                                                                        F I L E D
                                                                  United States Court of Appeals
                                                                          Tenth Circuit
                                    PUBLISH
                                                                         APR 15 1999
                  UNITED STATES COURT OF APPEALS
                                                                     PATRICK FISHER
                                                                              Clerk
                               TENTH CIRCUIT




 CATHY McNAMAR,

             Plaintiff-Appellant,

 v.                                                    No. 98-5077

 KENNETH S. APFEL, Commissioner
 of Social Security Administration,

             Defendant-Appellee.


          APPEAL FROM THE UNITED STATES DISTRICT COURT
             FOR THE NORTHERN DISTRICT OF OKLAHOMA
                       (D.C. No. 96-CV-1134-M)


Submitted on the briefs:

Paul F. McTighe, Jr., Tulsa, Oklahoma, for Plaintiff-Appellant.

Stephen C. Lewis, United States Attorney, Peter Bernhardt, Assistant U.S.
Attorney, Tulsa, Oklahoma, and Tina M. Waddell, Chief Counsel, Region VI,
Mark J. Kingsolver, Deputy Chief Counsel, and Linda H. Green, Assistant
Regional Counsel, Office of the General Counsel, Social Security Administration,
Dallas, Texas, for Defendant-Appellee.


Before BALDOCK , BARRETT and HENRY , Circuit Judges.


BARRETT , Senior Circuit Judge.
       Appellant Cathy McNamar appeals the district court’s affirmance of the

final decision of the Commissioner of Social Security reducing appellant’s

disability benefits by the amount of her Civil Service disability benefits, without

excluding her monthly health insurance premium. Because the Commissioner’s

decision is supported by substantial evidence and correct legal standards were

applied, we affirm.   1



       Appellant is disabled by Crohn’s Disease. She receives $747 in monthly

disability benefits from the Civil Service Retirement System, from which health

insurance premiums and taxes are deducted. Appellant also receives social

security disability benefits. Because appellant is eligible to receive both social

security disability benefits and disability benefits from another government plan,

federal law requires that her social security benefits be reduced.   See 42 U.S.C.

§ 424a(a); 20 C.F.R. § 404.408(a)(2). This appeal involves the amount by which

appellant’s social security benefit must be reduced.

       The Commissioner offset appellant’s entire civil service disability payment

against her social security disability payment, without excluding her monthly


       1
              After examining the briefs and appellate record, this panel has
determined unanimously to grant the parties’ request for a decision on the briefs
without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case
is therefore ordered submitted without oral argument.

                                             -2-
health insurance premiums from the offset. The Commissioner’s decision was

based on the language of 20 C.F.R. § 404.408(d), which identifies expenses that

may be excluded from the offset, and on several provisions of the Social Security

Administration’s Program Operations Manual System (POMS), a set of policies

issued by the Administration to be used in processing claims. The district court

affirmed the computation. On appeal, appellant argues that her health insurance

premiums are future medical expenses which should have been excluded from

the offset pursuant to 20 C.F.R. § 404.408(d).

       We review the Commissioner’s decision to determine whether it is

supported by substantial evidence and whether correct legal standards were

applied. See Hawkins v. Chater , 113 F.3d 1162, 1164 (10th Cir. 1997). Our

review of an agency’s interpretation of a statute or regulation it administers is

highly deferential.     See Thomas Jefferson Univ. v. Shalala     , 512 U.S. 504, 512

(1994); Wilkins v. Callahan , 127 F.3d 1260, 1262 (10th Cir. 1997). Such an

interpretation is given controlling weight unless it is arbitrary, capricious, or

contrary to law.      See Thomas Jefferson Univ. , 512 U.S. at 512 (“[T]he agency’s

interpretation must be given controlling weight unless it is plainly erroneous or

inconsistent with the regulation.”) (quotations omitted);       New Mexico Dep’t of

Human Servs. v. Department of Health & Human Servs.             , 4 F.3d 882, 884

(10th Cir. 1993).


                                             -3-
       The offset statute itself does not authorize the exclusion of any amounts

from the offset.   See 42 U.S.C. § 424a(a). The Social Security Administration’s

implementing regulation does, however, exclude the following amounts:

       [a]mounts paid or incurred, or to be incurred, by the individual for
       medical, legal, or related expenses in connection with the claim for
       public disability payments . . . or the injury . . . on which the public
       disability award . . . is based, . . . to the extent they . . . reflect either
       the actual amount of expenses already incurred or a reasonable
       estimate . . . of future expenses. Any expenses . . . not reflecting a
       reasonable estimate of the individual’s actual future expenses will
       not be excluded.

20 C.F.R. § 404.408(d). The agency has further clarified this regulation in two

POMS provisions which appear to foreclose appellant’s argument that her health

insurance premiums should have been excluded as future medical expenses.                See

POMS DI 52001.050(C)(2), attached to Appellant’s Br. (expressly stating that

health insurance premiums should be offset against the social security disability

benefit, and that such amounts “are not excludable expenses”); POMS

DI 52001.535(2) and (7), attached to Appellant’s Br. (requiring verification of

medical expenses, and stating that amounts for future medical expenses which

are not specified in the public disability award may not be excluded until they

are actually incurred). The question then, is whether these agency interpretations

are arbitrary, capricious, or contrary to law.

       Because the offset statute does not exclude any amounts from the required

offset, see § 424a(a), the Commissioner’s failure to exclude appellant’s health

                                             -4-
insurance premiums cannot be contrary to the statute. Nor does it appear that the

failure to exclude such premiums is contrary to the implementing regulation, as

the premiums do not represent an estimate of appellant’s actual future expenses

related to her Crohn’s disease. Although appellant’s health insurance may, at

some point, pay for disability-related medical expenses, it is not limited to these

expenses, but instead may be used to pay for an entire spectrum of medical care.

Finally, appellant has not shown that the agency’s interpretation of the setoff

requirement, as enunciated in the POMS, is arbitrary or capricious.

      The judgment of the United States District Court for the Northern District

of Oklahoma is AFFIRMED.




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