TN 47 (09-08)

Citations:

Section 1612(a)(1)(A) and 1612(a)(2) of the Social Security Act

A. Introduction

The policy and procedures in this section are effective for Supplemental Security Income (SSI) benefits payable on or after

September 1, 2008 and are based on the Heroes Earnings Assistance and Relief Tax Act of 2008 (the Heart Act) that changed how we treat certain cash payments to members of the Uniformed Services. Such cash payments are considered earned income for SSI purposes.

The policy and procedures before September 1, 2008 affecting cash payments and other policies not specifically addressed in this section e.g.; transitional compensation, overpayments, retroactive adjustments, resources, etc., continue to apply (see SI 00830.540 Uniformed Services - Pay and Allowances, Effective Before September 1, 2008).

B. Definitions

1. Additional pay

Additional pay is any extra increment in pay, other than an increase in basic pay (e.g., COLAs, promotions). Increases in basic pay include items such as cost-of-living allowances (COLA) and promotions.

2. Advance pay

Advance pay is a cash loan to be repaid in cash installments, usually by payroll deductions, rather than by future work. Advance pay is not taxed and is not income for SSI purposes. (See SI 00815.350 for information regarding the treatment of loans in the SSI program.)

3. Allowances

Allowances are cash benefits that compensate the service member, at least in part, for the expenses of housing, food, clothing, and special situations during periods of active duty service. Allowances are not paid for weekend drills of Reserve and National Guard components.

Allowances are not subject to FICA tax and usually are not subject to income taxes.

Often, for accounting purposes, a service branch changes a subcategory of allowance retroactively (e.g., from one type of subsistence allowance to another). The change is explained on the pay slip by showing, as an entitlement, the full amount due for the earlier month under the correct subcategory (e.g., leave rations). The full amount previously paid as the entitlement for the earlier month under the incorrect subcategory is shown as a deduction (e.g., separate rations). The amounts may be identical or different. (See SI 00830.540D.7. for the policy governing retroactive adjustments.)

4. Basic allowance for housing (BAH)

The basic allowance for housing (BAH) is an amount of money that a service member receives to pay for housing not provided by the Government. It is a combination of the old basic allowance for quarters (BAQ) and the variable housing allowance (VHA). The BAH was designed to make housing allowances more equitable throughout the services and the ranks, and more in line with civilian cost of living in the areas surrounding military installations.

In some cases, the service branch may pay a BAH to a service member living in free on-base housing, but then deduct the allowance (rather than rent) in the same month. This transaction is merely for accounting purposes and results in a zero payment transaction. What is actually received is rent-free shelter. The BAH is based on the service person's rank, and has nothing to do with the current market value (CMRV) of the shelter. The CMRV of the shelter must be obtained, for presumed maximum value rebuttal purposes, by determining what the shelter would rent for in the community (i.e., off the military installation).

5. Basic allowance for subsistence (BAS)

Subsistence means food and is also referred to as rations. Service members usually receive either free rations from a service facility or an allowance for rations. (The value of free rations does not appear on pay records.)

Effective 2002, subsistence is paid at a fixed monthly rate for both officers and enlisted persons which applies to all branches of military service.

6. Basic Discount Meal Rate (BAS DISC MEAL RATE)

The Basic Discount Meal Rate (BAS DISC MEAL RATE) is the amount deducted from the service member’s pay for subsistence (rations) when a meal card is issued for purchasing food at an on-base dining hall. The meal card is based on a standard daily rate.

7. Continental United States Cost of Living Allowance (CONUS COLA)

The CONUS COLA is paid to members of the Uniformed Services as compensation for a portion of excess costs for non-housing expenses incurred based on the geographical duty location. CONUS COLA is a monthly entitlement based on a 30-day month, the same as BAH. Private sector pay scales tend to reflect local living costs in United States locations, but military pay tables do not. The purpose of the CONUS COLA is to provide compensation for variations in non-housing costs in the continental United States. The CONUS COLA is considered a COLA (wages). It is not considered a special pay, additional pay, or an incremental increase in pay.

8. Hostile fire/imminent danger pay

Hostile fire pay and imminent danger pay (sometimes referred to as “combat pay”) are types of special pay to a service member who is:

• subject to hostile fire or explosion of hostile mines; or

• on duty in an area in which he/she is in imminent danger of being exposed to hostile fire or explosion of hostile mines, and

• while on duty in that area, other service members in the same area are subject to hostile fire or explosion of hostile mines; or

• killed, injured, or wounded by hostile fire, explosion of a hostile mine, or any other hostile action.

9. Leave and Earnings Statement (LES)

The LES is the monthly pay slip issued to service members. Each service branch has its own version. SI 00830.540I. lists common abbreviations used on LESs.

10. Privatized military housing

Military bases enter into privatization agreements with private companies to provide housing for military personnel. Under privatization, the private company builds or renovates military housing and makes it available for rent to service members. The rent is limited to the service member's BAH. Privatized housing may be on the military base or off the base. Because privatization agreements are developed locally by military bases, they may be referred to under different names. Some are called “Public/Private Ventures.”

11. Reservist differential pay

Reservist differential pay is earned income for SSI purposes. Beginning in March 2009, under 5 U.S.C. 5538, employing agencies must pay reservist differential payments to eligible Federal civilian employees who are members of the Reserve or National Guard called or ordered to active duty under certain specified provisions of law. Federal agencies must provide a payment—a "reservist differential"—equal to the amount by which an employee’s projected civilian "basic pay" for a covered pay period exceeds the employee’s actual military "pay and allowances" allocable to that pay period.

12. Special and incentive pay

Special and incentive pay is compensation to specific groups of uniformed people for inconveniences or hazards, or provides incentives for those with skills in high demand to join or remain in the service. Special pay includes:

• enlistment and reenlistment bonuses;

• flight pay;

• sea pay; and

• more than 30 additional types of pay.

Special and incentive pay is usually subject to income taxes but is not subject to FICA tax.

C. Policy

1. General

All cash payments, other than for on-base or privatized military housing, paid for service as a member of a uniformed service, except those listed in SI 00820.400C.3., are treated as earned income for SSI purposes.

NOTE: A service member’s LES will identify the type of cash payment and the amount for each. See SI 00830.540 for an explanation of the common LES abbreviations.

Only basic pay and CONUS COLA are considered wages for title II coverage purposes.

2. Types of cash payments

a. Additional pay

The policy for determining whether additional pay is income for SSI purposes is in SI 00830.540E.3. If the additional pay is considered income, it is treated as earned.

b. BAH for on base and privatized military housing

Service members and their families living in on-base housing may receive free housing. Service members and their families living in on-base housing or in privatized military housing may receive a BAH payment or the military may direct a BAH to a housing contractor by way of payroll deduction or allotment. In each case, the housing received is counted as outside ISM subject to the PMV rule. The BAH is not cash income.

NOTE: In-kind shelter received by a service member or the service member’s family is ISM to all individuals who benefit.

c. BAH for private housing

If service members and their families who live in private housing receive a BAH payment, it is earned income for SSI purposes.

d. BAS

A BAS payment for food is earned income for SSI purposes. If a deduction is made from the BAS to pay for meals eaten on base (e.g., a meal card), the gross amount of the BAS is still earned income, not ISM.

NOTE: All military personnel are required by military regulations to pay for their meals.

e. Clothing allowance

A cash payment to purchase clothing is earned income.

3. Exclusions

The following cash payments are excluded from income for SSI purposes:

• hostile fire and imminent danger payment,

See SI 00830.540D.3. for how the payment is treated for resource purposes;

• advance pay; and

• in deeming situations, other kinds of additional pay that may be received by military personnel serving in a combat zone. See SI 00830.540D.8. for the policy regarding additional pay to a deemor), and,

• refunds of allowances previously counted in a prior month (see SI 00815.250 for the policy on refunds).

D. Procedure

If the pay is not specifically excluded per SI 00820.400C.3, treat the income as earned or ISM, as appropriate.

1. Verification

Verify the amount of pay received following the procedures in SI 00830.540E. (Uniformed Services—Pay and Allowances Effective Before September 1, 2008).

2. BAH

Determine if a service member (and family) lives in on-base housing, in privatized military housing or private housing. Contact the base housing staff if there is a question.

Treat a BAH payment for private housing as earned income.
Assume that ISM applies when the service member lives in:

• privatized military housing; or

• on-base housing.

3. BAS

Treat the gross BAS amount as earned income.

4. Systems input

• MSSICS

Enter the amount of the pay that is considered earned income on the MSSICS IWAG screen.

Enter in Remarks, the total amount of cash payments received, other than basic pay and CONUS COLA, which was included in gross wages.

• Non-MSSICS

Enter the amount of cash remuneration received in the EN field on the SSA-450SI or SSA-1719B, as appropriate.

Enter the amount of cash payments received, other than basic pay and CONUS COLA, in the Remarks field of the SSR (see SM 01005.998 for a listing of the SSA-450SI fields, SM 01301.841 for the input instructions for the SSA-1719B Remarks field and SM 01301.900 for a listing of the SSA-1719B fields).

5. Documentation

Document evidence of pay received per the procedures in SI 00830.540E., Uniformed Services—Pay and Allowances Effective Before September 1, 2008, on a locked MSSICS DROC screen, EVID screen or fax the paper documentation (e.g., SSA-5002, LES) into NDRED or CEF/EF, as appropriate.

E. References

• SI 00835.350, ISM

• SI 00835.370, Rent-Free Shelter

• SI 00830.540, Uniformed Services - Pay and Allowances Effective Before September 1, 2008.