 416.990 to avoid any confusion about what we will do, and to use consistent language throughout these sections of our rules. Existing provisions in Sec. Sec. 404.1590 and 416.990 use both words. We use the word ``start'' in the opening sentence of existing Sec. Sec. 404.1590(b) and 416.990(b) to explain when we will do a continuing disability review. We then use the word ``scheduled'' in existing paragraphs (b)(1), (b)(2) and (b)(10) to explain when we will start a continuing disability review that we have scheduled in advance; that is, based on a diary for ``medical improvement expected,'' ``medical improvement possible,'' or ``medical improvement not expected,'' or on a ``vocational reexamination diary.'' In existing paragraph (b)(11) of Sec. 416.990, we specify a timeframe within which we must review the cases of certain children (i.e., by the first birthday of the child) unless certain conditions are met. In existing paragraph (b)(11)(ii) of Sec. 416.990, which discusses one of the conditions, we use the word ``schedule'' to describe a situation in which we set a time in advance for conducting a continuing disability review. The remaining provisions in existing paragraphs (b)(3)(b)(9) of Sec. Sec. 404.1590 and 416.990 describe situations in which we do not schedule continuing disability reviews in advance but may start them sooner than the regularly scheduled reviews.

In new Sec. Sec. 404.1590(i)(2) and 416.990(i)(2), The 24month requirement, we provide rules for determining whether the 24month requirement in new Sec. Sec. 404.1590(i)(1) and 416.990(i)(1) is met. In new paragraph (i)(2)(i), we explain that months for which you have actually received Social Security disability benefits under title II that you were due, or for which you have constructively received such benefits, will be counted for the 24month requirement. The 24 months do not have to be consecutive. We explain that we will consider you to have constructively received a benefit for a month for purposes of the 24month requirement if you were otherwise due a social security disability benefit for that month and your monthly benefit was withheld to recover an overpayment. We also explain that we do not count months for which you were technically ``entitled'' but did not actually or constructively receive benefit payments. In addition, we clarify that months for which you received only SSI payments and months for which you received continued benefits pending the appeal of a medical cessation determination, do not count toward the 24month requirement.

In new Sec. Sec. 404.1590(i)(2)(ii) and 416.990(i)(2)(ii), we explain that you will not meet the 24month requirement for purposes of new Sec. 404.1590(i)(1) or Sec. 416.990(i)(1) if you have not received Social Security disability benefits for at least 24 months as of the date on which we start a continuing disability review. We explain that the date on which we start a continuing disability review is the date on the notice we send you that tells you that we are beginning the review.

In new Sec. Sec. 404.1590(i)(3) and 416.990(i)(3), When we may start a continuing disability review even if you have received social security disability benefits for at least 24 months, we include a reminder that, even if you meet the requirements of new paragraph (i)(1) of Sec. 404.1590 or Sec. 416.990, we may still start a continuing disability review if we have another reason to do so; that is, when the fact that you are working is not the sole reason for the continuing disability review. We include two examples, including a reminder that we must still schedule you for regularly scheduled continuing disability reviews, as provided under section 221(m)(2)(A) of the Act.

In Sec. 404.1590, we include a new paragraph (i)(4), Reviews to determine whether the work you have done shows that you are able to do substantial gainful activity, to clarify that the exemption from continuing disability reviews in new paragraph (i)(1) of that section does not apply to certain reviews we conduct under title II of the Act. We explain that paragraph (i)(1) does not apply to the reviews we conduct using the rules in Sec. Sec. 404.1571404.1576 to determine whether the work you have done shows that you are able to do substantial gainful activity and are, therefore, no longer disabled. In other words, if section 221(m) of the Act applies to you, we may not be able to start a medical continuing disability review, but we can still start a work continuing disability review to determine if you are doing substantial gainful activity. We do not conduct similar reviews under title XVI because of the work incentive provisions in section 1619 of the Act. Therefore, we do not include a similar provision in the amendments to Sec. 416.990.

As we explain earlier in this preamble, if we start a continuing disability review based on your work activity, we will provide an opportunity for you to request that we review that action if you believe that you are protected by section 221(m)(1)(A) of the Act and that the action of starting the continuing disability review was in error. If we review the action and conclude that the initiation of the medical continuing disability review
[[Page 66849]]
was in error, we will discontinue the processing of the continuing disability review. If the continuing disability review proceeds to completion and we make a medical cessation determination, we provide a procedure in new Sec. Sec. 404.1590(i)(5) and 416.990(i)(4) under which we will vacate the medical cessation determination if the action of starting the continuing disability review is shown to have been in error because you were protected by section 221(m)(1)(A). You must provide evidence to us that establishes that you met the requirements of new Sec. 404.1590(i)(1) or Sec. 416.990(i)(1) as of the date of the start of your continuing disability review and that the start of the review was erroneous. In addition, we must receive the evidence within 12 months of the date of the notice of the initial determination of medical cessation.

We also amended existing paragraph (a) of Sec. Sec. 404.1590 and 416.990 to include references to new paragraphs (h) and (i) of these sections.

Section 404.1592a The Reentitlement Period

We amended existing paragraph (a) of Sec. 404.1592a to explain when the special rules in amended Sec. Sec. 404.1574(b)(3)(iii) and 404.1575(e) may apply, and when they will not apply, in making substantial gainful activity determinations. We also revised existing paragraph (a)(3) of Sec. 404.1592a to separate the provisions into two lower level paragraphs. We designated the second, third, and fourth sentences of existing paragraph (a)(3) as new paragraph (a)(3)(i). We designated the fifth, sixth, and seventh sentences of existing paragraph (a)(3) as new paragraph (a)(3)(ii).

We amended existing paragraph (a)(1) of Sec. 404.1592a to include a reference to the special rules for evaluating the work you do after you have received Social Security disability benefits for at least 24 months. We are including this reference in the list of examples of the relevant rules we will apply when deciding whether the work you do following completion of a trial work period is substantial gainful activity for purposes of determining whether your disability has ceased. We are also making a similar change in newly designated paragraph (a)(3)(ii).

We revised the last sentence of existing paragraph (a)(2)(i), and added in newly designated paragraph (a)(3)(i), of this section to clarify that, if we have decided that your disability ceased because you performed substantial gainful activity, we will not apply the special rules in amended Sec. Sec. 404.1574(b)(3)(iii) and 404.1575(e) in making substantial gainful activity determinations for purposes of determining whether benefits should be paid for any subsequent months of the reentitlement period or whether your entitlement to benefits has terminated. The special rules in amended Sec. Sec. 404.1574(b)(3)(iii) and 404.1575(e) do not apply in making these substantial gainful activity determinations because these determinations do not involve deciding whether your disability has ceased.
Section 404.1594 How We Will Determine Whether Your Disability Continues or Ends
Section 416.994 How We Will Determine Whether Your Disability Continues or Ends, Disabled Adults

We are adding new Sec. 404.1594(i), If you work during your current period of entitlement based on disability or during certain other periods, and new Sec. 416.994(b)(8), If you work during your current period of eligibility based on disability or during certain other periods, to:

In new Sec. Sec. 404.1594(i)(1) and 416.994(b)(8)(i), we clarify our rules about the last two steps of the medical improvement review standard sequential evaluation process for determining whether disability continues or ends to reflect an interpretation contained in an operating instruction we have been using for a number of years. The provisions clarify that we will not consider work you are doing now, or work that you did, during your current period of entitlement based on disability under title II (new Sec. 404.1594(i)(1)), or during your current period of eligibility based on disability under title XVI (new Sec. 416.994(b

FOR FURTHER INFORMATION CONTACT

Kristine Erwin-Tribbitt, Policy Analyst, Office of Program Development and Research, Social Security Administration, 6401 Security Boulevard, Baltimore, Maryland 21235 6401. Call (410) 9653353 or TTY (410) 9665609 for information about these final rules. For information on eligibility or filing for benefits, call our national tollfree number 1(800) 7721213 or TTY 1 (800) 3250778. You may also contact Social Security Online at http://www.socialsecurity.gov/ .