Regulations Regarding Income-Related Monthly Adjustment Amounts to Medicare Beneficiaries' Prescription Drug Coverage Premiums, 75884-75896 [2010-30276]
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Federal Register / Vol. 75, No. 234 / Tuesday, December 7, 2010 / Rules and Regulations
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[FR Doc. 2010–30197 Filed 12–6–10; 8:45 am]
BILLING CODE 4910–13–P
SOCIAL SECURITY ADMINISTRATION
20 CFR Part 418
[Docket No. SSA–2010–0029]
RIN 0960–AH22
Regulations Regarding Income-Related
Monthly Adjustment Amounts to
Medicare Beneficiaries’ Prescription
Drug Coverage Premiums
Social Security Administration.
Interim final rule with request
for comments.
AGENCY:
ACTION:
We are adding a new subpart
to our regulations, which contains the
rules we will apply to determine the
income-related monthly adjustment
amount for Medicare prescription drug
coverage premiums. This new subpart
implements changes made to the Social
Security Act (Act) by the Affordable
Care Act. These rules parallel the rules
in subpart B of this part, which
describes the rules we apply when we
determine the income-related monthly
adjustment amount for certain Medicare
Part B (medical insurance) beneficiaries.
These rules describe the new subpart;
what information we will use to
determine whether you will pay an
income-related monthly adjustment
amount and the amount of the
adjustment when applicable; when we
will consider a major life-changing
event that results in a significant
reduction in your modified adjusted
gross income; and how you can appeal
our determination about your incomerelated monthly adjustment amount.
These rules will allow us to implement
the provisions of the Affordable Care
SUMMARY:
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Act on time that relate to the incomerelated monthly adjustment amount for
Medicare prescription drug coverage
premiums, when they go into effect on
January 1, 2011.
DATES: Effective date: This interim final
rule will be effective on December 7,
2010. Comment date: To ensure that
your comments are considered, we must
receive them no later than February 7,
2011.
ADDRESSES: You may submit comments
by any one of three methods—Internet,
fax, or mail. Do not submit the same
comments multiple times or by more
than one method. Regardless of which
method you choose, please state that
your comments refer to Docket No.
SSA–2010–0029 so that we may
associate your comments with the
correct regulation.
Caution: You should be careful to
include in your comments only
information that you wish to make
publicly available. We strongly urge you
not to include in your comments any
personal information, such as Social
Security numbers or medical
information.
1. Internet: We strongly recommend
that you submit your comments via the
Internet. Please visit the Federal
eRulemaking portal at https://
www.regulations.gov. Use the Search
function to find docket number SSA–
2010–0029. The system will issue a
tracking number to confirm your
submission. You will not be able to
view your comment immediately
because we must post each comment
manually. It may take up to a week for
your comment to be viewable.
2. Fax: Fax comments to (410) 966–
2830.
3. Mail: Mail your comments to the
Office of Regulations, Social Security
Administration, 107 Altmeyer Building,
6401 Security Boulevard, Baltimore,
Maryland 21235–6401.
Comments are available for public
viewing on the Federal eRulemaking
portal at https://www.regulations.gov or
in person, during regular business
hours, by arranging with the contact
person identified below.
FOR FURTHER INFORMATION CONTACT:
Craig Streett, Office of Income Security
Programs, Social Security
Administration, 2–R–24 Operations
Building, 6401 Security Boulevard,
Baltimore, MD 21235–6401, (410) 965–
9793. For information on eligibility or
filing for benefits, call our national tollfree 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:
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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/.
Background
Medicare prescription drug coverage
(also known as Medicare Part D) is a
voluntary program that covers
prescription drugs, as explained in 42
CFR Part 423. These regulations cover
participants in Medicare prescription
drug coverage plans as defined in 42
CFR 423.4, including standalone
Medicare prescription drug plans,
Medicare Advantage plans with
prescription drug coverage, Programs of
All-Inclusive Care for the Elderly plans,
and cost plans offering prescription
drug coverage. We will refer to these
plans collectively as Medicare
prescription drug coverage plans.
Beneficiaries enrolled in Medicare
prescription drug coverage are
responsible for deductibles, costsharing, and monthly premiums. Costs
vary by plan. Beneficiaries with limited
income and resources may qualify for
‘‘Extra Help’’ with their monthly
premiums, deductibles, and costsharing.
The Centers for Medicare & Medicaid
Services (CMS) promulgates rules and
regulations concerning the Medicare
program. CMS sets the Medicare
prescription drug coverage base
beneficiary premium, which covers
approximately 25.5 percent of the cost
of the basic Medicare prescription drug
coverage. The Federal Government
subsidizes approximately 74.5 percent
of the cost of this basic Medicare
prescription drug coverage with
contributions from the Medicare
Prescription Drug Account in the
Federal Supplementary Medical
Insurance Trust Fund.
In March 2010, Congress passed the
Affordable Care Act, which establishes
an income-related adjustment to
Medicare prescription drug coverage
premiums.1 The Affordable Care Act
contains rules for determining when,
based on income, a beneficiary’s
monthly premium for Medicare
prescription drug coverage will include
a monthly adjustment amount.2 The
changes made to the Act by section
3308(a) of the Affordable Care Act are
effective for months after December
2010. Beginning in January 2011, an
estimated 1.05 million of the
approximately 29.2 million beneficiaries
enrolled in the Medicare prescription
drug coverage program will be assessed
1 Public
Law 111–148 § 3308(a).
2 Id.
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an income-related monthly adjustment
amount.
Generally, beneficiaries who have a
modified adjusted gross income above
the threshold level in their most
recently filed tax return (usually the tax
year 2 years prior to the effective year
of our determination) will pay an
income-related monthly adjustment
amount for their Medicare prescription
drug coverage, resulting in these
beneficiaries paying more of the cost of
their Medicare prescription drug
coverage. The income-related monthly
adjustment amount applied is in
addition to the Medicare Prescription
drug coverage plan sponsor’s monthly
premium and any applicable premium
increase for late enrollment or
reenrollment. We are responsible for
making any determination necessary to
carry out the income-related increase in
beneficiary premiums.
How This Will Affect You
The phrase ‘‘modified adjusted gross
income’’ has the same meaning given to
that term in section 1839(i)(4)(A) of the
Act.3 The phrase ‘‘modified adjusted
gross income’’ means your ‘‘adjusted
gross income,’’ as defined in section 62
of the Internal Revenue Code of 1986,
plus certain other forms of income that
may be excluded from adjusted gross
income for the purpose of determining
the amount of Federal income tax that
you must pay.4
We determine the taxable year to use
for purposes of determining your
modified adjusted gross income.5 Your
modified adjusted gross income is
generally determined for the ‘‘last
taxable year beginning in the second
calendar year proceeding the year
involved.’’ 6 Thus, in general, we will
use your modified adjusted gross
income provided by the Internal
Revenue Service (IRS) for the tax year
2 years prior to the effective year of the
income-related monthly adjustment
amount determination we make.
However, an exception allows us to
use your modified adjusted gross
income for the tax year 3 years prior to
the effective year of the income-related
monthly adjustment amount
determination.7 In addition, there are
certain circumstances in which we may
use a more recent taxable year than the
taxable year we would otherwise use to
determine modified adjusted gross
income when your income for the more
3 § 1860D–13(a)(7)(C)
of the Act.
of the Act.
5 § 1839(i)(4)(B), (C) of the Act; § 1860D–
13(a)(7)(C) of the Act.
6 § 1839(i)(4)(B) of the Act.
7 § 1839(i)(4)(B) of the Act.
4 § 1839(i)(4)(A)
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recent year is significantly less than the
income for the taxable year we normally
would use. The situations that allow us
to use data from a more recent taxable
year are when you have experienced the
death of your spouse, a marriage or
divorce, or other major life-changing
events that we specify in our
regulations.8
The payment of the full amount of the
income-related monthly adjustment
amount will begin in January 2011.9 If
you are enrolled in Medicare
prescription drug coverage prior to
January 1, 2011, and you will be
required to pay an income-related
monthly adjustment amount in 2011, we
will notify you by sending you a letter
at the end of 2010 about the additional
income-related monthly adjustment
amount. If you receive Social Security
monthly benefits, we will also send a
letter explaining how the incomerelated monthly adjustment amount will
affect the amount of those benefits. If
you receive Railroad Retirement or Civil
Service annuity payments, you will
receive a letter from the agency that
pays your annuity explaining how the
income-related monthly adjustment
amount will affect the amount of those
benefits.
If you enroll in Medicare prescription
drug coverage after January 1, 2011,
your Medicare prescription drug
coverage premium may not initially
include an income-related monthly
adjustment amount. If we subsequently
determine that you must pay an incomerelated monthly adjustment amount for
your Medicare prescription drug
coverage, we will notify you shortly
after you enroll in Medicare
prescription drug coverage. You will be
responsible for your income-related
monthly adjustment amounts for those
months after December 2010 for which
you are enrolled in Medicare
prescription drug coverage. If you are
enrolled in Medicare prescription drug
coverage during 2011 or after, we will
notify you prior to the start of each year
if you must pay an income-related
monthly adjustment amount in that year
and how much it will be.
How We Determine Your IncomeRelated Monthly Adjustment Amount
The amount of your modified
adjusted gross income for the applicable
tax year will determine if you must pay
an income-related monthly adjustment
amount. The modified adjusted gross
income threshold amount for 2011
through 2019 is $85,000 for individuals
who designated a filing status on their
8 § 1839(i)(4)(C)
of the Act.
of the Act.
9 § 1860D–13(a)(7)(A)
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Federal income tax return of single,
married filing separately, head of
household, or qualifying widow(er) with
dependent child; and the corresponding
threshold is $170,000 for individuals
who file a joint income tax return with
their spouse.10 After 2019, these
thresholds will resume adjustment for
inflation as required by section
1839(i)(5) of the Act.
We will ask the IRS to send us Federal
income tax return information about
your modified adjusted gross income for
the tax year 2 years before the effective
year of our determination of whether an
income-related monthly adjustment
amount will apply. If modified adjusted
gross income information is not
available from the IRS for the tax year
2 years before the effective year of our
determination, the IRS will send us
modified adjusted gross income
information for the tax year 3 years
before the effective year, if it exceeds
the threshold. The IRS will return
modified adjusted gross income
information only for those Medicare
beneficiaries whose modified adjusted
gross income exceeds the threshold for
their income tax filing status.
We will not ask the IRS for
information about your modified
adjusted gross income if we have
determined that you are participating in
the Medicare prescription drug coverage
low-income subsidy program described
in subpart D of this part, if you receive
Supplemental Security Income
payments under title XVI of the Act, or
if CMS has determined that you are
deemed eligible for a full Medicare
prescription drug coverage subsidy
under section 1860D–14(a)(3)(B)(v) of
the Act, as further explained in 42 CFR
423.773(c)(1).
We will use information for the tax
year 3 years prior to the effective year
of our determination to determine
whether you must pay an incomerelated monthly adjustment amount
only until we obtain information for the
tax year 2 years prior to the effective
year of our determination. When we use
such information to make a
determination, we will make retroactive
corrections that will apply to all months
that you paid an incorrect incomerelated monthly adjustment amount. If
we use information from the IRS for the
tax year 3 years before the effective year
of our determination, you may request
that we use information that you
provide for the tax year 2 years before
the effective year of our determination.
In some cases, you may pay a higher
premium based on your information
from the tax year 2 years prior to the
10 Section
1839(i)(2) of the Act.
VerDate Mar<15>2010
16:40 Dec 06, 2010
effective year of our determination.
However, providing that information to
us, rather than having us receive
information later from the IRS, will help
you avoid a retroactive correction. In
order for us to make an initial
determination based on such a request,
you must provide a copy of your Federal
income tax return for that year by
providing us with either your retained
copy of your Federal income tax return,
a copy that you request from the IRS, or
an IRS transcript of your return. If you
provide your retained copy of your tax
return, we will verify this information
with the IRS.
If we receive information from the IRS
that shows that you had modified
adjusted gross income that exceeded the
established threshold for a tax year for
which you did not file a tax return, we
will make a determination about your
income-related monthly adjustment
amount for that year. We will apply the
highest applicable percentage
adjustment based on that information,
as required by statute.11 Beginning in
2011, if the IRS provides information to
us to indicate a change in your modified
adjusted gross income for a prior tax
year, we will use this information to
establish corrections for the appropriate
effective years, regardless of when we
receive such information.
The Sliding Scale Formula and How It
Applies to You
CMS will use a sliding scale formula
to establish the four income-related
monthly adjustment amounts annually
beginning in 2011. The use of this
sliding scale formula is prescribed in
section 1839(i)(3) of the Act. CMS will
provide each of the income-related
monthly adjustment amounts to be used
to SSA. The income-related monthly
adjustment amount will be the
adjustment from the approximately 25.5
percent base beneficiary premium
multiplied by a specified percentage.
The percentage used in the calculation
changes as the amount of modified
adjusted gross income increases within
the ranges used to set the incomerelated monthly adjustment amount. We
will use your modified adjusted gross
income and your Federal income tax
filing status (e.g., single, married filing
jointly, married filing separately) to
determine whether you must pay an
income-related monthly adjustment
amount, and if so, what your incomerelated monthly adjustment amount will
be.
The modified adjusted gross income
ranges are contained in section
1839(i)(3)(C) of the Act as adjusted by
11 Section
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1839(i)(4)(B)(iii) of the Act.
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section 1839(i)(5) and by 1839(i)(6), as
amended by the Affordable Care Act.
The range amounts for individuals who
are married filing jointly are double the
range amounts for single income tax
filers. The IRS recognizes three
additional filing statuses: head of
household, qualifying widow(er) with
dependent child, and married filing
separately. If you file as a head of
household, a qualifying widow(er) with
a dependent child, or married filing
separately, we will apply the modified
adjusted gross income range applicable
to individuals who file their Federal
income tax return with a filing status of
single.
Individuals with a filing status of
married, filing separately, who must pay
an income-related monthly adjustment
amount because their tax information
reflects modified adjusted gross income
under section 1839(i)(3)(C)(iii) of the
Act and who lived with their spouse at
any time during the year, will pay either
the third or fourth range of incomerelated monthly adjustment amount as
described in section 1839(i)(3)(C)(i) of
the Act. Starting in 2010 for calendar
year 2011, and annually thereafter for
each following calendar year, CMS will
publish the annual modified adjusted
gross income ranges and income-related
monthly adjustment amounts that are
associated with each range. We will use
this published information to determine
which amount applies to you based on
your tax filing status in the tax year we
are using to determine your incomerelated monthly adjustment amount.
If you filed an amended tax return for
the tax year we used to make a
determination of your income-related
monthly adjustment amount, you may
request that we use your amended tax
return for that year. You must provide
us with proof that you filed an amended
tax return with the IRS, including your
retained copy of the amended tax return
and a letter from the IRS verifying
receipt of the return or an IRS transcript
of your amended tax return.
If you believe that the IRS provided
incorrect modified adjusted gross
income information and we used that
information to determine your incomerelated monthly adjustment amount,
you may request that we make a new
income-related monthly adjustment
amount determination. You must
provide proof of the error in the IRS
data and evidence of your actual
modified adjusted gross income, such as
a copy of the return that you obtain from
the IRS. When we use information from
your amended or corrected Federal
income tax return to make a
determination, we will make retroactive
adjustments that will apply to all
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months that you paid an incorrect
income-related monthly adjustment
amount.
If you believe our determination that
you must pay an income-related
monthly adjustment amount for your
Medicare prescription drug coverage is
incorrect because you do not have that
coverage, you must contact CMS to get
your records corrected. We will use the
corrected information we receive from
CMS to correct our records and make all
necessary adjustments. We will initiate
a retroactive refund after we correct our
records.
Inflation Adjustment of the IncomeRelated Monthly Adjustment Amount
The annual inflation adjustment of
the thresholds and the modified
adjusted gross income ranges used to
determine whether you must pay an
income-related monthly adjustment
amount is temporarily set aside by
section 3402 of the Affordable Care Act.
From January 1, 2011 through December
31, 2019, the dollar amounts used for
2010 will be the thresholds used to
determine if an income-related monthly
adjustment amount will apply. The
2010 thresholds in effect until the end
of 2019 will be modified adjusted gross
income of $170,000 for beneficiaries
who file their Federal income taxes as
married, filing jointly, and $85,000 for
beneficiaries who file their Federal
income taxes with any other filing
status. CMS will publish the amounts
within each range of income in the
sliding scale adjusted for inflation each
year. After 2019, these thresholds will
resume adjustment for inflation as
required by section 1839(i)(5) of the Act.
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Changes in Your Modified Adjusted
Gross Income
In consultation with the Secretary of
the Treasury, we are required to
establish procedures for determining
your modified adjusted gross income for
a tax year more recent than the
information ordinarily provided by the
IRS.12
The statute requires that we grant
your request to use a more recent tax
year to determine your income-related
monthly adjustment amount only when
all of the following conditions are met:
• You experience a major lifechanging event;
• That major life-changing event
results in a significant reduction in your
modified adjusted gross income;
• You request that we use a more
recent tax year’s modified adjusted gross
income; and
12 Section
1839(i)(4)(C) of the Act.
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• You provide evidence of the event
and the reduction in your modified
adjusted gross income.13
These rules also contain the
requirements that you must meet in
order for us to use a more recent tax
year’s modified adjusted gross income
to determine whether you must pay an
income-related monthly adjustment
amount and what your income-related
monthly adjustment amount will be.
These rules define qualifying major lifechanging events and explain what
constitutes a significant reduction in
your modified adjusted gross income by
reference to the rules we follow under
subpart B of this part. We also specify
the evidence we will require to establish
major life-changing events and the
resulting reduction in your modified
adjusted gross income by reference to
the rules we follow under subpart B of
this part.
Major life-changing events include
marriage, divorce, and death of a spouse
under section 1839(i)(4)(C)(ii)(II) of the
Act. We have discretion to include in
our regulations additional major lifechanging events that would allow us to
grant your request that we use
information from a more recent tax year
to determine your income-related
monthly adjustment amount. As noted
above, these rules include explanation
of the situations when we will
determine that you have experienced a
major life-changing event for purposes
of our rules in subpart B of part 418.
The following are the categories of
qualifying major life-changing events
that we currently recognize:
• Death of a spouse;
• Marriage;
• Marriage ended by divorce or
annulment;
• Partial or full work stoppage;
• You or your spouse experiences a
loss of income-producing property,
provided the loss is not at the direction
of you or your spouse (e.g., due to the
sale or transfer of the property) and is
not a result of the ordinary risk of
investment. Examples of the type of
property loss include, but are not
limited to: loss of real property within
a Presidentially or Gubernatoriallydeclared disaster area, destruction of
livestock or crops by natural disaster or
disease, loss from real property due to
arson, or loss of investment property as
a result of fraud or theft due to a
criminal act by a third party;
• You or your spouse experiences a
scheduled cessation, termination, or
reorganization of an employer’s pension
plan;
13 Section
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• You or your spouse receives a
settlement from an employer or former
employer because of the employer’s
closure, bankruptcy, or reorganization.
In these rules, we determine what
constitutes a significant reduction in
your income by reference to the rules
we follow under section 418.1215.
Under those rules, we define a
significant reduction in your modified
adjusted gross income as any change
that results in a reduction or elimination
of your income-related monthly
adjustment amount. Therefore, a
significant reduction in your modified
adjusted gross income is any change
that lowers your income below the
threshold amount or lowers the
modified adjusted gross income range in
which your income falls. We may grant
your request to use a more recent tax
year’s modified adjusted gross income
to determine your income-related
monthly adjustment amount only if you
provide us with a copy of a filed Federal
income tax return or equivalent
document.14
When we make an income-related
monthly adjustment amount
determination based on your request
due to a qualifying major life-changing
event, the determination will be
effective generally on January 1 of the
calendar year for which we make the
determination. If you enrolled in
Medicare prescription drug coverage
after January 1 of the year for which we
make an income-related monthly
adjustment amount determination based
on your request due to a major lifechanging event, the determination will
be effective the month your Medicare
prescription drug coverage enrollment
becomes effective.
When we make an income-related
monthly adjustment amount
determination following a major lifechanging event using your more recent
tax-year’s modified adjusted gross
income, we will continue trying to get
IRS data for that tax year. When we
receive modified adjusted gross income
information from the IRS for that tax
year, we will use the information from
the IRS to determine the correct incomerelated monthly adjustment amount for
the year or years for which we used
information that you provided, and we
will make retroactive corrections, if
necessary. Retroactive corrections will
apply to all months for which you paid
an incorrect income-related monthly
adjustment amount.
14 Section
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If You Disagree With Our
Determination of Your Income-Related
Monthly Adjustment Amount
We will determine whether you must
pay an income-related monthly
adjustment, and the amount of any
adjustment, based on information we
receive from the IRS or you. We will
send you a notice of our initial
determination of your income-related
monthly adjustment amount and the
basis for our determination. The notice
will explain that, if you disagree with
our determination, you may request that
we reconsider it within 60 days after the
date you receive notice of our initial
determination. The notice will also
explain that you may request a new
initial determination, rather than a
reconsideration, if you believe the
information we used in our initial
determination was correct, but you want
us to use different information about
your modified adjusted gross income. If
you have Medicare Part B without
Medicare prescription drug coverage,
and you enroll later that same year in
Medicare prescription drug coverage,
we will apply our income-related
monthly adjustment amount
determination for Medicare Part B to
determine your corresponding incomerelated monthly adjustment amount for
your Medicare prescription drug
coverage. When this subsequent action
results in increased deductions and a
change in the net amount of benefits
payable, you will get a letter notifying
you of the change in your benefits and
information on your appeal rights.
For purposes of this subpart, in
making initial determinations and
reconsiderations, we will use the rules
for the administrative review process
that we use for determinations of your
rights regarding nonmedical issues
under title II of the Act. However, in
order to expedite the processing of
requests for reconsideration under these
rules, we may accept requests for
reconsideration that are filed by
electronic or other means that we
determine to be appropriate, other than
a request in writing, as our title II
regulations provide.
If you are dissatisfied with our
reconsidered determination, you may
request further review, including a
hearing before an administrative law
judge (ALJ) from the Office of Medicare
Hearings and Appeals (OMHA) at the
Department of Health and Human
Services (HHS), review by the Medicare
Appeals Council (MAC) in HHS, and
judicial review, consistent with the
CMS regulations at 42 CFR part 423.
You may request that we use a
modified adjusted gross income for a
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more recent tax year if you have had a
major life-changing event that
significantly reduces your income, or if
the IRS has provided to us modified
adjusted gross income information from
3 years prior to the premium effective
year. You may also request that we
make a new initial determination when
you have amended your Federal income
tax return or when you can furnish
proof that the IRS has provided
incorrect information about your
modified adjusted gross income for the
year that we used to determine your
income-related monthly adjustment
amount. These additional options do
not affect your right to appeal an initial
determination that we make that you
must pay an income-related monthly
adjustment amount, but allow you to
choose an alternative or additional
method to request that we use other
information to make a new initial
determination.
Explanation of the New Subpart
We are adding a new subpart C,
Medicare Prescription Drug Coverage
Income-Related Monthly Adjustment
Amount, to part 418 of our rules.
Subpart C contains the rules that we
will use to determine when you will be
required to pay an income-related
monthly adjustment amount in addition
to your Medicare prescription drug
coverage monthly premium plus any
applicable premium increase for late
enrollment or reenrollment. Following
is a description of each section for
subpart C.
Introduction, General Provisions, and
Definitions
• Section 418.2001 describes what
provisions subpart C contains, lists the
groups of sections in the subpart, and
the subject of each group.
• Section 418.2005 explains the
purpose of the income-related monthly
adjustment amount and how we will
administer the income-related monthly
adjustment amount.
• Section 418.2010 contains
definitions of terms used throughout
this subpart.
Determination of the Income-Related
Monthly Adjustment Amount
• Section 418.2101 explains what the
income-related monthly adjustment
amount is and when it is applied.
• Section 418.2105 defines the
modified adjusted gross income
thresholds and what the modified
adjusted gross income threshold
amounts will be in the years 2011–2019.
It also describes how threshold amounts
will change in later years.
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• Section 418.2110 describes the
effective date of our initial
determination about the income-related
monthly adjustment amount.
• Section 418.2112 describes how
you will pay your income-related
monthly adjustment amount.
• Section 418.2115 defines modified
adjusted gross income ranges and
explains how we will use those ranges
and your tax filing status to determine
the amount of your income-related
monthly adjustment amount when
applicable, and what effect Federal
income tax filing status has on the
ranges.
• Section 418.2120 explains how we
will determine your income-related
monthly adjustment amount.
• Section 418.2125 explains how the
income-related monthly adjustment
amount will affect what you pay for
Medicare prescription drug coverage.
• Section 418.2135 describes what
modified adjusted gross income
information we will use to determine
your income-related monthly
adjustment amount by reference to our
rules in section 418.1135.
• Section 418.2140 describes what
will happen if the modified adjusted
gross income that we later receive from
the IRS is different from the information
that we previously used to make a
determination of your income-related
monthly adjustment amount by
reference to our rules in section
418.1140.
• Section 418.2145 describes how we
will determine the income-related
monthly adjustment amount if the IRS
does not provide your modified
adjusted gross income information by
reference to our rules in section
418.1145.
• Section 418.2150 describes when
we will use a copy of your amended
Federal income tax return filed with the
IRS to determine the income-related
monthly adjustment amount by
reference to our rules in section
418.1150.
Determinations Using a More Recent
Tax Year’s Modified Adjusted Gross
Income
• Section 418.2201 explains when we
will use modified adjusted gross income
information for a more recent tax year
to determine your income-related
monthly adjustment amount by
reference to our rules in section
418.1201.
• Section 418.2205 describes what is
considered a major life-changing event
that would justify using information
from a more recent tax year by reference
to our rules in section 418.1205.
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• Section 418.2210 explains what is
not considered a major life-changing
event that would justify using
information from a more recent tax year
by reference to our rules in section
418.1210.
• Section 418.2215 explains what we
consider a significant reduction in your
income for the purpose of these rules by
reference to our rules in section
418.1215.
• Section 418.2220 explains what we
do not consider a significant reduction
in your income for the purpose of these
rules by reference to our rules in section
418.1220.
• Section 418.2225 explains which
more recent tax years we may use to
determine whether you must pay an
income-related monthly adjustment
amount and the amount of that
adjustment by reference to our rules in
section 418.1225.
• Section 418.2230 explains the
effective date of our income-related
monthly adjustment amount
determination based on your request to
use a more recent tax year by reference
to our rules in section 418.1230.
• Section 418.2235 explains when we
will stop using your modified adjusted
gross income from a more recent tax
year for income-related monthly
adjustment amount determinations by
reference to our rules in section
418.1235.
• Section 418.2240 explains what you
should do if your modified adjusted
gross income for the more recent tax
year changes by reference to our rules in
section 418.1240.
• Section 418.2245 explains what
will happen if you notify us of a change
in your modified adjusted gross income
for the more recent tax year.
• Section 418.2250 explains what
evidence you will need to support your
request for us to use a more recent tax
year to determine your income-related
monthly adjustment amount by
reference to our rules in section
418.1250.
• Section 418.2255 describes what
evidence of a major life-changing event
you will need to provide to support
your request to use a more recent tax
year by reference to our rules in section
418.1255.
• Section 418.2260 describes the
types of evidence of a major lifechanging event that we will not accept
by reference to our rules in section
418.1260.
• Section 418.2265 describes what
evidence of a significant reduction in
your modified adjusted gross income
you will need to provide to support
your request to use a more recent tax
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year by reference to our rules in section
418.1265.
• Section 418.2270 explains what
evidence we will not accept of a
significant reduction in your modified
adjusted gross income by reference to
our rules in section 418.1270.
Determinations and the Administrative
Review Process
• Section 418.2301 explains what is
an initial determination regarding your
income-related monthly adjustment,
and provides examples of
determinations that are initial
determinations for the purposes of these
rules by reference to our rules in section
418.1301.
• Section 418.2305 explains that
administrative actions that are not
initial determinations are not subject to
the administrative review process by
reference to our rules in section
418.1305.
• Section 418.2310 explains when
you may request that we make a new
initial determination by reference to our
rules in section 418.1310.
• Section 418.2315 explains how we
will notify you when we make an initial
determination, and what information
the notice will contain by reference to
our rules in section 418.1315.
• Section 418.2320 explains the effect
of an initial determination.
• Section 418.2322 explains how a
Medicare Part B income-related monthly
adjustment amount determination will
apply to your Medicare prescription
drug coverage.
• Section 418.2325 explains when
you may request a reconsideration by
reference to our rules in section
418.1325.
• Section 418.2330 explains what
will happen if you request a
reconsideration because you believe that
the IRS information we used to make an
initial determination about your
income-related monthly adjustment
amount is incorrect.
• Section 418.2332 explains what you
can do if you believe that the CMS
information we used is incorrect.
• Section 418.2335 explains what to
do if you believe that we based our
initial determination on incorrect
modified adjusted gross income
information by reference to our rules in
section 418.1335.
• Section 418.2340 tells you the rules
for the administrative review process by
reference to our rules in section
418.1340.
• Section 418.2345 tells you the rules
we will use to decide if reopening a
prior initial or reconsidered
determination made by us is appropriate
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75889
by reference to our rules in section
418.1345.
• Section 418.2350 explains that the
HHS rules will apply for review of a
reconsidered determination, an ALJ
decision, or a decision by the MAC.
• Section 418.2355 explains that the
rules for reopening a prior decision
made by an ALJ of the OMHA or by the
MAC will follow the HHS rules
governing reopening.
Change to Medicare Part B IncomeRelated Monthly Adjustment Amounts
We are also amending our rules on the
Medicare Part B (supplementary
medical insurance) income-related
monthly adjustment amounts to add
section 418.1322. In order to provide
consistency with the rules at final
section 418.2322, this new section
explains that if we make an incomerelated monthly adjustment amount
determination for you for the effective
year for purposes of the Medicare
prescription drug coverage program, we
will apply that income-related monthly
adjustment amount determination for
purposes of determining your incomerelated monthly adjustment amount for
Medicare Part B for the same effective
year. As a result, if you have Medicare
prescription drug coverage without
Medicare Part B and you enroll later
that same year in Medicare Part B, the
income-related monthly adjustment
amount determination for your
Medicare prescription drug coverage
will also apply to your Medicare Part B.
If we were to delay our determination
when you enroll in Medicare Part B
later in that year, the delay could cause
confusion and larger retroactive
corrections. Conveying your incomerelated monthly adjustment amount
determination for Medicare prescription
drug coverage or Medicare Part B to the
other program when enrollment occurs
later in that year will simplify
processing and minimize delays in
collections of adjustments.
The new rule will facilitate applying
the administrative review decision or
new initial determination to both
programs sooner, because this change
will eliminate delays in applying the
income-related monthly adjustment
amount determination to both Medicare
prescription drug coverage and
Medicare Part B when you enroll in one
of these programs later in the year than
the other program. We will not request
information from the IRS about your
modified adjusted gross income under
the following circumstances: if you are
eligible for the low-income subsidy for
your Medicare prescription drug
coverage described in Subpart D of this
Part, if you receive supplemental
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security income payments, or CMS has
determined that you are deemed full
Medicare prescription drug coverage
subsidy eligible under § 1860D–
14(a)(3)(B)(v) of the Act as further
explained in 42 CFR 423.773(c)(1).
Clarity of These Rules
Executive Order 12866 requires each
agency to write all rules in plain
language. In addition to your
substantive comments on this proposed
rule, we invite your comments on how
to make rules easier to understand.
For example:
• Would more, but shorter, sections
be better?
• Are the requirements in the rule
clearly stated?
• Have we organized the material to
suit your needs?
• Could we improve clarity by adding
tables, lists, or diagrams?
• What else could we do to make the
rule easier to understand?
• Does the rule contain technical
language or jargon that is not clear?
• Would a different format make the
rule easier to understand, e.g. grouping
and order of sections, use of headings,
paragraphing?
When will we start to use this rule?
We will start to use these rules on the
date shown under the ‘‘Effective Date’’
section earlier in this preamble.
However, we are also inviting public
comments on the changes made by these
rules. We will consider any relevant
comments we receive, and plan to
publish another final rule document to
respond to any such comments we
receive, and to make any changes to the
rules as appropriate based on the
comments.
srobinson on DSKHWCL6B1PROD with RULES
Regulatory Procedures
We follow the Administrative
Procedure Act (APA) rulemaking
procedures specified in 5 U.S.C. 553
when we develop regulations.
Generally, the APA requires that an
agency provide prior notice and
opportunity for public comment before
issuing a final regulation. The APA
provides exceptions to its notice and
public comment procedures when an
agency finds good cause for dispensing
with such procedures because they are
impracticable, unnecessary, or contrary
to the public interest and incorporates a
statement of the finding and its reasons
in the rule issued.15
With respect to the new rules we are
adding under subpart C of part 418 of
our rules, we must begin to administer
the income-related monthly adjustment
15 5
U.S.C. 553(b)(B).
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16:40 Dec 06, 2010
amounts to Medicare prescription drug
coverage on January 1, 2011, in
accordance with section 3308(a) of the
Affordable Care Act. In light of the
March 23, 2010, enactment date of the
Affordable Care Act and our need to
have authority in place to make and
issue notices of determinations to start
collecting income-related monthly
adjustment amounts for Medicare
prescription drug coverage beginning
January 1, 2011, we do not have
sufficient time to provide a notice and
comment period before promulgating
final rules in order to begin
administering the program in a timely
manner. Thus, we find that the use of
the APA’s notice and comment
rulemaking procedures would be
impracticable in this situation.
With respect to the addition of
§ 418.1322, we find that good cause
exists for proceeding without prior
public notice and comment because
these changes allow us to avoid delay in
making a second income-related
monthly adjustment amount
determination for Medicare Part B when
a Medicare prescription drug coverage
beneficiary enrolls in Medicare Part B
later in the effective year. Avoiding such
delay by applying an income-related
monthly adjustment amount
determination that is based on the same
income threshold and ranges simplifies
processing and minimizes the need for
us to make unnecessary retroactive
corrections. Accordingly, we find that
prior public comment would be
contrary to the public interest with
respect to the changes we are making to
our rules in subpart B of part 418.
Although we are issuing this rule as
an interim final rule, we are inviting
public comment on the rule, and we
will consider any responsive comments
we receive within 60 days of the
publication of the rule.
In addition, for the reasons cited
above, we also find good cause for
dispensing with the 30-day delay in the
effective date of this rule.16 Because we
find that it is impracticable to delay the
effective date of our rule changes in
order to begin administering the
program by the statutory deadline, we
are making this rule effective upon
publication.
Executive Order 12866
We have consulted with the Office of
Management and Budget (OMB) and
determined that this rule meets the
criteria for a significant regulatory
action under Executive Order 12866.
Therefore, OMB reviewed it.
16 See
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5 U.S.C. 553(d)(3).
Frm 00024
Fmt 4700
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Regulatory Flexibility Act
We certify that this rule will not have
a significant economic impact on a
substantial number of small entities
because it affects individuals only.
Therefore, a regulatory flexibility
analysis is not required under the
Regulatory Flexibility Act, as amended.
Paperwork Reduction Act
We solicited public comment and
received OMB approval for the public
reporting burdens contained in these
rules in a separate Information
Collection Request.
(Catalog of Federal Domestic Assistance
Program Nos. 93.774 Medicare
Supplementary Medical Insurance; 96.002
Social Security—Retirement Insurance.)
List of Subjects in 20 CFR Part 418
Administrative practice and
procedure, Aged, Blind, Disability
benefits, Public assistance programs,
Reporting and recordkeeping
requirements, Supplemental Security
Income (SSI), Medicare subsidies.
Dated: November 23, 2010.
Michael J. Astrue,
Commissioner of Social Security.
For the reasons set out in the
preamble, we amend 20 CFR chapter III,
part 418 as set forth below:
■ 1. The authority citation for subpart B
of part 418 continues to read as follows:
■
Authority: Secs. 702(a)(5) and 1839(i) of
the Social Security Act (42 U.S.C. 902(a)(5)
and 1395r(i)).
■
2. Add § 418.1322 to read as follows:
§ 418.1322 How will a Medicare
prescription drug coverage income-related
monthly adjustment amount determination
for the effective year affect your Medicare
Part B?
If we make an income-related
monthly adjustment amount
determination for you for the effective
year under subpart C of this part
(Medicare Prescription Drug Coverage
Income-Related Monthly Adjustment
Amount), we will apply that incomerelated monthly adjustment amount
determination under this subpart to
determine your Part D income-related
monthly adjustment amount for the
same effective year. Therefore, if you
become enrolled in Medicare Part B in
the effective year after we make an
income-related monthly adjustment
amount determination about your
Medicare prescription drug coverage,
the income-related monthly adjustment
amount determination for your
Medicare prescription drug coverage
will also be used to determine your
Medicare Part B income-related monthly
adjustment amount. Any change in your
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net benefit due will be accompanied by
a letter explaining the change in your
net benefit and your right to appeal the
change.
3. Add subpart C to Part 418 to read
as follows:
■
Subpart C—Income-Related Monthly
Adjustments to Medicare Prescription
Drug Coverage Premiums
Sec.
Introduction, General Provisions, and
Definitions
418.2001 What is this subpart about?
418.2005 Purpose and administration.
418.2010 Definitions.
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Determination of the Income-Related
Monthly Adjustment Amount
418.2101 What is the income-related
monthly adjustment amount?
418.2105 What is the threshold?
418.2110 What is the effective date of our
initial determination about your incomerelated monthly adjustment amount?
418.2112 Paying your income-related
monthly adjustment amount.
418.2115 What are the modified adjusted
gross income ranges?
418.2120 How do we determine your
income-related monthly adjustment
amount?
418.2125 How will the income-related
monthly adjustment amount affect your
total Medicare prescription drug
coverage premium?
418.2135 What modified adjusted gross
income information will we use to
determine your income-related monthly
adjustment amount?
418.2140 What will happen if the modified
adjusted gross income information from
the IRS is different from the modified
adjusted gross income information we
used to determine your income-related
monthly adjustment amount?
418.2145 How do we determine your
income-related monthly adjustment
amount if the IRS does not provide
information about your modified
adjusted gross income?
418.2150 When will we use your amended
tax return filed with the IRS?
Determinations Using a More Recent Tax
Year’s Modified Adjusted Gross Income
418.2201 When will we determine your
income-related monthly adjustment
amount based on the modified adjusted
gross income information that you
provide for a more recent tax year?
418.2205 What is a major life-changing
event?
418.2210 What is not a major life-changing
event?
418.2215 What is a significant reduction in
your income?
418.2220 What is not a significant
reduction in your income?
418.2225 Which more recent tax year will
we use?
418.2230 What is the effective date of an
income-related monthly adjustment
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amount initial determination based on a
more recent tax year?
418.2235 When will we stop using your
more recent tax year’s modified adjusted
gross income to determine your incomerelated monthly adjustment amount?
418.2240 Should you notify us if the
information you gave us about your
modified adjusted gross income for the
more recent tax year changes?
418.2245 What will happen if you notify us
that your modified adjusted gross
income for the more recent tax year
changes?
418.2250 What evidence will you need to
support your request that we use a more
recent tax year?
418.2255 What kind of evidence of a major
life-changing event will you need to
support your request for us to use a more
recent tax year?
418.2260 What major life-changing event
evidence will we not accept?
418.2265 What kind of evidence of a
significant modified adjusted gross
income reduction will you need to
support your request?
418.2270 What modified adjusted gross
income evidence will we not accept?
Determinations and the Administrative
Review Process
418.2301 What is an initial determination
regarding your income-related monthly
adjustment amount?
418.2305 What is not an initial
determination regarding your incomerelated monthly adjustment amount?
418.2310 When may you request that we
make a new initial determination?
418.2315 How will we notify you and what
information will we provide about our
initial determination?
418.2320 What is the effect of an initial
determination?
418.2322 How will a Medicare Part B
income-related monthly adjustment
amount determination for the effective
year affect your Medicare prescription
drug coverage?
418.2325 When may you request a
reconsideration?
418.2330 Can you request a reconsideration
when you believe that the IRS
information we used is incorrect?
418.2332 Can you request a reconsideration
when you believe that the CMS
information we used is incorrect?
418.2335 What should you do if we base
our initial determination on modified
adjusted gross income information you
believe to be incorrect?
418.2340 What are the rules for our
administrative review process?
418.2345 Is reopening of an initial or
reconsidered determination made by us
ever appropriate?
418.2350 What are the rules for review of a
reconsidered determination or an ALJ
decision?
418.2355 What are the rules for reopening
a decision by an ALJ of the Office of
Medicare Hearings and Appeals (OMHA)
or by the Medicare Appeals Council
(MAC)?
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75891
Authority: Secs. 702(a)(5), 1860D–13(a)
and (c) of the Social Security Act (42 U.S.C.
902(a)(5), 1395w–113(a) and (c)).
Introduction, General Provisions, and
Definitions
§ 418.2001
What is this subpart about?
This subpart implements sections
1860D–13(a)(7) and 1860D–13(c)(4) of
the Social Security Act (the Act), as
added by section 3308 of the Affordable
Care Act (Pub. L. 111–148). Section
3308(a) establishes an income-related
monthly adjustment to Medicare
prescription drug coverage premiums.
Persons enrolled in Medicare
prescription drug plans, Medicare
Advantage plans with prescription drug
coverage, Programs of All-Inclusive Care
for the Elderly plans, and cost plans
offering prescription drug coverage who
have modified adjusted gross income
over a threshold amount established in
the statute will pay an income-related
monthly adjustment amount in addition
to their Medicare prescription drug
coverage plan’s monthly premium and
any applicable premium increases as
described in 42 CFR 423.286. The
regulations in this subpart explain how
we determine whether you are required
to pay an income-related monthly
adjustment amount, and if you are, the
amount of your adjustment. We have
divided the rules into the following
groups of sections:
(a) Sections 418.2001 through
418.2010 contain the introduction, a
statement of the general purpose of the
income-related monthly adjustment
amount, general provisions that apply to
the income-related monthly adjustment
amount, and definitions of terms that
we use in this subpart.
(b) Sections 418.2101 through
418.2150 describe what information
about your modified adjusted gross
income we will use to determine if you
are required to pay an income-related
monthly adjustment amount. In these
sections, we also describe how the
income-related monthly adjustment
amount will affect your total Medicare
prescription drug coverage premium.
(c) Sections 418.2201 through
418.2270 contain an explanation of the
standards that you must meet for us to
grant your request to use modified
adjusted gross income information that
you provide for a more recent tax year
rather than the information described in
paragraph (b) of this section. These
sections explain when we may consider
such a request, and the evidence that
you will be required to provide. These
sections also explain when an incomerelated monthly adjustment amount
determination based on information you
provide will be effective, and how long
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it will remain in effect. Additionally,
these sections describe how we make
retroactive adjustments of the incomerelated monthly adjustment amount
based on information you provide,
updated information you provide, and
information we later receive from the
Internal Revenue Service.
(d) Sections 418.2301 through
418.2355 explain how we will notify
you of our determination regarding your
income-related monthly adjustment
amount and contain the rules that we
will apply when you disagree with our
determination. These sections explain
your appeal rights and the
circumstances under which you may
request that we make a new initial
determination of your income-related
monthly adjustment amount.
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§ 418.2005
Purpose and administration.
(a) The purpose of the income-related
monthly adjustment amount is for
beneficiaries who have modified
adjusted gross income above an
established threshold to reimburse the
Federal Government for a portion of the
Federal subsidy of the Medicare
prescription drug coverage. Persons who
have modified adjusted gross income
above the thresholds described in
§ 418.2105 will pay an income-related
monthly adjustment amount in addition
to the premium for their prescription
drug coverage. The income-related
monthly adjustment amount due will be
determined based on the base
beneficiary premium amount that
represents 25.5 percent of the cost of the
basic Medicare prescription drug
coverage. The application of an incomerelated monthly adjustment amount
results in an increase in the total
amount that those who are affected pay
for Medicare prescription drug coverage
plans. A person who has modified
adjusted gross income above the
threshold amount will pay:
(1) The Medicare prescription drug
coverage plan monthly premium; plus
(2) Any applicable increase for late
enrollment or reenrollment;
(3) An income-related monthly
adjustment amount; and
(b) The Centers for Medicare &
Medicaid Services in the Department of
Health and Human Services establishes
rules for eligibility for Medicare
prescription drug coverage and
enrollment in Medicare prescription
drug coverage plans, as well as premium
penalties for late enrollment or
reenrollment (42 CFR 423.30 through
423.56).
(c) We use information from CMS
about enrollment in Medicare
prescription drug coverage plans to
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determine the records that we must
send to the IRS.
(d) We use information that we get
from the IRS to determine if persons
enrolled in Medicare prescription drug
coverage plans are required to pay an
income-related monthly adjustment
amount. We also change income-related
monthly adjustment amount
determinations using information you
provide under certain circumstances. In
addition, we notify beneficiaries when
the social security benefit amounts they
receive will change based on our
income-related monthly adjustment
amount determination.
§ 418.2010
Definitions.
(a) Terms relating to the Act and
regulations. For the purposes of this
subpart:
(1) Administrator means the
Administrator of CMS in HHS.
(2) ALJ means administrative law
judge.
(3) CMS means the Centers for
Medicare & Medicaid Services in HHS.
(4) Commissioner means the
Commissioner of Social Security.
(5) HHS means the Department of
Health and Human Services, which
oversees the Centers for Medicare &
Medicaid Services (CMS), the Office of
Medicare Hearings and Appeals
(OMHA) and the Medicare Appeals
Council (MAC)
(6) IRS means the Internal Revenue
Service in the Department of the
Treasury.
(7) MAC means the Medicare Appeals
Council in HHS.
(8) Medicare Prescription Drug
Coverage Plan means a Medicare
prescription drug plan, a Medicare
Advantage plan with prescription drug
coverage, a Program for All-inclusive
Care for the Elderly plan offering
qualified prescription drug coverage, or
a cost plan offering qualified
prescription drug coverage.
(9) OMHA means the Office of
Medicare Hearings and Appeals in HHS.
(10) Section means a section of the
regulations in this part unless the
context indicates otherwise.
(11) The Act means the Social
Security Act, as amended.
(12) Title means a title of the Act.
(13) We, our, or us means the Social
Security Administration (SSA).
(b) Miscellaneous. For the purposes of
this subpart:
(1) Amended tax return means a
Federal income tax return for which an
individual or couple has filed an
amended tax return that has been
accepted by the IRS.
(2) Effective year means the calendar
year for which we make an income-
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related monthly adjustment amount
determination.
(3) Federal premium subsidy is the
portion of the cost of providing
Medicare prescription drug coverage
that is paid by the Federal Government.
The Federal Government pays this
amount to Medicare Prescription Drug
coverage Plans from payments made
into the Medicare Prescription Drug
Account in the Federal Supplementary
Medical Insurance Trust Fund.
(4) Income-related monthly
adjustment amount is an additional
amount of premium that you will pay
for Medicare prescription drug coverage
if you have modified adjusted gross
income above the threshold described in
418.2105.
(5) Modified Adjusted Gross Income is
your adjusted gross income as defined
by the Internal Revenue Code, plus the
following forms of tax-exempt income:
(i) Tax-exempt interest income;
(ii) Income from United States savings
bonds used to pay higher education
tuition and fees;
(iii) Foreign earned income;
(iv) Income derived from sources
within Guam, American Samoa, or the
Northern Mariana Islands; and
(v) Income from sources within Puerto
Rico.
(6) Modified adjusted gross income
ranges are the groupings of modified
adjusted gross income above the
threshold. There are four ranges for
most individuals, based on their tax
filing status. There are two ranges for
those with a tax filing status of married,
filing separately, who also lived with
their spouse for part of the year. The
dollar amounts of the modified adjusted
gross income ranges are specified in
§ 418.2115.
(7) Premium is a payment that an
enrolled beneficiary pays for Medicare
prescription drug coverage to a
Medicare prescription drug plan, a
Medicare Advantage plan with
prescription drug coverage, a Program of
All-Inclusive Care for the Elderly Plan
offering qualified prescription drug
coverage, or a cost plan offering
qualified prescription drug coverage.
The rules that CMS use annually to
establish premium amounts for
Medicare prescription drug coverage are
contained in 42 CFR 423.286.
(8) Representative means, for the
purposes of the initial determination
and reconsidered determination, an
individual as defined in § 404.1703 of
this chapter, and for purposes of an ALJ
hearing or review by the MAC, an
individual as defined in 42 CFR
423.560.
(9) Tax filing status means the filing
status shown on your individual income
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tax return. It may be single, married
filing jointly, married filing separately,
head of household, or qualifying
widow(er) with dependent child.
(10) Tax year means the year for
which you have filed or will file your
Federal income tax return with the IRS.
(11) Threshold means a modified
adjusted gross income amount above
which you will have to pay an incomerelated monthly adjustment amount
described in paragraph (b)(4) of this
section. The dollar amount of the
threshold is specified in § 418.2105.
(12) You or your means the person or
representative of the person who is
subject to the income-related monthly
adjustment amount.
Determination of the Income-Related
Monthly Adjustment Amount
§ 418.2101 What is the income-related
monthly adjustment amount?
(a) The income-related monthly
adjustment amount is an amount that
you will pay in addition to the Medicare
prescription drug coverage plan
monthly premium, plus any applicable
increase in that premium as described
in 42 CFR 423.286, for your Medicare
prescription drug coverage plan when
your modified adjusted gross income is
above the threshold described in
§ 418.2105.
(b) Your income-related monthly
adjustment amount is based on your
applicable modified adjusted gross
income as described in § 418.2115 and
your tax filing status.
(c) We will determine your incomerelated monthly adjustment amount
using the method described in
§ 418.2120.
srobinson on DSKHWCL6B1PROD with RULES
§ 418.2105
What is the threshold?
(a) The threshold is a level of
modified adjusted gross income above
which you will have to pay the incomerelated monthly adjustment amount.
(b) For calendar years 2011 through
and including 2019, the modified
adjusted gross income threshold is
$85,000 for individuals with a Federal
income tax filing status of single,
married filing separately, head of
household, and qualifying widow(er)
with dependent child. The threshold is
$170,000 for individuals with a Federal
income tax filing status of married filing
jointly.
(c) Starting at the end of calendar year
2019 and for each calendar year
thereafter, CMS will set the threshold
amounts for the following year. CMS
will publish the threshold amounts
annually in the Federal Register.
Published threshold amounts will be
effective January 1 of the next calendar
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year, and remain unchanged for the full
calendar year.
§ 418.2110 What is the effective date of our
initial determination about your incomerelated monthly adjustment amount?
(a) Generally, an income-related
monthly adjustment amount
determination will be effective for all
months that you are enrolled in a
prescription drug coverage plan during
the year for which we determine you
must pay an income-related monthly
adjustment amount.
(b) When we have used modified
adjusted gross income information from
the IRS for the tax year 3 years prior to
the effective year to determine your
income-related monthly adjustment
amount, and modified adjusted gross
income information for the tax year 2
years prior later becomes available from
the IRS, we will review the new
information to determine if we should
revise our initial determination
concerning the income-related monthly
adjustment amount. If we revise our
initial determination, the effective date
of the new initial determination will be
January 1 of the effective year, or the
first month your enrollment or reenrollment in a Medicare prescription
drug coverage plan became effective if
later than January.
(c) When we use your amended tax
return, as described in § 418.2150, the
effective date will be January 1 of the
year(s) that is affected, or the first month
in that year that your enrollment or reenrollment in a Medicare prescription
drug coverage plan became effective if
later than January.
Example: You are enrolled in Medicare
prescription drug coverage throughout 2011.
We use your 2009 modified adjusted gross
income as reported to us by the IRS to
determine your 2011 income-related monthly
adjustment amount. In 2012, you submit to
us a copy of your 2009 amended tax return
that you filed with the IRS. The modified
adjusted gross income reported on your 2009
amended tax return is significantly less than
originally reported to the IRS. We use the
modified adjusted gross income reported on
your 2009 amended tax return to determine
your income-related monthly adjustment
amount. That income-related monthly
adjustment amount is effective January 1,
2011. We will retroactively correct any
differences between the amount paid in 2011
and the amount you should have paid based
on the amended tax return.
(d) When we use evidence that you
provide to proves the IRS modified
adjusted gross income information we
used was incorrect, as described in
§ 418.2335, the effective date will be
January of the year(s) that is affected or
the first month in that year that your
enrollment or re-enrollment in a
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Medicare prescription drug coverage
plan became effective if later than
January.
(e) When we use information from a
more recent tax year that you provide
due to a major life-changing event, as
described in § 418.2201, the effective
date is described in § 418.2230.
§ 418.2112 Paying your income-related
monthly adjustment amount.
(a) We will deduct the income-related
monthly adjustment amount from your
Social Security benefits if they are
sufficient to cover the amount owed. If
the amount of your Social Security
benefits is not sufficient to pay the full
amount of your income-related monthly
adjustment amount, CMS will bill you
for the full amount owed.
(b) If you do not receive Social
Security or Railroad Retirement Board
benefits, but you receive benefits from
the Office of Personnel Management, the
Office of Personnel Management will
deduct the income-related monthly
adjustment amount from your benefits if
they are sufficient to cover the amount
owed. If the amount of your Office of
Personnel Management benefits is not
sufficient to pay the full amount of your
income-related monthly adjustment
amount, CMS will bill you for the full
amount owed.
(c) If you do not receive Social
Security, Railroad Retirement Board, or
Office of Personnel Management
benefits, CMS will bill you for your
income-related monthly adjustment
amount.
§ 418.2115 What are the modified adjusted
gross income ranges?
(a) We list the modified adjusted gross
income ranges for the calendar years
2011 through and including 2019 for
each Federal tax filing category in
paragraphs (b), (c) and (d) of this
section. We will use your modified
adjusted gross income amount together
with your tax filing status to determine
the amount of your income-related
monthly adjustment for these calendar
years.
(b) For calendar years 2011 through
and including 2019, the modified
adjusted gross income ranges for
individuals with a Federal tax filing
status of single, head of household,
qualifying widow(er) with dependent
child, and married filing separately
when the individual has lived apart
from his/her spouse for the entire tax
year for the year we use to make our
income-related monthly adjustment
amount determination are as follows:
(1) Greater than $85,000 and less than
or equal to $107,000;
(2) Greater than $107,000 and less
than or equal to $160,000;
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(3) Greater than $160,000 and less
than or equal to $214,000; and
(4) Greater than $214,000.
(c) For calendar years 2011 through
and including 2019, the modified
adjusted gross income ranges for
individuals who are married and filed a
joint tax return for the tax year we use
to make the income-related monthly
adjustment amount determination are as
follows:
(1) Greater than $170,000 and less
than or equal to $214,000;
(2) Greater than $214,000 and less
than or equal to $320,000;
(3) Greater than $320,000 and less
than or equal to $428,000; and
(4) Greater than $428,000.
(d) For calendar years 2011 through
and including 2019, the modified
adjusted gross income ranges for
married individuals who file a separate
return and have lived with their spouse
at any time during the tax year we use
to make the income-related monthly
adjustment amount determination are as
follows:
(1) Greater than $85,000 and less than
or equal to $129,000; and
(2) Greater than $129,000.
(e) In 2019, CMS will set all modified
adjusted gross income ranges for 2020
and publish them in the Federal
Register. In each year thereafter, CMS
will set all modified adjusted gross
income ranges and publish the amounts
for each range prior to the beginning of
each subsequent year.
srobinson on DSKHWCL6B1PROD with RULES
§ 418.2120 How do we determine your
income-related monthly adjustment
amount?
(a) We will determine your incomerelated monthly adjustment amount by
using your tax filing status and modified
adjusted gross income.
(b) Tables of applicable percentage.
The tables in paragraphs (b)(1) through
(b)(3) of this section contain the
modified adjusted gross income ranges
for calendar years 2011 through and
including 2019, and the corresponding
percentage of the cost of basic Medicare
prescription drug coverage that
individuals with modified adjusted
gross incomes that fall within each of
the ranges will pay. The monthly dollar
amounts will be determined by CMS
using the formula in § 1860D–13(a)(7)(B)
of the Act. Based on your tax filing
status for the tax year we use to make
a determination about your incomerelated monthly adjustment amount, we
will determine which table is applicable
to you. We will use your modified
adjusted gross income to determine
which income-related monthly
adjustment amount to apply to you. The
dollar amounts used for each of the
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ranges of income-related monthly
adjustment will be set annually after
2019 as described in paragraph (c) of
this section. The modified adjusted
gross income ranges will be adjusted
annually after 2019 as described in
§ 418.2115(e).
(1) General table of applicable
percentages. If your filing status for your
Federal income taxes for the tax year we
use is single; head of household;
qualifying widow(er) with dependent
child; or married filing separately and
you lived apart from your spouse for the
entire tax year, we will use the general
table of applicable percentages. When
your modified adjusted gross income for
the year we use is in the range listed in
the left column in the following table,
you will pay an amount based on the
percentage listed in the right column,
which represents a percentage of the
cost of basic Medicare prescription drug
coverage.
in the right column, which represents a
percentage of the cost of basic Medicare
prescription drug coverage.
Modified adjusted gross income effective in 2011–2019
Beneficiary
percentage
(percent)
More than $85,000 but less
than or equal to $129,000
More than $129,000 .............
65
80
(c) For each year after 2019, CMS will
announce the modified adjusted gross
income ranges for the income-related
monthly adjustment amount described
in paragraph (b) of this section.
§ 418.2125 How will the income-related
monthly adjustment amount affect your
total Medicare prescription drug coverage
premium?
(a) If you must pay an income-related
monthly adjustment amount, your total
Medicare prescription drug coverage
premium will be the sum of:
Beneficiary
Modified adjusted gross inpercentage
come effective in 2011–2019
(1) Your prescription drug coverage
(percent)
monthly premium, as determined by
your plan; plus
More than $85,000 but less
than or equal to $107,000
35
(2) Any applicable increase in the
More than $107,000 but less
prescription drug coverage monthly
than or equal to $160,000
50
premium as described in 42 CFR
More than $160,000 but less
than or equal to $214,000
65 423.286; plus
More than $214,000 .............
80
(3) Your income-related monthly
adjustment amount.
(2) Table of applicable percentages for
(b) Regardless of the method you use
joint returns. If your Federal tax filing
status is married filing jointly for the tax to pay your Medicare prescription drug
year we use and your modified adjusted coverage premiums to your Medicare
prescription drug coverage plan, you
gross income for that tax year is in the
will pay any income-related monthly
range listed in the left column in the
following table, you will pay an amount adjustment amount you owe using the
method described in 418.2112.
based on the percentage listed in the
right column, which represents a
§ 418.2135 What modified adjusted gross
percentage of the cost of basic Medicare income information will we use to
prescription drug coverage.
determine your income-related monthly
Modified adjusted gross income effective in 2011–2019
More than $170,000 but less
than or equal to $214,000
More than $214,000 but less
than or equal to $320,000
More than $320,000 but less
than or equal to $428,000
More than $428,000 .............
Beneficiary
percentage
(percent)
35
50
65
80
(3) Table of applicable percentages for
married individuals filing separate
returns. If, for the tax year we use, your
Federal tax filing status is married filing
separately, you lived with your spouse
at some time during that tax year, and
your modified adjusted gross income is
in the range listed in the left column in
the following table, you will pay an
amount based on the percentage listed
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adjustment amount?
We will follow the rules in
§ 418.1135, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2140 What will happen if the
modified adjusted gross income
information from the IRS is different from
the modified adjusted gross income
information we used to determine your
income-related monthly adjustment
amount?
We will follow the rules in
§ 418.1140, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
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§ 418.2145 How do we determine your
income-related monthly adjustment amount
if the IRS does not provide information
about your modified adjusted gross
income?
We will follow the rules in
§ 418.1145, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2150 When will we use your
amended tax return filed with the IRS?
We will follow the rules in
§ 418.1150, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2225
we use?
Which more recent tax year will
We will follow the rules in
§ 418.1225, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2230 What is the effective date of an
income-related monthly adjustment amount
initial determination based on a more recent
tax year?
We will follow the rules in
§ 418.1230, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
Determinations Using a More Recent
Tax Year’s Modified Adjusted Gross
Income
§ 418.2235 When will we stop using your
more recent tax year’s modified adjusted
gross income to determine your incomerelated monthly adjustment amount?
§ 418.2201 When will we determine your
income-related monthly adjustment amount
based on the modified adjusted gross
income information that you provide for a
more recent tax year?
We will follow the rules in
§ 418.1201, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
We will follow the rules in
§ 418.1235, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2240 Should you notify us if the
information you gave us about your
modified adjusted gross income for the
more recent tax year changes?
§ 418.2205
event?
What is a major life-changing
We will follow the rules in
§ 418.1205, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2210 What is not a major lifechanging event?
We will follow the rules in
§ 418.1210, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2215 What is a significant reduction
in your income?
srobinson on DSKHWCL6B1PROD with RULES
We will follow the rules in
§ 418.1215, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2220 What is not a significant
reduction in your income?
We will follow the rules in
§ 418.1220, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
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We will follow the rules in
§ 418.1240, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2245 What will happen if you notify
us that your modified adjusted gross
income for the more recent tax year
changes?
(a) If you notify us that your modified
adjusted gross income for the more
recent tax year has changed from what
is in our records, we may make a new
initial determination for each effective
year involved. To make a new initial
determination(s) we will take into
account:
(1) The new modified adjusted gross
income information for the more recent
tax year you provide; and
(2) Any modified adjusted gross
income information from the IRS, as
described in § 418.2135, that we have
available for each effective year; and
(3) Any modified adjusted gross
income information from you, as
described in § 418.2135, that we have
available for each effective year.
(b) For each new initial determination
that results in a change in your incomerelated monthly adjustment amount, we
will make retroactive corrections that
will apply to all enrolled months of the
effective year.
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75895
(c) We will continue to use a new
initial determination described in
paragraph (a) of this section to
determine additional yearly incomerelated monthly adjustment amount(s)
until an event described in § 418.2235
occurs.
(d) We will make a new determination
about your income-related monthly
adjustment amount when we receive
modified adjusted gross income for the
effective year from the IRS, as described
in § 418.1140(d).
§ 418.2250 What evidence will you need to
support your request that we use a more
recent tax year?
We will follow the rules in
§ 418.1250, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2255 What kind of evidence of a
major life-changing event will you need to
support your request for us to use a more
recent tax year?
We will follow the rules in
§ 418.1255, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2260 What major life-changing event
evidence will we not accept?
We will follow the rules in
§ 418.1260, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2265 What kind of evidence of a
significant modified adjusted gross income
reduction will you need to support your
request?
We will follow the rules in
§ 418.1265, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2270 What modified adjusted gross
income evidence will we not accept?
We will follow the rules in
§ 418.1270, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
Determinations and the Administrative
Review Process
§ 418.2301 What is an initial determination
regarding your income-related monthly
adjustment amount?
We will follow the rules in
§ 418.1301, except that any references in
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that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2305 What is not an initial
determination regarding your incomerelated monthly adjustment amount?
We will follow the rules in
§ 418.1305, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2310 When may you request that we
make a new initial determination?
We will follow the rules in
§ 418.1310, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2315 How will we notify you and
what information will we provide about our
initial determination?
We will follow the rules in
§ 418.1315, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
benefit and your right to appeal the
change.
to the corresponding regulation in this
subpart.
§ 418.2325 When may you request a
reconsideration?
§ 418.2350 What are the rules for review of
a reconsidered determination or an ALJ
decision?
We will follow the rules in
§ 418.1325, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2330 Can you request a
reconsideration when you believe that the
IRS information we used is incorrect?
If you request a reconsideration solely
because you believe that the information
that the IRS gave us is incorrect, we will
dismiss your request for a
reconsideration and notify you to obtain
proof of a correction from the IRS and
request a new initial determination
(§ 418.2335). Our dismissal of your
request for reconsideration is not an
initial determination subject to further
administrative or judicial review.
§ 418.2332 Can you request a
reconsideration when you believe that the
CMS information we used is incorrect?
You may request a hearing before an
OMHA administrative law judge
consistent with HHS’ regulations at 42
CFR part 423. You may seek further
review of the administrative law judge’s
decision by requesting MAC review and
judicial review in accordance with HHS’
regulations.
§ 418.2355 What are the rules for
reopening a decision by an ALJ of the
Office of Medicare Hearings and Appeals
(OMHA) or by the Medicare Appeals Council
(MAC)?
The rules in 42 CFR 423.1980 through
423.1986 govern reopenings of decisions
by an administrative law judge of the
OMHA and decisions by the MAC. A
decision by an administrative law judge
of the OMHA may be reopened by the
administrative law judge or the MAC. A
decision by the MAC may be reopened
only by the MAC.
[FR Doc. 2010–30276 Filed 12–6–10; 8:45 am]
We will follow the rules in
§ 418.1320, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
If you request a reconsideration solely
because you believe that the information
that CMS gave us about your
participation in a Medicare prescription
drug coverage plan is incorrect, we will
dismiss your request for a
reconsideration and notify you that you
must contact CMS to get your records
corrected. Our dismissal of your request
for reconsideration is not an initial
determination subject to further
administrative or judicial review.
§ 418.2322 How will a Medicare Part B
income-related monthly adjustment amount
determination for the effective year affect
your Medicare prescription drug coverage?
§ 418.2335 What should you do if we base
our initial determination on modified
adjusted gross income information you
believe to be incorrect?
RIN 1545–BI66
We will follow the rules in
§ 418.1335, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
Correction
§ 418.2340 What are the rules for our
administrative review process?
§ 1.6054–1
srobinson on DSKHWCL6B1PROD with RULES
§ 418.2320 What is the effect of an initial
determination?
If we make an income-related
monthly adjustment amount
determination for you for the effective
year under subpart B of this part
(Medicare Part B Income-Related
Monthly Adjustment Amount), we will
apply that income-related monthly
adjustment amount determination under
this subpart to determine your Part D
income-related monthly adjustment
amount for the same effective year.
Therefore, if you obtain Medicare
prescription drug coverage in the
effective year after we make an incomerelated monthly adjustment amount
determination about your Medicare Part
B, the income-related monthly
adjustment amount determination we
made for your Medicare Part B will also
apply to your Medicare prescription
drug coverage. Any change in your net
benefit due will be accompanied by a
letter explaining the change in your net
VerDate Mar<15>2010
16:40 Dec 06, 2010
Jkt 223001
We will follow the rules in
§ 418.1340, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
to the corresponding regulation in this
subpart.
§ 418.2345 Is reopening of an initial or
reconsidered determination made by us
ever appropriate?
We will follow the rules in
§ 418.1345, except that any references in
that section to regulations in subpart B
of this part shall be treated as references
PO 00000
Frm 00030
Fmt 4700
Sfmt 9990
BILLING CODE 4191–02–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR 1
[TD 9504]
Basis Reporting by Securities Brokers
and Basis Determination for Stock
In rule document 2010–25504
beginning on page 64072 in the issue of
Monday, October 18, 2010, make the
following corrections:
[Corrected]
1. On page 64093, in the third
column, in § 1.6045–1(d)(6)(i), in the
first line ‘‘(i)’’ should read ‘‘(i)’’.
2. On the same page, in the same
column, in § 1.604–1(d)(6)(ii)(A), in the
first line ‘‘(A)’’ should read ‘‘(A)’’.
3. On page 64094, in the first column,
in § 1.604–1(d)(6)(ii)(B)(2), in the first
line ‘‘(2)’’; should read ‘‘(2)’’.
4. On the same page, in the same
column, in § 1.604–1(d)(6)(iii)(A), in the
first line ‘‘(A)’’ should read ‘‘(A)’’.
[FR Doc. C1–2010–25504 Filed 12–6–10; 8:45 am]
BILLING CODE 1505–01–D
E:\FR\FM\07DER1.SGM
07DER1
]]>Agencies
[Federal Register Volume 75, Number 234 (Tuesday, December 7, 2010)]
[Rules and Regulations]
[Pages 75884-75896]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-30276]
=======================================================================
-----------------------------------------------------------------------
SOCIAL SECURITY ADMINISTRATION
20 CFR Part 418
[Docket No. SSA-2010-0029]
RIN 0960-AH22
Regulations Regarding Income-Related Monthly Adjustment Amounts
to Medicare Beneficiaries' Prescription Drug Coverage Premiums
AGENCY: Social Security Administration.
ACTION: Interim final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: We are adding a new subpart to our regulations, which contains
the rules we will apply to determine the income-related monthly
adjustment amount for Medicare prescription drug coverage premiums.
This new subpart implements changes made to the Social Security Act
(Act) by the Affordable Care Act. These rules parallel the rules in
subpart B of this part, which describes the rules we apply when we
determine the income-related monthly adjustment amount for certain
Medicare Part B (medical insurance) beneficiaries. These rules describe
the new subpart; what information we will use to determine whether you
will pay an income-related monthly adjustment amount and the amount of
the adjustment when applicable; when we will consider a major life-
changing event that results in a significant reduction in your modified
adjusted gross income; and how you can appeal our determination about
your income-related monthly adjustment amount. These rules will allow
us to implement the provisions of the Affordable Care Act on time that
relate to the income-related monthly adjustment amount for Medicare
prescription drug coverage premiums, when they go into effect on
January 1, 2011.
DATES: Effective date: This interim final rule will be effective on
December 7, 2010. Comment date: To ensure that your comments are
considered, we must receive them no later than February 7, 2011.
ADDRESSES: You may submit comments by any one of three methods--
Internet, fax, or mail. Do not submit the same comments multiple times
or by more than one method. Regardless of which method you choose,
please state that your comments refer to Docket No. SSA-2010-0029 so
that we may associate your comments with the correct regulation.
Caution: You should be careful to include in your comments only
information that you wish to make publicly available. We strongly urge
you not to include in your comments any personal information, such as
Social Security numbers or medical information.
1. Internet: We strongly recommend that you submit your comments
via the Internet. Please visit the Federal eRulemaking portal at https://www.regulations.gov. Use the Search function to find docket number
SSA-2010-0029. The system will issue a tracking number to confirm your
submission. You will not be able to view your comment immediately
because we must post each comment manually. It may take up to a week
for your comment to be viewable.
2. Fax: Fax comments to (410) 966-2830.
3. Mail: Mail your comments to the Office of Regulations, Social
Security Administration, 107 Altmeyer Building, 6401 Security
Boulevard, Baltimore, Maryland 21235-6401.
Comments are available for public viewing on the Federal
eRulemaking portal at https://www.regulations.gov or in person, during
regular business hours, by arranging with the contact person identified
below.
FOR FURTHER INFORMATION CONTACT: Craig Streett, Office of Income
Security Programs, Social Security Administration, 2-R-24 Operations
Building, 6401 Security Boulevard, Baltimore, MD 21235-6401, (410) 965-
9793. 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:
[[Page 75885]]
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/.
Background
Medicare prescription drug coverage (also known as Medicare Part D)
is a voluntary program that covers prescription drugs, as explained in
42 CFR Part 423. These regulations cover participants in Medicare
prescription drug coverage plans as defined in 42 CFR 423.4, including
standalone Medicare prescription drug plans, Medicare Advantage plans
with prescription drug coverage, Programs of All-Inclusive Care for the
Elderly plans, and cost plans offering prescription drug coverage. We
will refer to these plans collectively as Medicare prescription drug
coverage plans.
Beneficiaries enrolled in Medicare prescription drug coverage are
responsible for deductibles, cost-sharing, and monthly premiums. Costs
vary by plan. Beneficiaries with limited income and resources may
qualify for ``Extra Help'' with their monthly premiums, deductibles,
and cost-sharing.
The Centers for Medicare & Medicaid Services (CMS) promulgates
rules and regulations concerning the Medicare program. CMS sets the
Medicare prescription drug coverage base beneficiary premium, which
covers approximately 25.5 percent of the cost of the basic Medicare
prescription drug coverage. The Federal Government subsidizes
approximately 74.5 percent of the cost of this basic Medicare
prescription drug coverage with contributions from the Medicare
Prescription Drug Account in the Federal Supplementary Medical
Insurance Trust Fund.
In March 2010, Congress passed the Affordable Care Act, which
establishes an income-related adjustment to Medicare prescription drug
coverage premiums.\1\ The Affordable Care Act contains rules for
determining when, based on income, a beneficiary's monthly premium for
Medicare prescription drug coverage will include a monthly adjustment
amount.\2\ The changes made to the Act by section 3308(a) of the
Affordable Care Act are effective for months after December 2010.
Beginning in January 2011, an estimated 1.05 million of the
approximately 29.2 million beneficiaries enrolled in the Medicare
prescription drug coverage program will be assessed an income-related
monthly adjustment amount.
---------------------------------------------------------------------------
\1\ Public Law 111-148 Sec. 3308(a).
\2\ Id.
---------------------------------------------------------------------------
Generally, beneficiaries who have a modified adjusted gross income
above the threshold level in their most recently filed tax return
(usually the tax year 2 years prior to the effective year of our
determination) will pay an income-related monthly adjustment amount for
their Medicare prescription drug coverage, resulting in these
beneficiaries paying more of the cost of their Medicare prescription
drug coverage. The income-related monthly adjustment amount applied is
in addition to the Medicare Prescription drug coverage plan sponsor's
monthly premium and any applicable premium increase for late enrollment
or reenrollment. We are responsible for making any determination
necessary to carry out the income-related increase in beneficiary
premiums.
How This Will Affect You
The phrase ``modified adjusted gross income'' has the same meaning
given to that term in section 1839(i)(4)(A) of the Act.\3\ The phrase
``modified adjusted gross income'' means your ``adjusted gross
income,'' as defined in section 62 of the Internal Revenue Code of
1986, plus certain other forms of income that may be excluded from
adjusted gross income for the purpose of determining the amount of
Federal income tax that you must pay.\4\
---------------------------------------------------------------------------
\3\ Sec. 1860D-13(a)(7)(C) of the Act.
\4\ Sec. 1839(i)(4)(A) of the Act.
---------------------------------------------------------------------------
We determine the taxable year to use for purposes of determining
your modified adjusted gross income.\5\ Your modified adjusted gross
income is generally determined for the ``last taxable year beginning in
the second calendar year proceeding the year involved.'' \6\ Thus, in
general, we will use your modified adjusted gross income provided by
the Internal Revenue Service (IRS) for the tax year 2 years prior to
the effective year of the income-related monthly adjustment amount
determination we make.
---------------------------------------------------------------------------
\5\ Sec. 1839(i)(4)(B), (C) of the Act; Sec. 1860D-13(a)(7)(C)
of the Act.
\6\ Sec. 1839(i)(4)(B) of the Act.
---------------------------------------------------------------------------
However, an exception allows us to use your modified adjusted gross
income for the tax year 3 years prior to the effective year of the
income-related monthly adjustment amount determination.\7\ In addition,
there are certain circumstances in which we may use a more recent
taxable year than the taxable year we would otherwise use to determine
modified adjusted gross income when your income for the more recent
year is significantly less than the income for the taxable year we
normally would use. The situations that allow us to use data from a
more recent taxable year are when you have experienced the death of
your spouse, a marriage or divorce, or other major life-changing events
that we specify in our regulations.\8\
---------------------------------------------------------------------------
\7\ Sec. 1839(i)(4)(B) of the Act.
\8\ Sec. 1839(i)(4)(C) of the Act.
---------------------------------------------------------------------------
The payment of the full amount of the income-related monthly
adjustment amount will begin in January 2011.\9\ If you are enrolled in
Medicare prescription drug coverage prior to January 1, 2011, and you
will be required to pay an income-related monthly adjustment amount in
2011, we will notify you by sending you a letter at the end of 2010
about the additional income-related monthly adjustment amount. If you
receive Social Security monthly benefits, we will also send a letter
explaining how the income-related monthly adjustment amount will affect
the amount of those benefits. If you receive Railroad Retirement or
Civil Service annuity payments, you will receive a letter from the
agency that pays your annuity explaining how the income-related monthly
adjustment amount will affect the amount of those benefits.
---------------------------------------------------------------------------
\9\ Sec. 1860D-13(a)(7)(A) of the Act.
---------------------------------------------------------------------------
If you enroll in Medicare prescription drug coverage after January
1, 2011, your Medicare prescription drug coverage premium may not
initially include an income-related monthly adjustment amount. If we
subsequently determine that you must pay an income-related monthly
adjustment amount for your Medicare prescription drug coverage, we will
notify you shortly after you enroll in Medicare prescription drug
coverage. You will be responsible for your income-related monthly
adjustment amounts for those months after December 2010 for which you
are enrolled in Medicare prescription drug coverage. If you are
enrolled in Medicare prescription drug coverage during 2011 or after,
we will notify you prior to the start of each year if you must pay an
income-related monthly adjustment amount in that year and how much it
will be.
How We Determine Your Income-Related Monthly Adjustment Amount
The amount of your modified adjusted gross income for the
applicable tax year will determine if you must pay an income-related
monthly adjustment amount. The modified adjusted gross income threshold
amount for 2011 through 2019 is $85,000 for individuals who designated
a filing status on their
[[Page 75886]]
Federal income tax return of single, married filing separately, head of
household, or qualifying widow(er) with dependent child; and the
corresponding threshold is $170,000 for individuals who file a joint
income tax return with their spouse.\10\ After 2019, these thresholds
will resume adjustment for inflation as required by section 1839(i)(5)
of the Act.
---------------------------------------------------------------------------
\10\ Section 1839(i)(2) of the Act.
---------------------------------------------------------------------------
We will ask the IRS to send us Federal income tax return
information about your modified adjusted gross income for the tax year
2 years before the effective year of our determination of whether an
income-related monthly adjustment amount will apply. If modified
adjusted gross income information is not available from the IRS for the
tax year 2 years before the effective year of our determination, the
IRS will send us modified adjusted gross income information for the tax
year 3 years before the effective year, if it exceeds the threshold.
The IRS will return modified adjusted gross income information only for
those Medicare beneficiaries whose modified adjusted gross income
exceeds the threshold for their income tax filing status.
We will not ask the IRS for information about your modified
adjusted gross income if we have determined that you are participating
in the Medicare prescription drug coverage low-income subsidy program
described in subpart D of this part, if you receive Supplemental
Security Income payments under title XVI of the Act, or if CMS has
determined that you are deemed eligible for a full Medicare
prescription drug coverage subsidy under section 1860D-14(a)(3)(B)(v)
of the Act, as further explained in 42 CFR 423.773(c)(1).
We will use information for the tax year 3 years prior to the
effective year of our determination to determine whether you must pay
an income-related monthly adjustment amount only until we obtain
information for the tax year 2 years prior to the effective year of our
determination. When we use such information to make a determination, we
will make retroactive corrections that will apply to all months that
you paid an incorrect income-related monthly adjustment amount. If we
use information from the IRS for the tax year 3 years before the
effective year of our determination, you may request that we use
information that you provide for the tax year 2 years before the
effective year of our determination.
In some cases, you may pay a higher premium based on your
information from the tax year 2 years prior to the effective year of
our determination. However, providing that information to us, rather
than having us receive information later from the IRS, will help you
avoid a retroactive correction. In order for us to make an initial
determination based on such a request, you must provide a copy of your
Federal income tax return for that year by providing us with either
your retained copy of your Federal income tax return, a copy that you
request from the IRS, or an IRS transcript of your return. If you
provide your retained copy of your tax return, we will verify this
information with the IRS.
If we receive information from the IRS that shows that you had
modified adjusted gross income that exceeded the established threshold
for a tax year for which you did not file a tax return, we will make a
determination about your income-related monthly adjustment amount for
that year. We will apply the highest applicable percentage adjustment
based on that information, as required by statute.\11\ Beginning in
2011, if the IRS provides information to us to indicate a change in
your modified adjusted gross income for a prior tax year, we will use
this information to establish corrections for the appropriate effective
years, regardless of when we receive such information.
---------------------------------------------------------------------------
\11\ Section 1839(i)(4)(B)(iii) of the Act.
---------------------------------------------------------------------------
The Sliding Scale Formula and How It Applies to You
CMS will use a sliding scale formula to establish the four income-
related monthly adjustment amounts annually beginning in 2011. The use
of this sliding scale formula is prescribed in section 1839(i)(3) of
the Act. CMS will provide each of the income-related monthly adjustment
amounts to be used to SSA. The income-related monthly adjustment amount
will be the adjustment from the approximately 25.5 percent base
beneficiary premium multiplied by a specified percentage. The
percentage used in the calculation changes as the amount of modified
adjusted gross income increases within the ranges used to set the
income-related monthly adjustment amount. We will use your modified
adjusted gross income and your Federal income tax filing status (e.g.,
single, married filing jointly, married filing separately) to determine
whether you must pay an income-related monthly adjustment amount, and
if so, what your income-related monthly adjustment amount will be.
The modified adjusted gross income ranges are contained in section
1839(i)(3)(C) of the Act as adjusted by section 1839(i)(5) and by
1839(i)(6), as amended by the Affordable Care Act. The range amounts
for individuals who are married filing jointly are double the range
amounts for single income tax filers. The IRS recognizes three
additional filing statuses: head of household, qualifying widow(er)
with dependent child, and married filing separately. If you file as a
head of household, a qualifying widow(er) with a dependent child, or
married filing separately, we will apply the modified adjusted gross
income range applicable to individuals who file their Federal income
tax return with a filing status of single.
Individuals with a filing status of married, filing separately, who
must pay an income-related monthly adjustment amount because their tax
information reflects modified adjusted gross income under section
1839(i)(3)(C)(iii) of the Act and who lived with their spouse at any
time during the year, will pay either the third or fourth range of
income-related monthly adjustment amount as described in section
1839(i)(3)(C)(i) of the Act. Starting in 2010 for calendar year 2011,
and annually thereafter for each following calendar year, CMS will
publish the annual modified adjusted gross income ranges and income-
related monthly adjustment amounts that are associated with each range.
We will use this published information to determine which amount
applies to you based on your tax filing status in the tax year we are
using to determine your income-related monthly adjustment amount.
If you filed an amended tax return for the tax year we used to make
a determination of your income-related monthly adjustment amount, you
may request that we use your amended tax return for that year. You must
provide us with proof that you filed an amended tax return with the
IRS, including your retained copy of the amended tax return and a
letter from the IRS verifying receipt of the return or an IRS
transcript of your amended tax return.
If you believe that the IRS provided incorrect modified adjusted
gross income information and we used that information to determine your
income-related monthly adjustment amount, you may request that we make
a new income-related monthly adjustment amount determination. You must
provide proof of the error in the IRS data and evidence of your actual
modified adjusted gross income, such as a copy of the return that you
obtain from the IRS. When we use information from your amended or
corrected Federal income tax return to make a determination, we will
make retroactive adjustments that will apply to all
[[Page 75887]]
months that you paid an incorrect income-related monthly adjustment
amount.
If you believe our determination that you must pay an income-
related monthly adjustment amount for your Medicare prescription drug
coverage is incorrect because you do not have that coverage, you must
contact CMS to get your records corrected. We will use the corrected
information we receive from CMS to correct our records and make all
necessary adjustments. We will initiate a retroactive refund after we
correct our records.
Inflation Adjustment of the Income-Related Monthly Adjustment Amount
The annual inflation adjustment of the thresholds and the modified
adjusted gross income ranges used to determine whether you must pay an
income-related monthly adjustment amount is temporarily set aside by
section 3402 of the Affordable Care Act. From January 1, 2011 through
December 31, 2019, the dollar amounts used for 2010 will be the
thresholds used to determine if an income-related monthly adjustment
amount will apply. The 2010 thresholds in effect until the end of 2019
will be modified adjusted gross income of $170,000 for beneficiaries
who file their Federal income taxes as married, filing jointly, and
$85,000 for beneficiaries who file their Federal income taxes with any
other filing status. CMS will publish the amounts within each range of
income in the sliding scale adjusted for inflation each year. After
2019, these thresholds will resume adjustment for inflation as required
by section 1839(i)(5) of the Act.
Changes in Your Modified Adjusted Gross Income
In consultation with the Secretary of the Treasury, we are required
to establish procedures for determining your modified adjusted gross
income for a tax year more recent than the information ordinarily
provided by the IRS.\12\
---------------------------------------------------------------------------
\12\ Section 1839(i)(4)(C) of the Act.
---------------------------------------------------------------------------
The statute requires that we grant your request to use a more
recent tax year to determine your income-related monthly adjustment
amount only when all of the following conditions are met:
You experience a major life-changing event;
That major life-changing event results in a significant
reduction in your modified adjusted gross income;
You request that we use a more recent tax year's modified
adjusted gross income; and
You provide evidence of the event and the reduction in
your modified adjusted gross income.\13\
---------------------------------------------------------------------------
\13\ Section 1839(i)(4)(C) of the Act.
---------------------------------------------------------------------------
These rules also contain the requirements that you must meet in
order for us to use a more recent tax year's modified adjusted gross
income to determine whether you must pay an income-related monthly
adjustment amount and what your income-related monthly adjustment
amount will be. These rules define qualifying major life-changing
events and explain what constitutes a significant reduction in your
modified adjusted gross income by reference to the rules we follow
under subpart B of this part. We also specify the evidence we will
require to establish major life-changing events and the resulting
reduction in your modified adjusted gross income by reference to the
rules we follow under subpart B of this part.
Major life-changing events include marriage, divorce, and death of
a spouse under section 1839(i)(4)(C)(ii)(II) of the Act. We have
discretion to include in our regulations additional major life-changing
events that would allow us to grant your request that we use
information from a more recent tax year to determine your income-
related monthly adjustment amount. As noted above, these rules include
explanation of the situations when we will determine that you have
experienced a major life-changing event for purposes of our rules in
subpart B of part 418. The following are the categories of qualifying
major life-changing events that we currently recognize:
Death of a spouse;
Marriage;
Marriage ended by divorce or annulment;
Partial or full work stoppage;
You or your spouse experiences a loss of income-producing
property, provided the loss is not at the direction of you or your
spouse (e.g., due to the sale or transfer of the property) and is not a
result of the ordinary risk of investment. Examples of the type of
property loss include, but are not limited to: loss of real property
within a Presidentially or Gubernatorially-declared disaster area,
destruction of livestock or crops by natural disaster or disease, loss
from real property due to arson, or loss of investment property as a
result of fraud or theft due to a criminal act by a third party;
You or your spouse experiences a scheduled cessation,
termination, or reorganization of an employer's pension plan;
You or your spouse receives a settlement from an employer
or former employer because of the employer's closure, bankruptcy, or
reorganization.
In these rules, we determine what constitutes a significant
reduction in your income by reference to the rules we follow under
section 418.1215. Under those rules, we define a significant reduction
in your modified adjusted gross income as any change that results in a
reduction or elimination of your income-related monthly adjustment
amount. Therefore, a significant reduction in your modified adjusted
gross income is any change that lowers your income below the threshold
amount or lowers the modified adjusted gross income range in which your
income falls. We may grant your request to use a more recent tax year's
modified adjusted gross income to determine your income-related monthly
adjustment amount only if you provide us with a copy of a filed Federal
income tax return or equivalent document.\14\
---------------------------------------------------------------------------
\14\ Section 1839(i)(4)(C)(ii) of the Act.
---------------------------------------------------------------------------
When we make an income-related monthly adjustment amount
determination based on your request due to a qualifying major life-
changing event, the determination will be effective generally on
January 1 of the calendar year for which we make the determination. If
you enrolled in Medicare prescription drug coverage after January 1 of
the year for which we make an income-related monthly adjustment amount
determination based on your request due to a major life-changing event,
the determination will be effective the month your Medicare
prescription drug coverage enrollment becomes effective.
When we make an income-related monthly adjustment amount
determination following a major life-changing event using your more
recent tax-year's modified adjusted gross income, we will continue
trying to get IRS data for that tax year. When we receive modified
adjusted gross income information from the IRS for that tax year, we
will use the information from the IRS to determine the correct income-
related monthly adjustment amount for the year or years for which we
used information that you provided, and we will make retroactive
corrections, if necessary. Retroactive corrections will apply to all
months for which you paid an incorrect income-related monthly
adjustment amount.
[[Page 75888]]
If You Disagree With Our Determination of Your Income-Related Monthly
Adjustment Amount
We will determine whether you must pay an income-related monthly
adjustment, and the amount of any adjustment, based on information we
receive from the IRS or you. We will send you a notice of our initial
determination of your income-related monthly adjustment amount and the
basis for our determination. The notice will explain that, if you
disagree with our determination, you may request that we reconsider it
within 60 days after the date you receive notice of our initial
determination. The notice will also explain that you may request a new
initial determination, rather than a reconsideration, if you believe
the information we used in our initial determination was correct, but
you want us to use different information about your modified adjusted
gross income. If you have Medicare Part B without Medicare prescription
drug coverage, and you enroll later that same year in Medicare
prescription drug coverage, we will apply our income-related monthly
adjustment amount determination for Medicare Part B to determine your
corresponding income-related monthly adjustment amount for your
Medicare prescription drug coverage. When this subsequent action
results in increased deductions and a change in the net amount of
benefits payable, you will get a letter notifying you of the change in
your benefits and information on your appeal rights.
For purposes of this subpart, in making initial determinations and
reconsiderations, we will use the rules for the administrative review
process that we use for determinations of your rights regarding
nonmedical issues under title II of the Act. However, in order to
expedite the processing of requests for reconsideration under these
rules, we may accept requests for reconsideration that are filed by
electronic or other means that we determine to be appropriate, other
than a request in writing, as our title II regulations provide.
If you are dissatisfied with our reconsidered determination, you
may request further review, including a hearing before an
administrative law judge (ALJ) from the Office of Medicare Hearings and
Appeals (OMHA) at the Department of Health and Human Services (HHS),
review by the Medicare Appeals Council (MAC) in HHS, and judicial
review, consistent with the CMS regulations at 42 CFR part 423.
You may request that we use a modified adjusted gross income for a
more recent tax year if you have had a major life-changing event that
significantly reduces your income, or if the IRS has provided to us
modified adjusted gross income information from 3 years prior to the
premium effective year. You may also request that we make a new initial
determination when you have amended your Federal income tax return or
when you can furnish proof that the IRS has provided incorrect
information about your modified adjusted gross income for the year that
we used to determine your income-related monthly adjustment amount.
These additional options do not affect your right to appeal an initial
determination that we make that you must pay an income-related monthly
adjustment amount, but allow you to choose an alternative or additional
method to request that we use other information to make a new initial
determination.
Explanation of the New Subpart
We are adding a new subpart C, Medicare Prescription Drug Coverage
Income-Related Monthly Adjustment Amount, to part 418 of our rules.
Subpart C contains the rules that we will use to determine when you
will be required to pay an income-related monthly adjustment amount in
addition to your Medicare prescription drug coverage monthly premium
plus any applicable premium increase for late enrollment or
reenrollment. Following is a description of each section for subpart C.
Introduction, General Provisions, and Definitions
Section 418.2001 describes what provisions subpart C
contains, lists the groups of sections in the subpart, and the subject
of each group.
Section 418.2005 explains the purpose of the income-
related monthly adjustment amount and how we will administer the
income-related monthly adjustment amount.
Section 418.2010 contains definitions of terms used
throughout this subpart.
Determination of the Income-Related Monthly Adjustment Amount
Section 418.2101 explains what the income-related monthly
adjustment amount is and when it is applied.
Section 418.2105 defines the modified adjusted gross
income thresholds and what the modified adjusted gross income threshold
amounts will be in the years 2011-2019. It also describes how threshold
amounts will change in later years.
Section 418.2110 describes the effective date of our
initial determination about the income-related monthly adjustment
amount.
Section 418.2112 describes how you will pay your income-
related monthly adjustment amount.
Section 418.2115 defines modified adjusted gross income
ranges and explains how we will use those ranges and your tax filing
status to determine the amount of your income-related monthly
adjustment amount when applicable, and what effect Federal income tax
filing status has on the ranges.
Section 418.2120 explains how we will determine your
income-related monthly adjustment amount.
Section 418.2125 explains how the income-related monthly
adjustment amount will affect what you pay for Medicare prescription
drug coverage.
Section 418.2135 describes what modified adjusted gross
income information we will use to determine your income-related monthly
adjustment amount by reference to our rules in section 418.1135.
Section 418.2140 describes what will happen if the
modified adjusted gross income that we later receive from the IRS is
different from the information that we previously used to make a
determination of your income-related monthly adjustment amount by
reference to our rules in section 418.1140.
Section 418.2145 describes how we will determine the
income-related monthly adjustment amount if the IRS does not provide
your modified adjusted gross income information by reference to our
rules in section 418.1145.
Section 418.2150 describes when we will use a copy of your
amended Federal income tax return filed with the IRS to determine the
income-related monthly adjustment amount by reference to our rules in
section 418.1150.
Determinations Using a More Recent Tax Year's Modified Adjusted Gross
Income
Section 418.2201 explains when we will use modified
adjusted gross income information for a more recent tax year to
determine your income-related monthly adjustment amount by reference to
our rules in section 418.1201.
Section 418.2205 describes what is considered a major
life-changing event that would justify using information from a more
recent tax year by reference to our rules in section 418.1205.
[[Page 75889]]
Section 418.2210 explains what is not considered a major
life-changing event that would justify using information from a more
recent tax year by reference to our rules in section 418.1210.
Section 418.2215 explains what we consider a significant
reduction in your income for the purpose of these rules by reference to
our rules in section 418.1215.
Section 418.2220 explains what we do not consider a
significant reduction in your income for the purpose of these rules by
reference to our rules in section 418.1220.
Section 418.2225 explains which more recent tax years we
may use to determine whether you must pay an income-related monthly
adjustment amount and the amount of that adjustment by reference to our
rules in section 418.1225.
Section 418.2230 explains the effective date of our
income-related monthly adjustment amount determination based on your
request to use a more recent tax year by reference to our rules in
section 418.1230.
Section 418.2235 explains when we will stop using your
modified adjusted gross income from a more recent tax year for income-
related monthly adjustment amount determinations by reference to our
rules in section 418.1235.
Section 418.2240 explains what you should do if your
modified adjusted gross income for the more recent tax year changes by
reference to our rules in section 418.1240.
Section 418.2245 explains what will happen if you notify
us of a change in your modified adjusted gross income for the more
recent tax year.
Section 418.2250 explains what evidence you will need to
support your request for us to use a more recent tax year to determine
your income-related monthly adjustment amount by reference to our rules
in section 418.1250.
Section 418.2255 describes what evidence of a major life-
changing event you will need to provide to support your request to use
a more recent tax year by reference to our rules in section 418.1255.
Section 418.2260 describes the types of evidence of a
major life-changing event that we will not accept by reference to our
rules in section 418.1260.
Section 418.2265 describes what evidence of a significant
reduction in your modified adjusted gross income you will need to
provide to support your request to use a more recent tax year by
reference to our rules in section 418.1265.
Section 418.2270 explains what evidence we will not accept
of a significant reduction in your modified adjusted gross income by
reference to our rules in section 418.1270.
Determinations and the Administrative Review Process
Section 418.2301 explains what is an initial determination
regarding your income-related monthly adjustment, and provides examples
of determinations that are initial determinations for the purposes of
these rules by reference to our rules in section 418.1301.
Section 418.2305 explains that administrative actions that
are not initial determinations are not subject to the administrative
review process by reference to our rules in section 418.1305.
Section 418.2310 explains when you may request that we
make a new initial determination by reference to our rules in section
418.1310.
Section 418.2315 explains how we will notify you when we
make an initial determination, and what information the notice will
contain by reference to our rules in section 418.1315.
Section 418.2320 explains the effect of an initial
determination.
Section 418.2322 explains how a Medicare Part B income-
related monthly adjustment amount determination will apply to your
Medicare prescription drug coverage.
Section 418.2325 explains when you may request a
reconsideration by reference to our rules in section 418.1325.
Section 418.2330 explains what will happen if you request
a reconsideration because you believe that the IRS information we used
to make an initial determination about your income-related monthly
adjustment amount is incorrect.
Section 418.2332 explains what you can do if you believe
that the CMS information we used is incorrect.
Section 418.2335 explains what to do if you believe that
we based our initial determination on incorrect modified adjusted gross
income information by reference to our rules in section 418.1335.
Section 418.2340 tells you the rules for the
administrative review process by reference to our rules in section
418.1340.
Section 418.2345 tells you the rules we will use to decide
if reopening a prior initial or reconsidered determination made by us
is appropriate by reference to our rules in section 418.1345.
Section 418.2350 explains that the HHS rules will apply
for review of a reconsidered determination, an ALJ decision, or a
decision by the MAC.
Section 418.2355 explains that the rules for reopening a
prior decision made by an ALJ of the OMHA or by the MAC will follow the
HHS rules governing reopening.
Change to Medicare Part B Income-Related Monthly Adjustment Amounts
We are also amending our rules on the Medicare Part B
(supplementary medical insurance) income-related monthly adjustment
amounts to add section 418.1322. In order to provide consistency with
the rules at final section 418.2322, this new section explains that if
we make an income-related monthly adjustment amount determination for
you for the effective year for purposes of the Medicare prescription
drug coverage program, we will apply that income-related monthly
adjustment amount determination for purposes of determining your
income-related monthly adjustment amount for Medicare Part B for the
same effective year. As a result, if you have Medicare prescription
drug coverage without Medicare Part B and you enroll later that same
year in Medicare Part B, the income-related monthly adjustment amount
determination for your Medicare prescription drug coverage will also
apply to your Medicare Part B.
If we were to delay our determination when you enroll in Medicare
Part B later in that year, the delay could cause confusion and larger
retroactive corrections. Conveying your income-related monthly
adjustment amount determination for Medicare prescription drug coverage
or Medicare Part B to the other program when enrollment occurs later in
that year will simplify processing and minimize delays in collections
of adjustments.
The new rule will facilitate applying the administrative review
decision or new initial determination to both programs sooner, because
this change will eliminate delays in applying the income-related
monthly adjustment amount determination to both Medicare prescription
drug coverage and Medicare Part B when you enroll in one of these
programs later in the year than the other program. We will not request
information from the IRS about your modified adjusted gross income
under the following circumstances: if you are eligible for the low-
income subsidy for your Medicare prescription drug coverage described
in Subpart D of this Part, if you receive supplemental
[[Page 75890]]
security income payments, or CMS has determined that you are deemed
full Medicare prescription drug coverage subsidy eligible under Sec.
1860D-14(a)(3)(B)(v) of the Act as further explained in 42 CFR
423.773(c)(1).
Clarity of These Rules
Executive Order 12866 requires each agency to write all rules in
plain language. In addition to your substantive comments on this
proposed rule, we invite your comments on how to make rules easier to
understand.
For example:
Would more, but shorter, sections be better?
Are the requirements in the rule clearly stated?
Have we organized the material to suit your needs?
Could we improve clarity by adding tables, lists, or
diagrams?
What else could we do to make the rule easier to
understand?
Does the rule contain technical language or jargon that is
not clear?
Would a different format make the rule easier to
understand, e.g. grouping and order of sections, use of headings,
paragraphing?
When will we start to use this rule?
We will start to use these rules on the date shown under the
``Effective Date'' section earlier in this preamble. However, we are
also inviting public comments on the changes made by these rules. We
will consider any relevant comments we receive, and plan to publish
another final rule document to respond to any such comments we receive,
and to make any changes to the rules as appropriate based on the
comments.
Regulatory Procedures
We follow the Administrative Procedure Act (APA) rulemaking
procedures specified in 5 U.S.C. 553 when we develop regulations.
Generally, the APA requires that an agency provide prior notice and
opportunity for public comment before issuing a final regulation. The
APA provides exceptions to its notice and public comment procedures
when an agency finds good cause for dispensing with such procedures
because they are impracticable, unnecessary, or contrary to the public
interest and incorporates a statement of the finding and its reasons in
the rule issued.\15\
---------------------------------------------------------------------------
\15\ 5 U.S.C. 553(b)(B).
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With respect to the new rules we are adding under subpart C of part
418 of our rules, we must begin to administer the income-related
monthly adjustment amounts to Medicare prescription drug coverage on
January 1, 2011, in accordance with section 3308(a) of the Affordable
Care Act. In light of the March 23, 2010, enactment date of the
Affordable Care Act and our need to have authority in place to make and
issue notices of determinations to start collecting income-related
monthly adjustment amounts for Medicare prescription drug coverage
beginning January 1, 2011, we do not have sufficient time to provide a
notice and comment period before promulgating final rules in order to
begin administering the program in a timely manner. Thus, we find that
the use of the APA's notice and comment rulemaking procedures would be
impracticable in this situation.
With respect to the addition of Sec. 418.1322, we find that good
cause exists for proceeding without prior public notice and comment
because these changes allow us to avoid delay in making a second
income-related monthly adjustment amount determination for Medicare
Part B when a Medicare prescription drug coverage beneficiary enrolls
in Medicare Part B later in the effective year. Avoiding such delay by
applying an income-related monthly adjustment amount determination that
is based on the same income threshold and ranges simplifies processing
and minimizes the need for us to make unnecessary retroactive
corrections. Accordingly, we find that prior public comment would be
contrary to the public interest with respect to the changes we are
making to our rules in subpart B of part 418.
Although we are issuing this rule as an interim final rule, we are
inviting public comment on the rule, and we will consider any
responsive comments we receive within 60 days of the publication of the
rule.
In addition, for the reasons cited above, we also find good cause
for dispensing with the 30-day delay in the effective date of this
rule.\16\ Because we find that it is impracticable to delay the
effective date of our rule changes in order to begin administering the
program by the statutory deadline, we are making this rule effective
upon publication.
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\16\ See 5 U.S.C. 553(d)(3).
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Executive Order 12866
We have consulted with the Office of Management and Budget (OMB)
and determined that this rule meets the criteria for a significant
regulatory action under Executive Order 12866. Therefore, OMB reviewed
it.
Regulatory Flexibility Act
We certify that this rule will not have a significant economic
impact on a substantial number of small entities because it affects
individuals only. Therefore, a regulatory flexibility analysis is not
required under the Regulatory Flexibility Act, as amended.
Paperwork Reduction Act
We solicited public comment and received OMB approval for the
public reporting burdens contained in these rules in a separate
Information Collection Request.
(Catalog of Federal Domestic Assistance Program Nos. 93.774 Medicare
Supplementary Medical Insurance; 96.002 Social Security--Retirement
Insurance.)
List of Subjects in 20 CFR Part 418
Administrative practice and procedure, Aged, Blind, Disability
benefits, Public assistance programs, Reporting and recordkeeping
requirements, Supplemental Security Income (SSI), Medicare subsidies.
Dated: November 23, 2010.
Michael J. Astrue,
Commissioner of Social Security.
0
For the reasons set out in the preamble, we amend 20 CFR chapter III,
part 418 as set forth below:
0
1. The authority citation for subpart B of part 418 continues to read
as follows:
Authority: Secs. 702(a)(5) and 1839(i) of the Social Security
Act (42 U.S.C. 902(a)(5) and 1395r(i)).
0
2. Add Sec. 418.1322 to read as follows:
Sec. 418.1322 How will a Medicare prescription drug coverage income-
related monthly adjustment amount determination for the effective year
affect your Medicare Part B?
If we make an income-related monthly adjustment amount
determination for you for the effective year under subpart C of this
part (Medicare Prescription Drug Coverage Income-Related Monthly
Adjustment Amount), we will apply that income-related monthly
adjustment amount determination under this subpart to determine your
Part D income-related monthly adjustment amount for the same effective
year. Therefore, if you become enrolled in Medicare Part B in the
effective year after we make an income-related monthly adjustment
amount determination about your Medicare prescription drug coverage,
the income-related monthly adjustment amount determination for your
Medicare prescription drug coverage will also be used to determine your
Medicare Part B income-related monthly adjustment amount. Any change in
your
[[Page 75891]]
net benefit due will be accompanied by a letter explaining the change
in your net benefit and your right to appeal the change.
0
3. Add subpart C to Part 418 to read as follows:
Subpart C--Income-Related Monthly Adjustments to Medicare
Prescription Drug Coverage Premiums
Sec.
Introduction, General Provisions, and Definitions
418.2001 What is this subpart about?
418.2005 Purpose and administration.
418.2010 Definitions.
Determination of the Income-Related Monthly Adjustment Amount
418.2101 What is the income-related monthly adjustment amount?
418.2105 What is the threshold?
418.2110 What is the effective date of our initial determination
about your income-related monthly adjustment amount?
418.2112 Paying your income-related monthly adjustment amount.
418.2115 What are the modified adjusted gross income ranges?
418.2120 How do we determine your income-related monthly adjustment
amount?
418.2125 How will the income-related monthly adjustment amount
affect your total Medicare prescription drug coverage premium?
418.2135 What modified adjusted gross income information will we use
to determine your income-related monthly adjustment amount?
418.2140 What will happen if the modified adjusted gross income
information from the IRS is different from the modified adjusted
gross income information we used to determine your income-related
monthly adjustment amount?
418.2145 How do we determine your income-related monthly adjustment
amount if the IRS does not provide information about your modified
adjusted gross income?
418.2150 When will we use your amended tax return filed with the
IRS?
Determinations Using a More Recent Tax Year's Modified Adjusted Gross
Income
418.2201 When will we determine your income-related monthly
adjustment amount based on the modified adjusted gross income
information that you provide for a more recent tax year?
418.2205 What is a major life-changing event?
418.2210 What is not a major life-changing event?
418.2215 What is a significant reduction in your income?
418.2220 What is not a significant reduction in your income?
418.2225 Which more recent tax year will we use?
418.2230 What is the effective date of an income-related monthly
adjustment amount initial determination based on a more recent tax
year?
418.2235 When will we stop using your more recent tax year's
modified adjusted gross income to determine your income-related
monthly adjustment amount?
418.2240 Should you notify us if the information you gave us about
your modified adjusted gross income for the more recent tax year
changes?
418.2245 What will happen if you notify us that your modified
adjusted gross income for the more recent tax year changes?
418.2250 What evidence will you need to support your request that we
use a more recent tax year?
418.2255 What kind of evidence of a major life-changing event will
you need to support your request for us to use a more recent tax
year?
418.2260 What major life-changing event evidence will we not accept?
418.2265 What kind of evidence of a significant modified adjusted
gross income reduction will you need to support your request?
418.2270 What modified adjusted gross income evidence will we not
accept?
Determinations and the Administrative Review Process
418.2301 What is an initial determination regarding your income-
related monthly adjustment amount?
418.2305 What is not an initial determination regarding your income-
related monthly adjustment amount?
418.2310 When may you request that we make a new initial
determination?
418.2315 How will we notify you and what information will we provide
about our initial determination?
418.2320 What is the effect of an initial determination?
418.2322 How will a Medicare Part B income-related monthly
adjustment amount determination for the effective year affect your
Medicare prescription drug coverage?
418.2325 When may you request a reconsideration?
418.2330 Can you request a reconsideration when you believe that the
IRS information we used is incorrect?
418.2332 Can you request a reconsideration when you believe that the
CMS information we used is incorrect?
418.2335 What should you do if we base our initial determination on
modified adjusted gross income information you believe to be
incorrect?
418.2340 What are the rules for our administrative review process?
418.2345 Is reopening of an initial or reconsidered determination
made by us ever appropriate?
418.2350 What are the rules for review of a reconsidered
determination or an ALJ decision?
418.2355 What are the rules for reopening a decision by an ALJ of
the Office of Medicare Hearings and Appeals (OMHA) or by the
Medicare Appeals Council (MAC)?
Authority: Secs. 702(a)(5), 1860D-13(a) and (c) of the Social
Security Act (42 U.S.C. 902(a)(5), 1395w-113(a) and (c)).
Introduction, General Provisions, and Definitions
Sec. 418.2001 What is this subpart about?
This subpart implements sections 1860D-13(a)(7) and 1860D-13(c)(4)
of the Social Security Act (the Act), as added by section 3308 of the
Affordable Care Act (Pub. L. 111-148). Section 3308(a) establishes an
income-related monthly adjustment to Medicare prescription drug
coverage premiums. Persons enrolled in Medicare prescription drug
plans, Medicare Advantage plans with prescription drug coverage,
Programs of All-Inclusive Care for the Elderly plans, and cost plans
offering prescription drug coverage who have modified adjusted gross
income over a threshold amount established in the statute will pay an
income-related monthly adjustment amount in addition to their Medicare
prescription drug coverage plan's monthly premium and any applicable
premium increases as described in 42 CFR 423.286. The regulations in
this subpart explain how we determine whether you are required to pay
an income-related monthly adjustment amount, and if you are, the amount
of your adjustment. We have divided the rules into the following groups
of sections:
(a) Sections 418.2001 through 418.2010 contain the introduction, a
statement of the general purpose of the income-related monthly
adjustment amount, general provisions that apply to the income-related
monthly adjustment amount, and definitions of terms that we use in this
subpart.
(b) Sections 418.2101 through 418.2150 describe what information
about your modified adjusted gross income we will use to determine if
you are required to pay an income-related monthly adjustment amount. In
these sections, we also describe how the income-related monthly
adjustment amount will affect your total Medicare prescription drug
coverage premium.
(c) Sections 418.2201 through 418.2270 contain an explanation of
the standards that you must meet for us to grant your request to use
modified adjusted gross income information that you provide for a more
recent tax year rather than the information described in paragraph (b)
of this section. These sections explain when we may consider such a
request, and the evidence that you will be required to provide. These
sections also explain when an income-related monthly adjustment amount
determination based on information you provide will be effective, and
how long
[[Page 75892]]
it will remain in effect. Additionally, these sections describe how we
make retroactive adjustments of the income-related monthly adjustment
amount based on information you provide, updated information you
provide, and information we later receive from the Internal Revenue
Service.
(d) Sections 418.2301 through 418.2355 explain how we will notify
you of our determination regarding your income-related monthly
adjustment amount and contain the rules that we will apply when you
disagree with our determination. These sections explain your appeal
rights and the circumstances under which you may request that we make a
new initial determination of your income-related monthly adjustment
amount.
Sec. 418.2005 Purpose and administration.
(a) The purpose of the income-related monthly adjustment amount is
for beneficiaries who have modified adjusted gross income above an
established threshold to reimburse the Federal Government for a portion
of the Federal subsidy of the Medicare prescription drug coverage.
Persons who have modified adjusted gross income above the thresholds
described in Sec. 418.2105 will pay an income-related monthly
adjustment amount in addition to the premium for their prescription
drug coverage. The income-related monthly adjustment amount due will be
determined based on the base beneficiary premium amount that represents
25.5 percent of the cost of the basic Medicare prescription drug
coverage. The application of an income-related monthly adjustment
amount results in an increase in the total amount that those who are
affected pay for Medicare prescription drug coverage plans. A person
who has modified adjusted gross income above the threshold amount will
pay:
(1) The Medicare prescription drug coverage plan monthly premium;
plus
(2) Any applicable increase for late enrollment or reenrollment;
(3) An income-related monthly adjustment amount; and
(b) The Centers for Medicare & Medicaid Services in the Department
of Health and Human Services establishes rules for eligibility for
Medicare prescription drug coverage and enrollment in Medicare
prescription drug coverage plans, as well as premium penalties for late
enrollment or reenrollment (42 CFR 423.30 through 423.56).
(c) We use information from CMS about enrollment in Medicare
prescription drug coverage plans to determine the records that we must
send to the IRS.
(d) We use information that we get from the IRS to determine if
persons enrolled in Medicare prescription drug coverage plans are
required to pay an income-related monthly adjustment amount. We also
change income-related monthly adjustment amount determinations using
information you provide under certain circumstances. In addition, we
notify beneficiaries when the social security benefit amounts they
receive will change based on our income-related monthly adjustment
amount determination.
Sec. 418.2010 Definitions.
(a) Terms relating to the Act and regulations. For the purposes of
this subpart:
(1) Administrator means the Administrator of CMS in HHS.
(2) ALJ means administrative law judge.
(3) CMS means the Centers for Medicare & Medicaid Services in HHS.
(4) Commissioner means the Commissioner of Social Security.
(5) HHS means the Department of Health and Human Services, which
oversees the Centers for Medicare & Medicaid Services (CMS), the Office
of Medicare Hearings and Appeals (OMHA) and the Medicare Appeals
Council (MAC)
(6) IRS means the Internal Revenue Service in the Department of the
Treasury.
(7) MAC means the Medicare Appeals Council in HHS.
(8) Medicare Prescription Drug Coverage Plan means a Medicare
prescription drug plan, a Medicare Advantage plan with prescription
drug coverage, a Program for All-inclusive Care for the Elderly plan
offering qualified prescription drug coverage, or a cost plan offering
qualified prescription drug coverage.
(9) OMHA means the Office of Medicare Hearings and Appeals in HHS.
(10) Section means a section of the regulations in this part unless
the context indicates otherwise.
(11) The Act means the Social Security Act, as amended.
(12) Title means a title of the Act.
(13) We, our, or us means the Social Security Administration (SSA).
(b) Miscellaneous. For the purposes of this subpart:
(1) Amended tax return means a Federal income tax return for which
an individual or couple has filed an amended tax return that has been
accepted by the IRS.
(2) Effective year means the calendar year for which we make an
income-related monthly adjustment amount determination.
(3) Federal premium subsidy is the portion of the cost of providing
Medicare prescription drug coverage that is paid by the Federal
Government. The Federal Government pays this amount to Medicare
Prescription Drug coverage Plans from payments made into the Medicare
Prescription Drug Account in the Federal Supplementary Medical
Insurance Trust Fund.
(4) Income-related monthly adjustment amount is an additional
amount of premium that you will pay for Medicare prescription drug
coverage if you have modified adjusted gross income above the threshold
described in 418.2105.
(5) Modified Adjusted Gross Income is your adjusted gross income as
defined by the Internal Revenue Code, plus the following forms of tax-
exempt income:
(i) Tax-exempt interest income;
(ii) Income from United States savings bonds used to pay higher
education tuition and fees;
(iii) Foreign earned income;
(iv) Income derived from sources within Guam, American Samoa, or
the Northern Mariana Islands; and
(v) Income from sources within Puerto Rico.
(6) Modified adjusted gross income ranges are the groupings of
modified adjusted gross income above the threshold. There are four
ranges for most individuals, based on their tax filing status. There
are two ranges for those with a tax filing status of married, filing
separately, who also lived with their spouse for part of the year. The
dollar amounts of the modified adjusted gross income ranges are
specified in Sec. 418.2115.
(7) Premium is a payment that an enrolled beneficiary pays for
Medicare prescription drug coverage to a Medicare prescription drug
plan, a Medicare Advantage plan with prescription drug coverage, a
Program of All-Inclusive Care for the Elderly Plan offering qualified
prescription drug coverage, or a cost plan offering qualified
prescription drug coverage. The rules that CMS use annually to
establish premium amounts for Medicare prescription drug coverage are
contained in 42 CFR 423.286.
(8) Representative means, for the purposes of the initial
determination and reconsidered determination, an individual as defined
in Sec. 404.1703 of this chapter, and for purposes of an ALJ hearing
or review by the MAC, an individual as defined in 42 CFR 423.560.
(9) Tax filing status means the filing status shown on your
individual income
[[Page 75893]]
tax return. It may be single, married filing jointly, married filing
separately, head of household, or qualifying widow(er) with dependent
child.
(10) Tax year means the year for which you have filed or will file
your Federal income tax return with the IRS.
(11) Threshold means a modified adjusted gross income amount above
which you will have to pay an income-related monthly adjustment amount
described in paragraph (b)(4) of this section. The dollar amount of the
threshold is specified in Sec. 418.2105.
(12) You or your means the person or representative of the person
who is subject to the income-related monthly adjustment amount.
Determination of the Income-Related Monthly Adjustment Amount
Sec. 418.2101 What is the income-related monthly adjustment amount?
(a) The income-related monthly adjustment amount is an amount that
you will pay in addition to the Medicare prescription drug coverage
plan monthly premium, plus any applicable increase in that premium as
described in 42 CFR 423.286, for your Medicare prescription drug
coverage plan when your modified adjusted gross income is above the
threshold described in Sec. 418.2105.
(b) Your income-related monthly adjustment amount is based on your
applicable modified adjusted gross income as described in Sec.
418.2115 and your tax filing status.
(c) We will determine your income-related monthly adjustment amount
using the method described in Sec. 418.2120.
Sec. 418.2105 What is the threshold?
