Medicare Part D Subsidies, 77664-77685 [05-24633]

Agencies

• Social Security Administration

[Federal Register Volume 70, Number 250 (Friday, December 30, 2005)]
[Rules and Regulations]
[Pages 77664-77685]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-24633]



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Part V





Social Security Administration





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20 CFR Part 418



Medicare Part D Subsidies; Final Rule

Federal Register / Vol. 70, No. 250 / Friday, December 30, 2005 / 
Rules and Regulations

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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 418

RIN 0960-AG03


Medicare Part D Subsidies

AGENCY: Social Security Administration (SSA).

ACTION: Final rules.

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SUMMARY: We are adding to our regulations a new part to contain rules 
that we will apply when we evaluate applications for premium and cost-
sharing subsidies under the Medicare program. We are including a new 
subpart, Medicare Part D Subsidies, to this part. This new subpart 
contains the rules that we use to determine eligibility for premium and 
cost-sharing subsidies under the Medicare Part D program, which was 
added by the Medicare Prescription Drug, Improvement, and Modernization 
Act of 2003 (Medicare Modernization Act or MMA). These final rules 
describe: What the new subpart is about; how we determine whether you 
are eligible for premium and cost-sharing subsidies; how we redetermine 
your eligibility for a subsidy; how you apply for a subsidy; how we 
evaluate your income and resources; when your eligibility for premium 
and cost-sharing subsidies terminates; how you may report changes in 
your circumstances; and how you can appeal a determination we make 
under the Part D subsidy program.

DATES: These final rules are effective on December 30, 2005.

FOR FURTHER INFORMATION CONTACT: Craig Streett, Team Leader, Office of 
Income Security Programs, Social Security Administration, 252 Altmeyer 
Building, 6401 Security Boulevard, Baltimore, MD 21235-6401, 410-965-
9793 or TTY 1-800-966-5906, for information about this Federal Register 
document. For information on eligibility or filing for benefits, call 
our national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or 
visit our Internet site, Social Security Online, at https://
www.socialsecurity.gov.

SUPPLEMENTARY INFORMATION:

Electronic Version

    The electronic file of this document is available on the date of 
publication in the Federal Register at https://www.gpoaccess.gov/fr/
index.html.

Statutory Provisions

    Section 101 of the Medicare Modernization Act (Pub. L. 108-173), 
which was enacted into law December 8, 2003, adds sections 1860D-1 
through 1860D-24 to the Social Security Act (the Act), and establishes 
a new Part D program for voluntary prescription drug coverage effective 
January 1, 2006. The Centers for Medicare & Medicaid Services (CMS) has 
overall responsibility for implementing the voluntary Medicare Part D 
prescription drug benefit and published final rules on January 28, 2005 
at 70 FR 4193. As described in these final rules, we are responsible 
only for the premium and cost-sharing subsidy (the subsidy) portion of 
the Medicare Part D prescription drug benefit program. We are 
authorized to make eligibility determinations, provide appeal 
procedures, and perform eligibility redeterminations for the Part D 
subsidy in the 50 States and the District of Columbia. We are not 
authorized to undertake this task for Medicare beneficiaries who live 
in the territories or who live outside of the 50 States or the District 
of Columbia.
    Section 702(a)(5) of the Act allows us to make the rules and 
regulations necessary or appropriate to carry out the functions of SSA. 
Section 1860D-14 of the Act provides for premium and cost-sharing 
subsidies of prescription drug coverage for certain individuals with 
low income and resources. An individual must be entitled to benefits 
under Medicare Part A or enrolled in Medicare Part B in order to 
receive a subsidy. Section 1860D-14(a)(3)(B) directs us to make subsidy 
determinations. It also requires us to provide appeal procedures for 
subsidy eligibility determinations and to perform redeterminations. 
(State Medicaid agencies have similar responsibilities that are covered 
in CMS' final rules. Additionally, CMS will conduct annual 
redeterminations of deemed status and will reconsider certain CMS low 
income subsidy (LIS) determinations; CMS LIS reconsideration procedures 
will be addressed in the agency's operating instructions.) Generally, 
the agency that processes the subsidy application will handle 
redeterminations and appeals related to that initial eligibility 
determination.

Background

    The purpose of the subsidy program is to assist some Medicare 
beneficiaries who have limited financial means with paying for 
voluntary Medicare prescription drug coverage under the Medicare Part D 
program. If you have limited income and resources, you may be eligible 
for a subsidy to help you pay your monthly premium, your copayments, 
and the annual deductible under your Medicare Part D prescription drug 
plan. If you are a Medicare beneficiary or are applying for Medicare 
benefits and you want to receive a subsidy, you must follow a two-step 
process to obtain prescription drug benefits:
     File a subsidy application either with us or with your 
State Medicaid Agency to see if you qualify for a subsidy; and
     Enroll with an authorized prescription drug provider for 
the Medicare Part D prescription drug benefit; i.e., a prescription 
drug plan. (We do not enroll beneficiaries for Medicare Part D. If you 
are a Medicare beneficiary, you must take the necessary steps to enroll 
yourself with a participating approved prescription drug plan or 
Medicare Advantage plan that offers prescription drug coverage. 
Sections 423.32-423.34 of 42 CFR discuss the enrollment process, 
including the enrollment of full benefit dual-eligible individuals. You 
also may obtain information about enrolling on the Internet at 
www.medicare.gov or by calling CMS at 1-800-Medicare.)
    You may take these 2 steps in any order. However, if you have 
Medicare and receive Medicaid coverage, are enrolled in a Medicare 
Savings Program within your State, or receive Supplemental Security 
Income (SSI), you will be deemed eligible for the subsidy effective 
with the first month you meet any one of these conditions; and you do 
not need to file a subsidy application.
    Certain individuals with both Medicare and Medicaid, with Medicare 
Savings Programs, or with Medicare and receiving SSI payments but who 
have not enrolled in a prescription drug plan, will be able to take 
advantage of special enrollment processes. The special enrollment 
processes are discussed in the preamble to CMS' final rules published 
January 28, 2005 at 70 FR 4205-4209 and in CMS's regulations at 42 CFR 
423.34.

How To Become Eligible for a Subsidy

    Section 1860D-14 of the Act requires us to take applications for 
subsidies from individuals who are applying for Medicare Part D 
prescription drug coverage. These final rules describe the requirements 
you must meet to become eligible for a subsidy and what conditions will 
prevent you from receiving a subsidy. Criteria for eligibility include:
     You must be entitled to benefits under Medicare Part A 
(Hospital Insurance) and/or enrolled in Medicare Part B (Supplementary 
Medical Insurance) under title XVIII of the Act;

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     You must be enrolled in a Medicare prescription drug plan 
or Medicare Advantage plan with prescription drug coverage by the end 
of your enrollment period;
     You must reside in the United States as defined in Sec.  
418.3010;
     You (and your living with spouse, if applicable) must meet 
the income and resource requirements of the subsidy program; and
     You must apply for the subsidy.
    Conditions that could prevent you from receiving a subsidy include:
     You lose entitlement to or are not enrolled in Medicare 
Part A and you also lose eligibility for or are not enrolled in 
Medicare Part B, or
     You do not enroll or you are no longer enrolled with a 
Medicare prescription drug plan or Medicare Advantage plan with 
prescription drug coverage.
    These final rules also tell you that if we made the original 
determination of subsidy eligibility, we will periodically review your 
subsidy eligibility to make sure that you are still eligible for a 
subsidy and to determine whether you should receive a full or partial 
subsidy. The amount of subsidies for Part D premiums, deductibles, and 
co-payments will be based on the amount of your income and resources 
(and those of your spouse, if applicable) and your family size.
    Section 1860D-14(a)(3)(B)(ii) of the Act specifies that initial 
subsidy determinations will remain in effect for a period to be 
determined by the Secretary of Health and Human Services (HHS) but not 
to exceed 1 year. Section 1860D-14(a)(3)(B)(iv) provides that we shall 
conduct redeterminations periodically. We interpret these provisions 
together as envisioning prospective determinations that remain 
unchanged until we conduct the next redetermination of eligibility. To 
comply with the 1-year limitation in section 1860D-14(a)(3)(B)(ii), we 
will conduct the first redetermination within 12 months of our 
determination that you are eligible for a subsidy.
    However, we recognize that certain life events could have a 
significant impact on your income, resources or family size which in 
turn could impact your eligibility for a subsidy or the amount of your 
subsidy. Therefore, these final rules contain an exception to the 
general rule that a determination remains in effect until we conduct 
the next redetermination.
    Under that exception, if you are a subsidy-eligible individual and 
your income, resources or family size changes because of marriage, 
divorce, annulment, separation, resumption of members of a couple 
living together, or the death of your spouse, you may ask us to 
redetermine your subsidy based on your new circumstances. When you 
report such a change or we receive such a report from another source, 
we will send you a redetermination form. You must complete the form and 
return it to us so that we can redetermine your subsidy. The 
redetermined subsidy, if any, will be effective with the month after 
the month you request us to redetermine your subsidy. We will process 
other changes, such as the loss of a job, which you would report, in 
conjunction with your next redetermination.

Eligibility and Applying for a Subsidy

    Attaining eligibility for the subsidy under Medicare Part D is a 
two-step process. You must:
     Apply for the subsidy with us or your State Medicaid 
agency, and
     Enroll in Medicare Part D by enrolling in a Medicare 
prescription drug plan or Medicare Advantage plan with prescription 
drug coverage.
    You may take either step first, but the subsidy will not begin 
until you are enrolled in a Medicare Part D plan or Medicare Advantage 
plan with prescription drug coverage. If you file your application for 
the subsidy before the month you are enrolled in a Medicare Part D plan 
or Medicare Advantage plan with prescription drug coverage, the 
earliest month you can receive the subsidy is the month you are 
enrolled in such a plan.
    These final rules apply when you file for a Medicare Part D subsidy 
with us. As a condition of eligibility for the subsidy, section 1860D-
14(a)(3) of the Act requires that you, or your personal representative 
(as defined in 42 CFR 423.772), file an application with us or a State 
office that accepts Medicaid applications. Our application may be 
printed in paper form, completed by our employees on computer screens, 
or available on our Internet Web site, Social Security Online at http:/
/www.socialsecurity.gov.
    When you file an application we will determine your eligibility and 
provide you with appeal rights. If we find that you are eligible for 
the subsidy, we will also determine whether you should receive a full 
or partial subsidy. Timely filing also assures that you can receive the 
subsidy for any months you are eligible. If you inquire orally or in 
writing about the subsidy and tell us you want to file a subsidy 
application, or if you partially complete the subsidy application on 
our Internet Web site, we will use the date of your inquiry or the date 
we receive a partially completed Internet subsidy application from our 
Web site as your filing date for the subsidy if the requirements in 
Sec.  418.3230 are met.
    Your application for the subsidy remains in effect until we make a 
final determination on it. As stated in Sec.  418.3620, our initial 
determination is binding unless you request an appeal within the time 
period stated in Sec.  418.3630(a) and our decision on the appeal is 
binding unless you file an action in Federal district court seeking 
review of our final decision (see Sec.  418.3675). If you timely file 
an appeal of our initial determination, your application for the 
subsidy remains in effect until we make a decision on your appeal. If 
you are not enrolled in a Medicare Part D plan or Medicare Advantage 
plan with prescription drug coverage when you file your subsidy 
application, we will write and tell you about your eligibility for the 
subsidy and that you must be enrolled in such a plan in order to 
receive a subsidy.

How We Evaluate Your Income

    Section 1860D-14(a)(1)-(3) of the Act establishes income limits for 
eligibility for the Medicare Part D subsidy. Therefore, we will require 
you to provide information about the income you receive. If you are 
married and living with your spouse, we will also require you to 
provide information about your spouse's income. These final rules 
explain what we consider income, what we exclude from income counting, 
and how we will compute the amount of an individual's countable income.
    We will count both earned income and unearned income. Earned income 
consists of wages and net earnings from self-employment. Unearned 
income is any income that is not wages or net earnings from self-
employment. Unearned income includes Social Security benefits, Veterans 
benefits, public and private pensions, annuities, and any support and 
maintenance provided to you.
    We will not count all of the money you receive when we determine 
your eligibility for the subsidy. We will apply certain exclusions to 
income you receive when we determine countable income. As directed by 
the new legislation, these exclusions are modeled after the exclusions 
used in the SSI program. For example, we will exclude up to $20 per 
month ($240 per year) of your income. In addition, we will exclude from 
unearned income the first $60 per calendar quarter of income that is 
irregular or infrequent; e.g., cash received as a birthday gift, and 
the first $30 per calendar quarter of earned income that is irregular 
or infrequent.

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We will also exclude all interest and dividends.
    We will exclude up to $65 per month ($780 per year) and one-half of 
the remainder of your earned income (or your and your spouse's combined 
earned income). We also will exclude a portion of earned income if you 
are disabled under Social Security rules and have expenses related to 
your impairment that you must pay in order for you to work. We call 
these expenses impairment-related work expenses. Similarly, we will 
exclude a portion of your earned income if you are blind under Social 
Security rules and have expenses that must be paid in order for you to 
work. We will apply these exclusions based on these percentages in lieu 
of determining the actual work related expense in each case. The amount 
we exclude will be equal to the average percentage of gross earnings 
excluded for SSI recipients who have such expenses. Initially, the 
exclusion for impairment-related work expenses will be 16.3 percent of 
the gross earnings; the exclusion for blind work expenses will be 25 
percent of the gross earnings. However, if you have expenses that 
exceed the average, we will give you the opportunity to present 
evidence of your actual expenses and adjust the amount of earned income 
excluded accordingly. We may adjust the percentages if the average 
percentage of gross earnings excluded for SSI recipients with 
disability related or blind work expenses changes. If we make such a 
change we will publish a notice in the Federal Register.

How We Evaluate Your Resources

    Section 1860D-14(a)(3)(D) of the Act establishes resource limits 
for eligibility for the Medicare Part D subsidy. Therefore, we will 
require you to provide information about your resources. If you are 
married and living with your spouse we also will require you to provide 
information about your spouse's resources. These final rules explain 
what resources we will count and what resources we will not count; 
i.e., exclude from counting. As directed by the legislation, the 
resource exclusions are modeled after the resource exclusions in the 
SSI program.
    We will count liquid resources, which are cash, financial accounts, 
financial instruments, and other property that can be converted to cash 
within 20 workdays. Liquid resources can include stocks, bonds, mutual 
fund shares, insurance policies, and financial institution accounts, 
including checking and savings accounts or retirement accounts, such as 
individual retirement accounts and 401(k) accounts, revocable trusts, 
and funds in an irrevocable trust if the individual can direct the use 
of those funds. We will presume that these types of resources can be 
converted to cash within 20 workdays and are countable. However, if the 
individual establishes that a particular resource cannot be converted 
to cash within 20 workdays, we will not count it as a resource in the 
subsidy determination. We also will count the equity value of real 
property that you own except for the home that is your principal place 
of residence and the land it resides on. We will not count other 
nonliquid resources such as motor vehicles and irrevocable trusts.

Verification

    We will compare the information you provide on your application to 
information in our records and information we obtain from other Federal 
agencies. If necessary, we will contact you to reconcile any 
discrepancies between the information on your application and the 
information from the Federal agencies. We may ask you to submit 
documents, such as bank statements, to resolve discrepancies.

Changes in Your Subsidy

    Section 1860D-14(a)(3)(B)(iv) of the Act requires us to redetermine 
your continuing subsidy eligibility periodically. During those 
redeterminations, we will reevaluate your income and resources to see 
if you continue to be eligible for a subsidy. If you are still eligible 
there may be an increase or decrease in the amount of your subsidy. 
These final rules explain how we will make adjustments to or terminate 
subsidies as a result of periodic redeterminations or redeterminations 
based on reports of death, marriage, divorce, annulment, separation, or 
resumption of living together. Any determinations made as a result of 
changes in your circumstances will be a new initial determination, and 
we will notify you of the determination in writing and explain your 
right to appeal that determination.

If You Disagree With Our Determination of Your Subsidy

    Section 1860D-14(a)(3)(B)(iv)(II) of the Act requires us to 
establish appeal procedures for subsidy eligibility determinations 
similar to the appeal procedure for the SSI program. The procedures in 
these final rules will apply only if we, not a State Medicaid agency, 
make the initial determination. If CMS determines that you no longer 
meet deemed status because you are no longer eligible for SSI (and CMS 
determines you are not eligible for Medicaid or the Medicare Savings 
Program), CMS may refer you to us about your SSI eligibility.
    We have a process for you to appeal our eligibility determination 
on your subsidy application, and our determinations of whether you can 
receive a full or partial subsidy, of an adjustment to your subsidy, or 
of a termination of your subsidy eligibility. We also explain the 
rights of your spouse whose eligibility could be adversely affected by 
your appeal. In these final rules, the term ``the appeal process,'' 
means the same as ``the administrative review process,'' and we use 
these terms interchangeably throughout.
    The administrative review process will provide you one level of 
administrative review. Under these final rules, if you decide you want 
to appeal, you may choose between either a hearing via telephone or a 
case review. Both the telephone hearing and the case review are at the 
same level of the appeals process. You will have an opportunity to 
review the information we use in making a decision and to give us more 
information that you may want us to consider. You can also have 
witnesses at your hearing if you choose.
    In addition, you can have a personal representative help you with 
your appeal or represent you. We will work with your representative 
just as we would work with you. CMS regulations (42 CFR 423.772), which 
we will apply here, define a personal representative as:
     An individual who is authorized to act on behalf of the 
applicant;
     If the applicant is incapacitated or incompetent, someone 
acting responsibly on his or her behalf, or
     An individual of the applicant's choice who is requested 
by the applicant to act as his or her representative in the application 
process.
    You must contact us within 60 days of the date you receive notice 
of the initial determination to ask for an appeal of your subsidy 
determination. If you miss the deadline for requesting an appeal, you 
can request more time if you can show us you have good cause for 
missing the deadline. Once we make a decision on your appeal, we will 
send you a written notice explaining our decision. If you are 
dissatisfied with our final decision, you may file an action in Federal 
district court. As we explain in Sec.  418.3670, if we dismiss your 
appeal, we will mail a written notice of the dismissal to you, but the 
dismissal is not subject to judicial review and is binding on you 
unless we vacate it.

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    The issues that we will review are the issues with which you 
disagree. We may consider other issues, but we will provide you with 
advance notice of these other issues, as explained in Sec.  418.3625.
    We may correct clerical errors if discovered within 60 days of the 
date of our initial determination. We will notify you of our revised 
determination as explained in Sec.  418.3678.

Explanation of Part 418

    Part 418 consists of four subparts. We are reserving subparts A-C 
for future use. We are adding a new subpart D, Medicare Part D 
Subsidies, which contains the rules that we use to make determinations 
and decisions about eligibility for the subsidy.
    Following is a description of each section for subpart D.

Introduction, General Provisions, and Definitions

     Section 418.3001 describes what subpart D is about, lists 
the groups of sections, and the subject of each group.
     Section 418.3005 explains that the purpose of the subsidy 
program is to offer help with prescription drug costs to individuals 
with limited financial means who meet specific requirements.
     Section 418.3010 contains definitions of terms used 
throughout this subpart.

Eligibility for a Medicare Prescription Drug Subsidy

     Section 418.3101 lists the requirements that you must meet 
to establish eligibility for a subsidy.
     Section 418.3105 provides a cross-reference to CMS' 
regulations concerning who does not need to file an application for a 
subsidy.
     Section 418.3110 explains what happens when you apply for 
a subsidy.
     Section 418.3115 describes what will prevent you from 
becoming eligible for a subsidy, even if you meet the requirements in 
Sec.  418.3101.
     Section 418.3120 describes the changes in your 
circumstances that may affect your eligibility for a subsidy or whether 
you can receive a full or partial subsidy, explains when we may make a 
redetermination of your eligibility when your circumstances change, and 
explains that we will notify you of our determination.
     Section 418.3123 explains when a change in your subsidy is 
effective.
     Section 418.3125 defines the term ``redetermination'' and 
explains when we conduct redeterminations.

Filing of Applications

     Section 418.3201 explains that an application is usually 
necessary for a subsidy and why.
     Section 418.3205 explains when an application for a 
subsidy becomes a claim for a subsidy.
     Section 418.3210 describes an application for a subsidy.
     Section 418.3215 explains who may file an application for 
a subsidy.
     Section 418.3220 explains when we consider an application 
for a subsidy filed and lists places it can be filed.
     Section 418.3225 explains how long an application for a 
subsidy will remain in effect.
     Section 418.3230 explains when we will use the date you 
make an oral or written inquiry indicating your intent to file for the 
subsidy as your subsidy application filing date.

Income

     Section 418.3301 provides the general definition of income 
that will be used for subsidy determinations.
     Section 418.3305 provides a general description of what is 
not considered income for purposes of determining eligibility for a 
subsidy and if eligible, whether you should receive a full or partial 
subsidy.
     Section 418.3310 explains whose income will be counted 
when we determine eligibility for a subsidy and if eligible, whether 
you should receive a full or partial subsidy.
     Section 418.3315 describes earned income.
     Section 418.3320 explains how we count earned income, 
including when it is considered received, how we count net earnings 
from self-employment, how we count royalties and honoraria, and how we 
determine the time periods for which the earned income is counted.
     Section 418.3325 explains that not all earned income will 
be counted and lists the earned income exclusions that may apply.
     Section 418.3330 provides the general definition of 
unearned income.
     Section 418.3335 describes the types of unearned income 
that will be counted.
     Section 418.3340 describes how we count unearned income, 
including when it is considered received, how we determine how much of 
your income is countable, and how we determine the time periods for 
which the unearned income is counted.
     Section 418.3345 explains how we will determine the value 
of unearned income, if any, received in the form of in-kind support and 
maintenance.
     Section 418.3350 explains that not all unearned income is 
countable and lists the exclusions that may apply.

Resources

     Section 418.3401 provides the general definition of 
resources that will be used for purposes of subsidy eligibility 
determinations.
     Section 418.3405 describes the types of resources that are 
considered for purposes of subsidy eligibility determinations and lists 
the type of resources that are considered liquid.
     Section 418.3410 explains whose resources will be counted.
     Section 418.3415 explains that we determine the value of 
countable resources as of the first day of the month for which a 
determination will be made.
     Section 418.3420 explains how we count funds held in 
financial institution accounts.
     Section 418.3425 provides a list of assets that will not 
be counted as resources.

Adjustments and Terminations

     Section 418.3501 explains the types of events that could 
cause us to increase or reduce your subsidy or to terminate your 
eligibility for a subsidy.
     Section 418.3505 describes the effects of increases, 
reductions, and terminations of subsidies.
     Section 418.3510 explains that before we increase, reduce, 
or terminate your subsidy, we must send you a written notice with 
appeal rights.
     Section 418.3515 explains that after we terminate a 
subsidy, you must generally file a new application to be eligible for a 
subsidy again.

Determinations and the Administrative Review Process

     Section 418.3601 explains your rights and your spouse's 
rights under the administrative review process.
     Section 418.3605 explains that initial determinations are 
determinations we make that are subject to administrative and judicial 
review and provides examples of determinations that are initial 
determinations.
     Section 418.3610 lists administrative actions that are not 
initial determinations. Although we may review these actions, they are 
not subject to administrative or judicial review.
     Section 418.3615 explains that we will mail you a notice 
whenever we make an initial determination in your case. The notice will 
tell you what our determination is, our reasons for making the 
determination, and your right to request an appeal of the 
determination.

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     Section 418.3620 explains that an initial determination is 
binding unless you request an appeal within the stated time period or 
we revise it as explained in Sec.  418.3678.
     Section 418.3625 describes the administrative review 
process. This section also explains that if you are dissatisfied with 
our final decision, you may request judicial review.
     Section 418.3630 explains how to file a request for a 
hearing and that you may ask for more time to request your appeal if 
you had good cause for missing the 60-day deadline.
     Section 418.3635 explains who can request administrative 
review on your behalf.
     Section 418.3640 explains the standards we follow in 
determining whether you had good cause for missing the 60-day deadline 
to request a review.
     Section 418.3645 explains under what circumstances the 
decision-maker may be disqualified.
     Section 418.3650 explains that we make a decision based on 
the information we have and any other information you provide.
     Section 418.3655 explains that we will send you a notice 
of our decision on the appeal that gives you the right to judicial 
review.
     Section 418.3665 explains under what circumstances your 
request for administrative review may be dismissed.
     Section 418.3670 explains how we will notify you if your 
request for administrative review is dismissed.
     Section 418.3675 explains that our final decision on 
appeal is binding unless you request judicial review within the stated 
time or we revise it as explained in Sec.  418.3678.
     Section 418.3678 explains the process for correcting 
Agency clerical errors.
     Section 418.3680 explains what happens if a Federal court 
remands your case to us.

Public Comments

    On March 4, 2005, we published proposed rules in the Federal 
Register at 70 FR 10558 and provided a 60-day period for interested 
persons to comment. We received comments from 22 organizations and one 
individual. Because some of the comments received were quite detailed, 
we have condensed, summarized or paraphrased them in the following 
discussion. We have tried to present all views adequately and carefully 
address all of the issues raised by the commenters that are within the 
scope of the proposed rules.

Introduction, General Provisions and Definitions

    Comment: One commenter recommended that we revise the proposed 
rules to provide guidance to States on how to verify income and 
resources, and how to process redeterminations and appeals.
    Response: As noted in the preamble to the proposed rules, these 
rules only address our processing of applications, redeterminations and 
appeals. We have no authority to regulate the States in this area. CMS 
oversees the State's participation in this program and issued its own 
rules that the States are expected to follow on January 28, 2005 (70 FR 
4193). CMS also issued additional guidance to the States in a document 
dated May 25, 2005. This guidance is available on CMS' Web site at 
https://www.cms.hhs.gov/States/03_lowincomesubsidy.asp.
    Comment: Six commenters suggested that the final rules include time 
limits within which we must process applications, redeterminations, and 
appeals.
    Response: We have designed a largely automated process to ensure 
timely processing of applications, redeterminations and appeals. We 
intend to complete all actions as quickly as possible. We expect that 
most applications and redeterminations will be processed expeditiously. 
However, there are several aspects of the process that make it 
impossible to guarantee a specific processing time. For example, if 
information reported on the application conflicts with information 
obtained from other Federal agencies regarding an applicant's income or 
resources, we will need to contact the applicant to reconcile the 
discrepancy, which might increase the time needed to process the 
application. We also expect to receive some applications that have not 
been fully completed that will require additional time to complete 
before processing. Furthermore, because this is a new program, it is 
difficult to anticipate the volumes of applications, redeterminations, 
or appeals that we will receive. The volume of receipts could impact 
the processing time and make it inappropriate to set specific time 
limits for acting on an appeal. Lastly, the legislation imposes no such 
time limits, and we do not believe it advisable for us to do so.
    In evaluating this comment and reviewing the relevant proposed 
rules, we detected an inadvertent error in Sec.  418.3225(c). That 
section stated that individuals who applied for the subsidy but were 
not yet entitled to Medicare Part A or enrolled in Medicare Part B 
would receive a letter explaining their eligibility for the subsidy 
provided they become so entitled and/or enrolled. However, because 
entitlement to Medicare Part A or enrollment in Medicare Part B is a 
criterion for eligibility for a subsidy (in addition to enrollment in a 
Part D plan), we will not be able to make a subsidy eligibility 
determination in the absence of entitlement to or enrollment in 
Medicare Part A or Part B. (The CMS regulations at 42 CFR 423.774 
permit a subsidy eligibility determination to be made for Medicare 
beneficiaries not yet enrolled in a prescription drug plan, but they do 
not provide similar authority regarding individuals who do not yet have 
Medicare coverage.) Therefore, we are revising Sec.  418.3225(c) to 
state that if you apply for the subsidy before you are entitled to 
Medicare Part A and/or enrolled in Medicare Part B but you appear to be 
in an enrollment period, the notice we send will advise you that we 
will not take any action on your application until you become entitled 
to Medicare Part A and/or enrolled in Medicare Part B. If you do not 
appear to be in an enrollment period, the notice will advise you that 
you are not eligible for the subsidy because you are not entitled to 
Medicare Part A or enrolled in Medicare Part B. This letter will also 
explain your appeal rights.
    Comment: One commenter stated that the Notice of Termination should 
be sent 30 days prior to the termination date.
    Response: The MMA instructed us to establish a simplified program. 
In keeping with the directive, we are following notice guidelines used 
in other programs that we administer. As a result, the Notice of 
Termination explains that the beneficiary will receive continuation of 
their subsidy if he or she appeals within 10 days, and further explains 
that the beneficiary has 60 days to appeal. Additionally, the 
beneficiary can request good cause for late filing of an appeal if he/
she fails to meet the 10 and 60-day deadlines.
    Comment: One commenter suggested that the regulations should 
include a provision requiring us to issue all notices in alternate 
language formats upon claimant request.
    Response: Although this is a valid concern that warrants further 
consideration, we have not adopted this comment. The only alternate 
language format for notices we are currently able to offer is Spanish; 
however, this is not available to Railroad Retirement beneficiaries 
because we do not have a record of their preference for a Spanish 
notice. We will investigate expanding

[[Page 77669]]

our ability to offer other alternate language formats in the future.
    Comment: One commenter stated that we should hire enough staff to 
handle the new workload.
    Response: This comment is not within the scope of these rules. 
However, we have put a great deal of effort into determining the amount 
of staff that will be needed, as well as the hiring and training of the 
additional staff.

Eligibility for a Medicare Prescription Drug Subsidy

    Comment: Nine commenters said that the rules should state that the 
low-income subsidy shall not negatively affect the eligibility of any 
recipient for other Federal benefits programs.
    Response: Since the Act does not address the effect of the subsidy 
on other Federal programs or provide a specific exclusion, and since we 
have no authority to instruct other agencies, this recommendation is 
beyond the scope of these rules. However, CMS has prepared several fact 
sheets explaining the impact of the subsidy on various Federal 
programs. Those fact sheets are available at CMS' Web site, 
www.Medicare.gov. In evaluating this comment, we noticed that our 
proposed rules were not sufficiently clear about how income excluded by 
other Federal programs would be treated for purposes of determining 
eligibility for the subsidy. Therefore, we are revising Sec.  
418.3350(b), by adding a reference to Sec.  416.1124(b) of our rules to 
clarify that income, excluded by the SSI program because it is excluded 
under other Federal statutes, will also be excluded for purposes of 
determining eligibility for the subsidy.
    Comment: Nine commenters suggested that we add explicit language to 
explain when eligibility is effective for beneficiaries with deemed 
eligibility status.
    Response: We agree with this comment and have revised Sec.  
418.3105 to clarify that if beneficiaries have deemed eligibility 
status because they receive Medicaid coverage, are enrolled in a 
Medicare Savings Program within their State, or receive SSI and have 
Medicare, then their subsidy is effective with the first month they 
have deemed eligibility status.
    Comment: Nine commenters said that the rules should include a 
procedure to screen applicants for eligibility for Medicare Savings 
Programs.
    Response: We believe that this is a procedural matter that does not 
require us to revise our rules. However, our operating guides include 
instructions on screening for these cases.
    Comment: Nine commenters said that we should adopt a policy of 
continuous eligibility where beneficiaries retain eligibility for a 
full 12 months, regardless of any income changes.
    Response: Following the guidelines in CMS regulations at 42 CFR 
423.780, we will determine eligibility and subsidy percentage for a 
calendar year. CMS will make the subsidy amount determination. These 
determinations will remain in effect throughout the year, unless a 
beneficiary reports a subsidy-changing event described in Sec.  
418.3120(a) or the beneficiary becomes deemed eligible for a full 
subsidy.
    Comment: Two commenters said that we should use data exchange 
information to determine if beneficiaries qualify for a more generous 
subsidy.
    Response: The rules state at Sec.  418.3120(b)(1) that we will use 
information we receive from the beneficiary or from data exchanges with 
Federal agencies to determine the correct subsidy amount. Depending on 
the new information we receive, the subsidy may increase, decrease, or 
remain unchanged. Except as provided in Sec.  418.3120(a), we will use 
any income or resource information obtained via data exchange when we 
determine a person's continuing eligibility for the next calendar year.
    Comment: One commenter said that we should specify a time frame for 
enrollment in a Medicare Advantage plan.
    Response: Medicare Advantage plans and enrollment rules fall under 
the jurisdiction of HHS and CMS. Therefore, we do not have the 
authority to implement rules governing Medicare Advantage plans.
    Comment: One commenter said that we should develop processes to 
advise applicants whose application for the subsidy has been denied 
that they might qualify for Medicaid or a Medicare Savings Program.
    Response: We are aware of the importance of making referrals to 
other programs. Our notices will advise all applicants of their 
potential eligibility for a Medicare Savings Program.
    Comment: One commenter said that late enrollment penalties should 
not be assessed for individuals who have their applications denied when 
they are not enrolled in a plan but later have their claims allowed.
    Response: The policies for late enrollment penalties are under the 
control of CMS. Therefore, we are not authorized to implement policies 
governing late enrollment penalties.
    Comment: Three commenters asked that we provide greater detail in 
the regulations about how we will conduct redeterminations of subsidy 
eligibility. They suggested that we adopt a ``passive'' redetermination 
process, in which we advise the beneficiary about the information we 
have, and the beneficiary is only required to respond if the 
information is inaccurate. They suggested that we limit the number of 
times we will conduct a redetermination in a given period. The 
commenters explain that this would enable a simple redetermination 
process that would not be a burden on us or on beneficiaries.
    Response: We agree that the redetermination process should be 
simple and should not be burdensome. For these reasons, we plan to use 
a ``passive'' redetermination process for a beneficiary's first 
scheduled redetermination. Further, we do not plan to conduct a 
redetermination for every beneficiary every year, but will instead 
schedule redeterminations based on the likelihood that an individual's 
situation may change. We expect this process to fulfill our 
responsibility to maintain the integrity and accuracy of the subsidy 
program, while minimizing burdens placed on us and on beneficiaries. 
However, without further experience we cannot commit ourselves to the 
``passive'' redetermination process or any particular redetermination 
frequency, and therefore we are not revising the regulation to address 
these issues. Experience may tell us that a different process better 
serves the integrity of the program and interests of beneficiaries. The 
law gives us broad discretion, which we exercise in these regulations, 
to determine the procedures for conducting redeterminations. However, 
based on these comments, we are changing Sec.  418.3110(c) and Sec.  
418.3225(b) to eliminate the statement that we will terminate subsidy 
eligibility if an individual has not yet enrolled in a prescription 
drug plan at the time of a redetermination. We are making this change 
because some situations could develop in the future where an individual 
will be enrolled in a drug plan but the effective date will be later 
than our redetermination. We plan to monitor our redetermination 
process in order to determine whether any further changes are 
warranted.
    Comment: Four commenters suggest that changes that would affect the 
subsidy amount, such as in income, resources, household composition, or 
enrollment in a Medicare Savings Program, could be reported at any time 
and should become effective immediately, or a month after the month of 
the report of the change, rather than delaying the effect. They are 
concerned about the fact that these changes are not

[[Page 77670]]

effective until the January following the report. They believe this 
would be disadvantageous for beneficiaries who have a decrease in 
income or resources, but will continue to receive the same subsidy 
amount until a redetermination is completed.
    Response: Section 418.3110(d)(3) of these final rules clarify that 
a person who has been denied eligibility for a prescription drug 
subsidy may reapply any time their situation changes. Individuals 
already receiving a subsidy may report significant changes at any time. 
However, in keeping with the direction provided by section 1860D-14 of 
the Act, we established a simplified application form and process for 
this program. One technique that we adopted to maintain a simplified 
process was that eligibility determinations will be based on 
determinations of yearly income and resource amounts. The determination 
remains in effect for a calendar year unless the beneficiary reports 
one of the six subsidy changing events listed in the rules, appeals the 
initial determination, or becomes eligible for a program that would 
cause deemed eligibility for a full subsidy. This approach ensures that 
the individuals found eligible for subsidies will have continuous 
eligibility and will not be impacted by monthly income changes. Also, 
beneficiaries are not burdened with reporting responsibilities. This 
comment did alert us to one possible subsidy-changing event that we 
inadvertently omitted, that of a change in household composition due to 
a separated married couple resuming living together. We have revised 
Sec.  418.3120 to reflect this change.

Filing of Application

    Comment: One commenter said that we should use a term such as 
``helper'' as synonymous with ``representative'' and specify that 
representatives are always allowed to sign an application.
    Response: We follow CMS' policy concerning representatives in the 
Medicare program as defined by CMS' regulations at 42 CFR 423.772. This 
definition makes it clear, however, that representatives are fully 
authorized to act on a person's behalf.
    Comment: One commenter suggested that we eliminate the penalty 
clause on the application. Another commenter said that the form should 
not have been drafted prior to the issuance of these rules and that it 
should be revised to consider any comments received on these rules.
    Response: We published three notices in the Federal Register on 
July 30, 2004 (69 FR 45879), September 30, 2004 (69 FR 58578) and 
November 17, 2004 (69 FR 67379). In these notices, we gave the public 
an opportunity to comment on the application form. We received a number 
of comments on the form which we evaluated before the final version was 
approved. None of the comments received on these rules will impact the 
application. However, we will continue to evaluate and revise the form 
when changes appear necessary.
    Comment: Ten commenters made the following comments about various 
aspects of the application process:
     Allow more time to submit requested information, so that 
applicants who may be mentally or physically unable to comply will have 
an adequate opportunity to respond.
     Clarify how we will assist when an applicant fails to 
submit requested information.
     Contact the applicant and explain what is needed to 
complete the application.
     Give the applicant 180 days to complete the application.
     Specify a time frame to process incomplete applications 
and clarify the rules we will follow to process them.
     State that we will send a written notice giving a deadline 
to submit the required information.
    Response: These comments deal with procedural issues and are not 
within the scope of these rules. However, we have reviewed the 
operating instructions and believe they address the concerns raised by 
the commenters. We will continue to monitor the process and make 
changes if necessary.

Income

    Comment: Five commenters recommended that we revise Sec.  418.3335 
to remove in-kind support and maintenance from consideration as 
countable income. They asserted that under MMA, we have the authority 
to exclude consideration of in-kind support and maintenance in making 
eligibility determinations. Four of the five commenters pointed out 
that the Medicare Savings Program uses SSI methodology to determine 
countable income but the model Medicare Savings Program application 
created by CMS does not include in-kind support and maintenance. They 
further pointed out that it could be difficult for individuals to 
provide information about household expenses which might discourage 
potential beneficiaries from filing a claim.
    Response: After careful consideration, we decided not to adopt this 
recommended change. Section 1860D-14(a)(3)(C)(i) of the Act provides 
that income for subsidy eligibility shall be determined in the manner 
prescribed in section 1905(p)(1)(B) of the Act without regard to the 
application of section 1902(r)(2). Section 1905(p)(1)(B) of the Act 
provides that income will be determined under section 1612 of the Act. 
Section 1902(r)(2) provides the authority for States to use income and 
resources methodologies for certain groups of Medicaid eligibles that 
are less strict than those used in the SSI program, but section 1860D-
14(a)(3)(C)(i) specifically precludes us from using those less strict 
rules. Therefore, we must follow the income-counting requirements of 
section 1612 which provides that in-kind support and maintenance will 
be counted as income with a maximum value of one-third of the 
applicable SSI Federal benefit rate, although we have simplified some 
of the rules consistent with Congress' intent.
    Comment: One commenter recommended that we simplify the in-kind 
support and maintenance determination described in Sec.  418.3345 by 
allowing beneficiaries to use a default dollar value equal to one-third 
of the SSI Federal benefit rate unless the beneficiary alleges a dollar 
amount less than the default value.
    Response: We do not agree that permitting beneficiaries to use a 
default dollar value equal to one-third of the SSI Federal benefit rate 
would simplify in-kind support and maintenance determinations. In 
addition, we are concerned that offering individuals the option of 
using a default amount could inappropriately encourage individuals to 
allege the default amount instead of the actual amount which could be 
lower and, therefore, beneficial to the individual. Section 418.3345(b) 
of the final rules states that we will count in-kind support and 
maintenance as income only up to one-third of the applicable SSI 
Federal benefit rate. Section 418.3345(a) of the final rules states 
that the amount of income derived from in-kind support and maintenance 
is the current market value of the food and shelter provided by other 
people. When the current market value of the in-kind support and 
maintenance is less than one-third of the applicable Federal benefit 
rate, only the current market value is counted as income. However, to 
make this clear in the regulations, we have revised Sec.  418.3345(b) 
to state that if the current market value of in-kind support and 
maintenance the individual receives is worth less than one-third of the 
applicable monthly SSI Federal benefit rate, we count only the current 
market value as income.

[[Page 77671]]

    Comment: One commenter stated that the rules in Sec.  418.3345 do 
not offer a streamlined approach that enables beneficiaries to 
determine how much, if any, in-kind support and maintenance they 
receive. The commenter recommended that we reduce the amount of the 
maximum countable in-kind support and maintenance to below one-third of 
the Federal SSI benefit rate. The commenter further recommended that we 
provide a streamlined methodology for beneficiaries to calculate in-
kind support and maintenance.
    Response: After careful consideration, we decided not to adopt 
these recommended changes. The authority to count in-kind support and 
maintenance as income is derived from section 1612(a) of the Act. This 
section provides that the countable income derived from in-kind support 
and maintenance is equal to one-third of the Federal SSI benefit rate. 
The statute does not provide the authority to establish a lower maximum 
countable amount. We will count less than the maximum amount as income 
when the beneficiary receives in-kind support and maintenance that is 
worth less than the maximum. Furthermore, we are providing a 
streamlined process for determining in-kind support and maintenance 
which requires that the beneficiary answer only one question on the 
subsidy application. By limiting the application to only one question, 
we have developed a process that is very streamlined, and is much 
simpler than the SSI process for determining in-kind support and 
maintenance.
    Comment: Nine commenters stated that the Student Earned Income 
Exclusion (SEIE) should be applied to individuals who apply for the 
subsidy. In the SSI program, the SEIE applies to individuals under age 
22 who are regularly attending school and who have earned income. The 
SEIE excludes earned income up to a maximum of $5670 (in 2005) per 
year. The commenters state that this exclusion would permit disabled 
students to gain work experience without jeopardizing eligibility for 
the subsidy.
    Response: We expect that prescription drug subsidy claims involving 
individuals who could meet all of the requirements for the student 
earned income exclusion will be very rare. We are still analyzing the 
potential impact of the prescription drug subsidy on the disabled 
student population who have Medicare coverage and will revisit this 
area in subsequent regulations if appropriate.
    Comment: Nine commenters stated that the rules in Sec.  418.3325 
should provide an exclusion for earned income received by a Social 
Security Disability Insurance (SSDI) beneficiary during a trial work 
period or an unsuccessful work attempt. The same commenters stated that 
the regulation also should provide an exclusion for earned income of an 
SSDI beneficiary received as a result of a work-related subsidy or 
special condition. Under SSDI rules, a work-related subsidy exclusion 
is applied when an individual's earnings exceed the reasonable value of 
the work performed, and we count only the pay that is actually earned. 
Under SSDI rules, if work is done under special conditions, we may 
determine that the work does not show that the individual can perform 
substantial gainful activity. These commenters also stated that the 
regulations should permit SSDI beneficiaries to deduct unincurred 
business expenses when determining countable self employment income. An 
unincurred business expense occurs when a sponsoring agency or another 
person pays certain business expenses for the individual who is 
attempting to work. The commenters stated that not providing these 
earned income exclusions would be a disincentive for SSDI beneficiaries 
who might not try working because their earnings could cause them to 
lose eligibility for the subsidy.
    Response: After careful consideration, we decided not to adopt 
these recommended changes. The earned income exclusions proposed by the 
commenters pertain only to the SSDI program under title II of the Act. 
For purposes of determining subsidy eligibility, section 1860D-
14(a)(3)(C) of the Act provides that income is determined in the manner 
described in section 1905(p)(1)(B) of the Act; that is, under the SSI 
methodology provided in section 1612 of the Act. Section 1612 describes 
what income is countable and what income is excludable and does not 
provide for these earned income exclusions.
    Comment: Fourteen commenters stated that the rules in Sec.  
418.3325(b)(5) and (b)(7) should provide that impairment related work 
expenses (IRWE) and blind work expenses (BWE) should exclude the 
average percentage of gross earnings or the actual expenses, whichever 
is greater.
    Response: The rules in Sec.  418.3325(b)(5) and (b)(7) already 
provide that actual expenses for IRWE and BWE will be used if they are 
greater than the average percentage of such expenses. If the actual 
expenses are not greater, then the average percentage will be excluded 
automatically when the individual indicates on the application that he 
or she has such expenses.
    Comment: One commenter stated that if greater than average IRWEs 
and BWEs are not automatically considered, a clear procedure and 
timeline for establishing greater than average IRWEs and BWEs must be 
established so that beneficiaries are aware that their actual expenses 
will be considered if higher than the average expenses. The commenter 
further stated that the rules lack procedural availability or timelines 
within which SSA must respond to requests to consider actual expenses.
    Response: The specific procedures and timeline for determining 
higher than average IRWE and BWE expenses will not be addressed in the 
regulations. These are operational issues and not appropriate to 
include in regulations. However, Sec.  418.3325 clearly states that we 
will exclude greater than average IRWE or BWE expenses when the 
individual's actual IRWE or BWE expenses are greater than the average. 
The notices that we send to beneficiaries will state how much income we 
are counting and how much income is excluded because of IRWE or BWE. 
The notices will inform the beneficiaries to contact us if they 
disagree with our income determination. If a beneficiary contacts us 
with a question about the IRWE or BWE exclusion amount, we will help 
the individual to establish the actual amount of IRWE or BWE expenses 
that should be excluded.
    Comment: Four commenters who approved of our decision to use the 
average percentage for computing IRWE encouraged us to make the process 
of proving higher than average IRWE as easy for beneficiaries as 
possible. One of these four commenters recommended that we permit self-
attestation of higher IRWE to make the process simpler for 
beneficiaries and for us.
    Response: We agree with the commenter that the process for proving 
higher than average IRWE and BWE should be as easy as possible for 
beneficiaries. However, we do not believe a change in the regulation is 
necessary. The procedures we have developed are based on the 
recognition that determining dollar amounts for IRWE or BWE can be 
difficult because of the wide variety of expenses that potentially 
qualify for this exclusion. Therefore, under our procedures our staff 
will assist beneficiaries establish a higher than average IRWE or BWE 
exclusion and in obtaining any documentation that might be required to 
establish a higher than average IRWE or BWE exclusion. We will issue 
operating

[[Page 77672]]

instructions explaining these procedures.
    Comment: One commenter recommended that income deductions should be 
afforded to individuals who use service dogs or guide dogs and incur 
expenses related to use of these dogs.
    Response: The procedures for determining the exclusion of expenses 
associated with service dogs or guide dogs are provided in our 
operating instructions and will not be addressed in these regulations. 
Our procedures exclude expenses associated with service dogs and guide 
dogs and all associated expenses under either the IRWE or BWE exclusion 
if the dogs are needed for employment-related activity. To make it 
clear that BWE exclusions such as guide dogs also apply to subsidy 
determinations, we are adding a cross-reference in Sec.  418.3325(b)(7) 
that refers to the SSI BWE provision in Sec.  416.1112(c)(8) of our 
rules.
    Comment: One commenter recommended that we clarify the regulations 
by stating that cost-of-living increases in Federal benefits are not 
counted as income until the month following the annual publication of 
the updated Federal poverty guidelines.
    Response: We have clarified Sec.  418.3340(f) of the final rules to 
state that we will not count the amount of the cost-of-living 
adjustment (COLA) for Social Security benefits for any month before the 
Federal poverty guidelines are published. Section 1905(p)(2)(D)(i) of 
the Act provides that the income of an individual who is entitled to 
monthly insurance benefits under title II shall not include any amounts 
attributable to a COLA for each month through the month following the 
month in which the annual revision of the Federal poverty guidelines 
are published. However, the statutory authority to not count the COLA 
applies only to monthly insurance benefits under title II and not to 
other Federal benefits. Therefore, we have also revised Sec.  
418.3120(a)(7) for consistency.

Resources

    Comment: One commenter stated that our description in Sec.  
418.3405 of liquid resources as those which can be converted to cash 
within 20 workdays is ambiguous. The commenter stated that Sec.  
418.3405 of the rules should include a finite list of the resources 
that will be counted and a statement that anything not listed will not 
be counted.
    Response: The purpose of Sec.  418.3405 is to describe the types of 
financial accounts and instruments that will be counted as resources. 
Liquid resources are resources that are held in financial accounts or 
other instruments that can be converted to cash within 20 workdays. We 
will presume that these types of resources can be converted to cash 
within 20 workdays and are countable. However, if the individual 
establishes that a particular resource (other than nonhome real 
property) cannot be converted to cash within 20 workdays, we will not 
count it as a resource in the subsidy determination. We refer to 
``liquid resources'' in order to differentiate them from ``non-liquid'' 
resources which, except for equity in nonhome real property, will not 
be counted for purposes of determining subsidy eligibility (e.g., 
vehicles, household goods, jewelry, musical instruments, etc.). We are 
adding language to Sec.  418.3405 to clarify that ``20 days'' means 
``20 workdays.'' This is how we described this rule in the preamble of 
the Notice of Proposed Rulemaking (NPRM) and it was an unintended 
omission that we did not say ``workdays'' in Sec.  418.3405 in the 
NPRM.
    Based on over 30 years of experience making resource determinations 
for the SSI program, we are convinced that it is not feasible for us, 
or beneficial to the individual, to provide a finite list of all 
countable resources. A list could be developed to include most of the 
common types of financial instruments, but it would not capture all of 
the many types of financial instruments in existence now. In addition, 
new types of financial instruments and investment vehicles are being 
created regularly and often are given names in order to differentiate 
them from existing products. It would be very difficult to maintain 
such a list in our regulations. Using a list could also result in 
unequal treatment of beneficiaries because we would exclude from 
resource counting some financial products just because they are not on 
the list even if they are very similar to financial products on the 
list that are countable.
    To further improve the clarity of what resources are generally 
considered liquid, we will add the following examples to the list of 
resources that are ordinarily considered liquid, ``trusts if they are 
revocable or if the trust beneficiary can direct the use of the funds 
in the trust.'' We consider a revocable trust to be a liquid resource 
because it can be converted to cash. Also, if a trust beneficiary can 
direct the use of the funds in a trust, the funds in the trust are a 
liquid resource because the beneficiary can use those funds for support 
and maintenance.
    Comment: Two commenters recommended that the cash value of life 
insurance should not count as a resource because life insurance 
policies may not be easily convertible to cash and therefore would not 
meet the definition of liquid assets adopted by CMS in 42 CFR 423.772 
which states that liquid resources are resources that