[Federal Register Volume 71, Number 42 (Friday, March 3, 2006)]
[Proposed Rules]
[Pages 10926-10939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-2075]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 418

RIN 0960-AG11


Medicare Part B Income-Related Monthly Adjustment Amount

AGENCY: Social Security Administration (SSA).

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: We propose to add to our regulations a new subpart, Medicare 
Part B Income-Related Monthly Adjustment Amount, to contain the rules 
we would follow for Medicare Part B income-related monthly adjustment 
amount determinations. The monthly adjustment amount represents the 
amount of decrease in the Medicare Part B premium subsidy, i.e. the 
amount of the Federal Government's contribution to the Federal 
Supplementary Medical Insurance Trust Fund. This new subpart would 
implement section 811 of the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (the Medicare Modernization Act or MMA) 
and would contain the rules for determining when, based on income, a 
monthly adjustment amount will be added to a Supplementary Medical 
Insurance (Medicare Part B) beneficiary's standard monthly premium. 
These proposed rules describe: what the new subpart is about; what 
information we would use to determine whether you would 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.

DATES: To be sure your comments are considered, we must receive them by 
May 2, 2006.

ADDRESSES: You may give us your comments by: using our Internet 
facility (i.e., Social Security Online) at http://policy.ssa.gov/erm/rules.nsf/Rules+Open+To+Comment or the Federal eRulemaking Portal at 
http://www.regulations.gov; e-mail to [email protected]; telefax to 
(410) 966-2830; or letter to the Commissioner of Social Security, P.O. 
Box 17703, Baltimore, MD 21235-7703. You may also deliver them to the 
Office of Regulations, Social Security Administration, 100 Altmeyer 
Building, 6401 Security Boulevard, Baltimore, MD 21235-6401, between 8 
a.m. and 4:30 p.m. on regular business days. Comments are posted on our 
Internet site or you may inspect them physically on regular business 
days by making arrangements with the contact person shown in this 
preamble.

FOR FURTHER INFORMATION CONTACT: Craig Streett, Team Leader, Office of 
Income Security Programs, Social Security Administration, 252 Altmeyer 
Building, 6401 Security Boulevard, Baltimore, MD 21235-6401, 410-965-
9793 or TTY 1-800-966-5609, for information about this notice. 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 http://www.socialsecurity.gov.

SUPPLEMENTARY INFORMATION: 

Electronic Version

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

Statutory Provisions

    Section 811 of the MMA (Public Law 108-173), which was enacted into 
law on December 8, 2003, added subsection (i) to section 1839 of the 
Social Security Act (the Act), and established a Medicare Part B 
premium subsidy reduction (referred to in these proposed rules as ``the 
income-related monthly adjustment amount'') effective January 1, 2007, 
which will be added to the standard monthly Medicare Part B premium 
amount for certain beneficiaries. Section 1839(i) of the Act was 
subsequently amended by section 5111 of the Deficit Reduction Act of 
2005, Public Law 109-171. The Centers for Medicare & Medicaid Services 
(CMS), in the Department of Health and Human Services (HHS), has 
overall responsibility for determining the annual Medicare Part B 
standard monthly premium amounts and premium increases for late 
enrollment or reenrollment. CMS regulations at 42 CFR part 408 describe 
the rules that CMS uses to determine those amounts. As explained in 
these proposed rules, we are responsible only for making initial 
determinations and reconsiderations about income-related monthly 
adjustment amounts. Any subsequent levels of appeal will be provided by 
HHS under its regulations at 42 CFR part 405, subpart I.
    Section 702(a)(5) of the Act allows us to make the rules and 
regulations necessary or appropriate to carry out the functions of SSA. 
Other provisions in section 811 of the MMA provide us with additional 
specific authorization to make rules and regulations to determine the 
income-related monthly adjustment amount. For example, sections 
1839(i)(4)(B) and (i)(4)(C)(ii)(II) of the Act authorize us to 
promulgate regulations, in consultation with the Secretary of the 
Treasury, necessary for our determinations about income-related monthly 
adjustment amounts. Section 1839 of the Act requires the Secretary of 
HHS to annually determine the Medicare Part B standard monthly premium 
amount. Section 1839 of the Act also authorizes the Secretary of HHS to 
establish a premium increase for late enrollment and for reenrollment 
under certain circumstances and provide for a limitation on increases 
in the Medicare Part B standard monthly premium for some beneficiaries.
    The new section 1839(i) requires us to determine the income-related 
monthly adjustment amount for Medicare beneficiaries with modified 
adjusted gross income above an established threshold. The income-
related monthly adjustment amount is added to the Medicare Part B 
standard monthly premium and any applicable premium increase for late 
enrollment or reenrollment. The MMA provides that in 2007 the modified 
adjusted gross income threshold is $80,000 for individuals who file 
their Federal income taxes with a filing status of single and $160,000 
for married individuals who file a joint tax return. Section 811(c)(1) 
of the MMA enacted a new section 6103(1)(20) of the Internal Revenue 
Code authorizing the Internal Revenue Service (IRS) to provide certain 
income information to us to use in determining the income-related 
monthly adjustment amount. The MMA requires

[[Page 10927]]

that the threshold amount be adjusted yearly based on the Consumer 
Price Index.
    Section 811(b)(1)(C) of the MMA also amended section 1839(f) of the 
Act, so that the limitation on increases in the Medicare Part B 
standard monthly premium for some beneficiaries will not apply to 
beneficiaries who are responsible for an income-related monthly 
adjustment amount.

Background

    Medicare Part B is a voluntary program which provides medical 
insurance coverage for medical and health services such as physician 
services, diagnostic services, and medical supplies. Medicare Part B 
beneficiaries are responsible for deductibles, co-insurance and monthly 
premiums towards the cost of covered services. CMS promulgates rules 
and regulations concerning the Medicare program.
    The Medicare Part B standard monthly premium is set by CMS so that 
it covers approximately 25 percent of the Medicare Part B program 
costs. Certain beneficiaries may also pay an increased premium for late 
enrollment in Medicare Part B or for reenrollment after a period 
without coverage. Approximately 75 percent of the full cost of Medicare 
Part B is subsidized by the Federal Government by contributions to the 
Federal Supplementary Medical Insurance Trust Fund. In addition, for 
certain beneficiaries whose premiums are deducted from other payable 
Social Security (or railroad retirement) benefit amounts that they 
receive, the yearly adjustment to the premium amount cannot be raised 
more than the amount of the cost-of-living adjustment for those other 
benefits.
    Starting in January 2007, the Medicare Part B premium subsidy will 
be reduced for an estimated 4 to 5 percent of the approximately 40 
million Medicare Part B beneficiaries. Beneficiaries who had modified 
adjusted gross income above the threshold level set in the MMA in the 
tax year 2 years prior to the year for which we make a determination 
about whether they must pay an income-related monthly adjustment amount 
(the effective year) will receive a reduced Federal subsidy of their 
Medicare Part B premium. The reduction of the Federal premium subsidy 
will result in beneficiaries with modified adjusted gross income above 
the threshold paying more of the cost of their Medicare Part B benefits 
through an income-related monthly adjustment amount that is added to 
the Medicare Part B standard monthly premium plus any applicable 
premium increase for late enrollment or reenrollment.

How This Affects You

    Your modified adjusted gross income is your adjusted gross income, 
as defined at 26 U.S.C. 62 and in related regulations, 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. The MMA as amended by the Deficit Reduction Act provides 
that the payment of the full amount of the income-related monthly 
adjustment amount will be phased in starting in 2007 and will be 
completed in 2009. If you must pay an income-related monthly adjustment 
amount, you will not be eligible for the limitation on Medicare Part B 
standard monthly premium increase beyond the amount of your Social 
Security (or tier 1 railroad retirement) cost-of-living adjustments, as 
described in 42 CFR 408.20.
    If you are a Medicare beneficiary prior to January 1, 2007 and you 
will be required to pay an income-related monthly adjustment amount in 
2007, you will be notified at the end of 2006 about the additional 
amount of your premium and any related changes in the amount of your 
Social Security monthly benefits or other payments from which your 
premiums will be withheld (railroad retirement or Civil Service annuity 
payments). If you enroll in Medicare Part B after January 1, 2007 and 
we determine that you must pay an income-related monthly adjustment 
amount for your Medicare Part B coverage, you will be notified shortly 
after you enroll in Medicare Part B. If you are a Medicare beneficiary 
during 2007 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.

How We Determine Your Income-Related Monthly Adjustment Amount

    The amount of your modified adjusted gross income will determine if 
you are to pay an income-related monthly adjustment. Section 1839(i)(2) 
of the Act establishes the threshold for modified adjusted gross income 
used to determine if you are to pay an income-related monthly 
adjustment amount. In 2007, the modified adjusted gross income 
threshold amount is $80,000 for individuals who file their Federal 
income tax return with a filing status of single, married filing 
separately, head of household, or qualifying widow(er) with dependent 
child, and $160,000 for individuals who file a joint income tax return 
with their spouse.
    Section 1839(i)(4) of the Act requires us to request information 
about your modified adjusted gross income from IRS in the Department of 
the Treasury and to use this information to determine if you must pay 
an income-related monthly adjustment amount. We will specify the tax 
year involved in our information request. We will request that IRS send 
us Federal income tax return information about your modified adjusted 
gross income for the tax year which is 2 years before the effective 
year. If modified adjusted gross income information is not available 
from IRS for the tax year 2 years before the effective year of our 
determination, IRS will send us your modified adjusted gross income 
information for the tax year 3 years before that year if it exceeds the 
threshold. We will use information for 3 years prior to determine 
whether you must pay an income-related monthly adjustment amount only 
until information for 2 years prior becomes available.
    If we use information from 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 that year. 
We will use that information, when you provide it to us, if that 
information will result in a lower income-related monthly adjustment 
amount. In order for us to make an initial determination based on such 
a request, you must provide your retained copy of your Federal income 
tax return for that year, a copy that you request from IRS, or an IRS 
transcript of your return. If you provide your retained copy, we will 
also verify this information with IRS.
    In some cases, IRS will not have data to provide us regarding an 
individual's modified adjusted gross income because the amount of the 
individual's income is below the level for which an income tax return 
must be filed. We will not be making income-related monthly adjustment 
amount determinations in such situations because this individual's 
income would also be below the modified adjusted gross income 
threshold. However, if we receive information which indicates that an 
individual who has not filed a tax return has income which exceeds the 
established threshold for an income-related monthly adjustment amount, 
we will make such a determination. The statute requires that we, in 
consultation with the Secretary of the Treasury issue regulations that 
``provide for the treatment of the premium adjustment with respect to 
such individual[s].'' We are consulting with the IRS to determine if we 
can obtain information from IRS

[[Page 10928]]

(or otherwise) on such non-filing individuals. Since typically the IRS 
does not collect and maintain the same information for filers and non-
filers, SSA is requesting public comment on this issue.

The Sliding Scale Formula and How It Applies to You

    Section 1839(i)(3) prescribes a sliding scale formula that CMS will 
use to establish annually four income-related monthly adjustment 
amounts beginning in 2007. The calculation of the income-related 
monthly adjustment amount reduces a beneficiary's Medicare Part B 
premium subsidy using specified percentages. The amount of this premium 
subsidy reduction is the income-related monthly adjustment amount. To 
determine each income-related monthly adjustment amount, CMS will use 
the unsubsidized Medicare Part B premium (approximately four times the 
Medicare Part B standard monthly premium) and multiply it by a 
specified percentage. The percentage used in the calculation increases 
as the amount of modified adjusted gross income increases.
    We 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 the amount of your income-related monthly 
adjustment amount. Section 1839(i)(3)(C) provides the modified adjusted 
gross income ranges. The range amounts for individuals who are married 
filing jointly are double the range amounts for single income tax 
filers. IRS recognizes three additional filing statuses: Head of 
household, qualifying widow(er) (26 U.S.C. 2) and married filing 
separately. If you file as a head of household or as a qualifying 
widow(er), we will apply the modified adjusted gross income range 
applicable to individuals who file their Federal income tax with a 
filing status of single. Section 1839(i)(3)(C)(iii) provides for the 
modified adjusted gross income ranges for individuals who file their 
Federal income tax return with a filing status of married filing 
separately and who also have lived with their spouse at any time during 
the year to be reduced by the threshold amount established for that 
calendar year which may result in a higher income-related monthly 
adjustment amount for these individuals. However, section 1839(i)(1) 
provides a threshold amount (which is $80,000 in 2007 but will change 
in subsequent years due to indexing) that is applicable to all income-
related monthly adjustment amount determinations. Thus, the lowest 
range amount cannot be lower than the threshold. For 2007, this results 
in the following two ranges for married filing separately: (1) $80,000 
to less than or equal to $120,000 and (2) More than $120,000.
    Starting in 2007 for calendar year 2008, 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 IRS, 
including your retained copy of the amended tax return, and a letter 
from IRS verifying receipt of the return or an IRS transcript of your 
amended tax return. If you believe that 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 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 months that you paid an incorrect income-related monthly adjustment 
amount.

Phase-In and Inflation Adjustment of the Income-Related Monthly 
Adjustment Amount

    Section 1839(i)(3)(B) requires the amount of the full income-
related monthly adjustment to be phased in over a 3-year period 
beginning in 2007. The effect is that from 2007 through 2009 the amount 
of the income-related monthly adjustment amount will increase, because 
the subsidy will decrease. The percentage will change each year so that 
the income-related monthly adjustment amount will gradually increase, 
until the full amount is phased in starting in 2009.
    Beginning in 2008, section 1839(i)(5) of the Act requires an annual 
inflation adjustment for the threshold amount and the amounts used in 
the modified adjusted gross income ranges. The adjustment will be based 
on the percentage increase in the Consumer Price Index for all urban 
consumers rounded to the nearest $1,000. CMS will publish these amounts 
annually.

Changes in Your Modified Adjusted Gross Income

    Section 1839(i)(4)(C) of the Act requires us to establish 
procedures in consultation with the Secretary of the Treasury for 
determining your modified adjusted gross income for a tax year more 
recent than the information ordinarily provided by IRS. The statute 
states that we will grant your request to use a more recent tax year to 
determine your income-related monthly adjustment amount only when:
     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.
    These proposed rules describe the standards 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 the amount of your income-related monthly 
adjustment amount will be. In these proposed rules we define qualifying 
major life-changing events and what is a significant reduction in your 
modified adjusted gross income. We also specify the evidence we will 
require of major life-changing events and the resulting reduction in 
your modified adjusted gross income.
    Section 1839(i)(4)(C)(ii)(II) specifies that major life-changing 
events include marriage, divorce, and death of a spouse. Under that 
section, we have discretion to include in 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. In these rules we propose to 
establish the following categories of qualifying major life-changing 
events:
     Death of a spouse;
     Marriage;
     Divorce;
     Partial or full work stoppage;

[[Page 10929]]

     Loss of income from income-producing property when the 
loss is not at your direction, for example, loss of income from real 
property due to a natural disaster in a Presidentially or 
Gubernatorially-declared disaster area, or due to arson, or destruction 
of livestock or crops; and
     Reduction or loss of certain forms of pension income due 
to termination or reorganization of the pension plan, or a scheduled 
cessation of your pension benefits.
    We have included these additional categories of major life-changing 
events because we recognize that these events may cause a significant 
reduction in your modified adjusted gross income. We will include 
losses in pension income that occur due to events outside of your 
control, such as underfunding that results in a termination of the 
plan, but not due to your choices about funding an employee-directed 
pension plan. The statute does not authorize us to define as major 
life-changing events circumstances that affect your expenses, but not 
your income.
    We propose to 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. Section 
1839(i)(4)(C)(ii) provides that 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. These 
proposed rules define the evidence that we will consider to be 
equivalent to a copy of a filed Federal income tax return.
    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 generally be effective on 
January 1 of the calendar year for which we make the determination. If 
you enrolled in Medicare Part B 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 of your Medicare Part B enrollment.
    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 IRS for that tax year, we will 
use the information from 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 
adjustments, if necessary. Retroactive adjustments will apply to all 
months for which you paid an incorrect income-related monthly 
adjustment amount.

If You Disagree With Our Determination of Your Income-Related Monthly 
Adjustment Amount

    We will decide whether you must pay an income-related monthly 
adjustment, and the amount of any adjustment, based on information we 
receive from 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.
    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. These are the same rules 
that we use when making initial determinations and reconsiderations 
regarding applications for and entitlement to Medicare benefits under 
42 CFR 405.904(a)(1). If you are dissatisfied with our reconsideration, 
you may request further review, including a hearing before an 
administrative law judge from the Office of Medicare Hearings and 
Appeals (OMHA) at HHS, review by the Medicare Appeals Council (MAC), 
and judicial review, consistent with the CMS regulations at 42 CFR part 
405, subpart I. As part of your request for an administrative law judge 
hearing or MAC review, you will be required to provide your consent to 
HHS for us to release your relevant tax return information to OMHA or 
the MAC for the purposes of adjudicating any appeal of the amount of an 
income-related adjustment to the Part B premium subsidy and for any 
judicial review of that appeal.
    We propose to establish a new procedure, a request for a new 
initial determination, that you may use when you do not dispute the 
accuracy of the IRS modified adjusted gross income information we used, 
or the determination we made based on that information, but you want us 
to use different information. You may provide evidence of your modified 
adjusted gross income for a more recent tax year than the information 
provided by IRS when you have had a major life-changing event that 
significantly reduces your income or when IRS has provided modified 
adjusted gross income information from 3 years prior to the premium 
effective year and you supply your retained copy of your Federal income 
tax return for the tax year 2 years prior. 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 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.
    We propose to establish this alternative procedure in view of the 
nature of the information that we are required by the MMA to use in 
making determinations regarding the income-related monthly adjustment 
amount. We anticipate that the use of this new procedure will allow us 
to make timely adjustments when you have updated information about your 
modified adjusted gross income, or when you can prove the IRS 
information we used is incorrect. This process does not affect your 
right to appeal any initial determination that we make about your 
income-related monthly adjustment amount, but allows you to choose an 
alternative of requesting that we use other information to make a new 
initial determination.

Explanation of Proposed Subpart B

    We propose to add a new subpart B, Medicare Part B Income-Related 
Monthly Adjustment Amount, to part 418 of chapter III of title 20 of 
the Code of Federal Regulations. Proposed subpart B would contain 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 
Part B standard monthly premium plus any applicable premium increase 
for late enrollment or reenrollment. Following is a description of each 
section for proposed subpart B.

[[Page 10930]]

Introduction, General Provisions, and Definitions

     Section 418.1001 describes what subpart B is about, lists 
the groups of sections in the subpart, and the subject of each group.
     Section 418.1005 explains that the purpose of the income-
related monthly adjustment amount is to reduce the premium subsidy of 
the Medicare Part B program, i.e., the amount of the Federal 
Government's contribution to the Federal Supplementary Medical 
Insurance Trust Fund, for certain beneficiaries.
     Section 418.1010 contains definitions of terms used 
throughout this subpart.

Determination of the Income-Related Monthly Adjustment Amount

     Section 418.1101 explains what the income-related monthly 
adjustment amount is and when it is applied.
     Section 418.1105 defines the modified adjusted gross 
income threshold and what the modified adjusted gross income threshold 
amounts will be in the year 2007. It also describes how threshold 
amounts will change in later years.
     Section 418.1110 defines modified adjusted gross income 
ranges and explains how we will use them 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 418.1115 explains how we will determine your 
income-related monthly adjustment amount.
     Section 418.1120 describes the effective date of our 
initial determination about the income-related monthly adjustment 
amount.
     Section 418.1125 explains how the income-related monthly 
adjustment amount will affect your total Medicare Part B premium.
     Section 418.1130 explains how we will phase in the full 
applicable income-related monthly adjustment amounts.
     Section 418.1135 describes what modified adjusted gross 
income information we will use to determine your income-related monthly 
adjustment amount.
     Section 418.1140 describes what will happen if the 
modified adjusted gross income that we later receive from IRS is 
different from the information that we previously used to make a 
determination of your income-related monthly adjustment amount.
     Section 418.1145 describes how we will determine the 
income-related monthly adjustment amount if IRS does not provide your 
modified adjusted gross income information.
     Section 418.1150 describes when we will use a copy of your 
amended Federal income tax return filed with IRS to determine the 
income-related monthly adjustment amount and what proof is necessary to 
show that you filed a tax return with IRS.

Determinations Using a More Recent Tax Year's Modified Adjusted Gross 
Income

     Section 418.1201 explains when we will use modified 
adjusted gross income information for a more recent tax year to 
determine your income-related monthly adjustment amount.
     Section 418.1205 describes what is considered a major 
life-changing event that would justify using information from a more 
recent tax year.
     Section 418.1210 explains what is not considered a major 
life-changing event that would justify using information from a more 
recent tax year.
     Section 418.1215 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.
     Section 418.1220 outlines what evidence we will consider 
when you request that we use information that you provide about your 
modified adjusted gross income for a more recent tax year to determine 
your income-related monthly adjustment amount.
     Section 418.1225 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.
     Section 418.1230 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.
     Section 418.1235 explains the effective date of our 
income-related monthly adjustment amount determination based on your 
request to use a more recent tax year.
     Section 418.1240 explains when we will stop using your 
modified adjusted gross income from a more recent tax year for income-
related monthly adjustment amount determinations.
     Section 418.1245 explains what you should do if your 
modified adjusted gross income for the more recent tax year changes.
     Section 418.1250 explains what will happen if you notify 
us of a change in your modified adjusted gross income for the more 
recent tax year.

Determinations and the Administrative Review Process

     Section 418.1301 explains what is an initial determination 
regarding your income-related monthly adjustment, and provides examples 
of determinations that are initial determinations for purposes of these 
rules.
     Section 418.1303 explains that administrative actions that 
are not initial determinations are not subject to the administrative 
review process.
     Section 418.1305 explains how we will notify you when we 
make an initial determination, and what information the notice will 
contain.
     Section 418.1310 explains the effect of the initial 
determination.
     Section 418.1315 explains when you may request a 
reconsideration.
     Section 418.1320 explains when you may request that we 
make a new initial determination.
     Section 418.1325 tells you the rules for the 
administrative review process.
     Section 418.1330 tells you the rules we will use to decide 
if reopening a prior determination or decision is appropriate.
     Section 418.1335 explains what will happen if you request 
a reconsideration because you believe that IRS information we used to 
make an initial determination about your income-related monthly 
adjustment amount is incorrect.
     Section 418.1340 explains what to do if you believe our 
initial determination is based on incorrect modified adjusted gross 
income information.

Clarity of These Proposed Rules

    Executive Order 12866, as amended by Executive Order 13258, 
requires each agency to write all rules in plain language. In addition 
to comments you may have on these proposed rules, we also invite your 
comments on how to make the rules easier to understand. For example:
     Have we organized the material to suit your needs?
     Are the requirements in the rules clearly stated?
     Do the rules contain technical language or jargon that is 
not clear?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the rules easier to understand?
     Would more (but shorter) sections be better?
     Could we improve clarity by adding tables, lists, or 
diagrams?
     What else could we do to make the rules easier to 
understand?

[[Page 10931]]

Regulatory Procedures

Executive Order 12866

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these proposed rules meet the criteria for an 
``economically significant'' regulatory action under Executive Order 
12866, as amended by Executive Order 13258. Thus they were reviewed by 
OMB.
    These proposed rules provide the implementing rules for the income-
related premium calculation enacted as part of MMA. The legislative 
provision is expected to result in an overall savings to the Medicare 
Supplementary Medical Insurance Trust Fund of roughly $7.7 billion over 
the period of fiscal years 2007-2011. The following chart shows the 
total savings in millions for each program year.

------------------------------------------------------------------------
                       Fiscal year                         Total savings
------------------------------------------------------------------------
2007....................................................             490
2008....................................................           1,180
2009....................................................           1,860
2010....................................................           2,060
2011....................................................           2,150
                                                         ---------------
    Total: 2007-2011....................................           7,740
------------------------------------------------------------------------

    In addition, the process of determining the additional premiums 
will result in an increase in administrative expenses incurred by SSA 
in the amount of $200 million over that same 5-year period.

Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in the following table 
(Table 1) we have prepared an accounting statement showing the 
classification of the expenditures associated with the provisions of 
these proposed rules. This table provides our best estimate of the 
increase in premium payments as a result of the changes to the Part B 
program presented in these proposed rules. All expenditures are 
classified as transfers to the SMI Trust Fund.

   Table 1.--Accounting Statement: Classification of Estimated Savings
                              [In millions]
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $1,370.
From Whom to Whom?.....................  Certain High-Income Medicare
                                          Part B Beneficiaries to the
                                          Medicare SMI Trust Fund.
------------------------------------------------------------------------

Regulatory Flexibility Act

    We certify that these proposed rules will not have a significant 
economic impact on a substantial number of small entities as they 
affect individuals only. Therefore, a regulatory flexibility analysis 
as provided in the Regulatory Flexibility Act, as amended, is not 
required for these proposed rules.

Paperwork Reduction Act

    These proposed rules contain reporting requirements as shown in the 
following table. Where the public reporting burden is accounted for in 
Information Collection Requests for the various forms that the public 
uses to submit the information to SSA, a 1-hour placeholder burden is 
being assigned to the specific reporting requirement(s) contained in 
these rules.

----------------------------------------------------------------------------------------------------------------
                                                                                      Average
                                                  Annual  number   Frequency of     burden per       Estimated
                     Section                            of           response        response      annual burden
                                                    respondents                      (minutes)        (hours)
----------------------------------------------------------------------------------------------------------------
Sec.   418.1135(c)-(e), Sec.   418.1140(b)-(d),          104,725               1              30          52,363
 Sec.   418.1320(a)(1)-(2)......................
Sec.   418.1150, Sec.   418.1320(a)(2)..........             300               1              30             150
Sec.   418.1005(c), Sec.   418.1201, Sec.         ..............  ..............  ..............               1
 418.1215, Sec.   418.1220, Sec.   418.1225,
 Sec.   418.1230, Sec.   418.1320(a)(4).........
Sec.   418.1240(c)-d, Sec.   418.1245, Sec.               42,260               1              30          21,130
 418.1250.......................................
Sec.   418.1310, Sec.   418.1315................           6,698               1              30           3,349
Sec.   418.1340.................................             200               1              30             100
                                                 ---------------------------------------------------------------
    Total.......................................         154,183  ..............  ..............          77,093
----------------------------------------------------------------------------------------------------------------

    An Information Collection Request has been submitted to OMB for 
clearance. We are soliciting comments on the burden estimate; the need 
for the information; its practical utility; ways to enhance its 
quality, utility, and clarity; and on ways to minimize the burden on 
respondents, including the use of automated collection techniques or 
other forms of information technology. Comments should be submitted 
and/or faxed to OMB and SSA at the following addresses/numbers:

    Office of Management and Budget, Attn: Desk Officer for SSA, Fax 
Number: 202-395-6974.
Social Security Administration, Attn: SSA Reports Clearance Officer, 
Rm. 1338 Annex Building, 6401 Security Boulevard, Baltimore, MD 21235-
6401. Fax Number: 410-965-6400.

    Comments can be received for up to 60 days after publication of 
this notice and will be most useful if received within 30 days of 
publication. To receive a copy of the OMB clearance package, you may 
call the SSA Reports Clearance Officer at 410-965-0454.

(Catalog of Federal Domestic Assistance Program Nos. 93.773, 
Medicare--Hospital Insurance and 93.774, Medicare--Supplementary 
Medical Insurance Program)

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: February 27, 2006.
Jo Anne B. Barnhart,
Commissioner of Social Security.
    For the reasons set out in the preamble, we propose to add a new

[[Page 10932]]

subpart B to part 418 of chapter III of title 20 of the Code of Federal 
Regulations as follows:

PART 418--MEDICARE SUBSIDIES

Subpart B--Medicare Part B Income-Related Monthly Adjustment Amount

Introduction, General Provisions, and Definitions

Sec.
418.1001 What is this subpart about?
418.1005 Purpose and administration.
418.1010 Definitions.

Determination of the Income-Related Monthly Adjustment Amount

418.1101 What is the income-related monthly adjustment amount?
418.1105 What is the threshold?
418.1110 What are the modified adjusted gross income ranges?
418.1115 How do we determine your income-related monthly adjustment 
amount?
418.1120 What is the effective date of our initial determination 
about your income-related monthly adjustment amount?
418.1125 How will the income-related monthly adjustment amount 
affect your total Medicare Part B premium?
418.1130 How will we phase in the income-related monthly adjustment 
amount?
418.1135 What modified adjusted gross income information will we use 
to determine your income-related monthly adjustment amount?
418.1140 What will happen if the modified adjusted gross income 
information from IRS is different from the modified adjusted gross 
income information we used to determine your income-related monthly 
adjustment amount?
418.1145 How do we determine your income-related monthly adjustment 
amount if IRS does not provide information about your modified 
adjusted gross income?
418.1150 When will we use your amended tax return filed with IRS?

Determinations Using a More Recent Tax Year's Modified Adjusted Gross 
Income

418.1201 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?
418.1205 What is a major life-changing event?
418.1210 What is not a major life-changing event?
418.1215 What more recent tax year will we use?
418.1220 What evidence will you need to support your request for us 
to use a more recent tax year?
418.1225 What kind of major life-changing event evidence will you 
need to support your request?
418.1230 What kind of significant modified adjusted gross income 
reduction evidence will you need to support your request?
418.1235 What is the effective date of an income-related monthly 
adjustment amount initial determination that is based on a more 
recent tax year?
418.1240 When will we stop using your more recent tax year's 
modified adjusted gross income to determine your income-related 
monthly adjustment amount?
418.1245 Should you notify us if your modified adjusted gross income 
for the more recent tax year changes?
418.1250 What will happen if you notify us that your modified 
adjusted gross income for the more recent tax year changes?

Determinations and the Administrative Review Process

418.1301 What is an initial determination regarding your income-
related monthly adjustment amount?
418.1303 What is not an initial determination regarding your income-
related monthly adjustment amount?
418.1305 How will we notify you and what information will we provide 
about our initial determination?
418.1310 What is the effect of an initial determination?
418.1315 When may you request a reconsideration?
418.1320 When may you request that we make a new initial 
determination?
418.1325 What are the rules for the administrative review process?
418.1330 Is reopening of a determination or decision ever 
appropriate?
418.1335 Can you request a reconsideration when you believe the IRS 
information we used is incorrect?
418.1340 What should you do if our initial determination is based on 
modified adjusted gross income information you believe to be 
incorrect?

Subpart B--Medicare Part B Income-Related Monthly Adjustment Amount

    Authority: Secs. 702(a)(5) and 1839(i) of the Social Security 
Act (42 U.S.C. 902(a)(5) and 1395r(i)).

Introduction, General Provisions, and Definitions


Sec.  418.1001  What is this subpart about?

    This subpart relates to section 1839(i) of the Social Security Act 
(the Act), as added by section 811 of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (Pub. L. 108-173). Section 
1839(i) establishes an income-related monthly adjustment to the 
Medicare Part B premium. Beneficiaries enrolled in Medicare Part B 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 the Medicare Part B standard monthly premium and any 
applicable premium increases as described in 42 CFR 408.20. The 
regulations in this subpart explain how we decide whether you are 
required to pay an income-related monthly adjustment amount and the 
amount of your adjustment. The rules are divided into the following 
groups of sections:
    (a) Sections 418.1001 through 418.1010 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 418.1101 through 418.1150 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 Part B premium. These 
sections also explain how the income-related monthly adjustment amount 
will be phased in from calendar year 2007 through calendar year 2009.
    (c) Sections 418.1201 through 418.1250 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 income-related monthly adjustment amount 
determinations based on information you provide will be effective, and 
how long they will remain in effect. Additionally, these sections 
describe how retroactive adjustments of the income-related monthly 
adjustment amount will be made based on information you provide, 
updated information you provide and information we later receive from 
the Internal Revenue Service (IRS).
    (d) Sections 418.1301 through 418.1340 contain the rules that we 
will apply when you disagree with our determination regarding your 
income-related monthly adjustment amount. 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.  418.1005  Purpose and administration.

    (a) The purpose of the income-related monthly adjustment amount is 
to reduce the Federal subsidy of the Medicare Part B program for 
beneficiaries with modified adjusted gross income above an established 
threshold. These beneficiaries will pay a greater share of

[[Page 10933]]

actual program costs. Medicare Part B premiums paid by beneficiaries 
cover approximately 25 percent of total Medicare Part B program costs 
and the remaining 75 percent of program costs are subsidized by the 
Federal Government's contributions to the Federal Supplementary Medical 
Insurance Trust Fund. The reduction in the Medicare Part B premium 
subsidy results in an increase in the total amount that affected 
beneficiaries pay for Medicare Part B coverage. A beneficiary with 
modified adjusted gross income above the threshold amount will pay:
    (1) The Medicare Part B standard monthly premium; plus
    (2) Any applicable increase in the standard monthly premium for 
late enrollment or reenrollment; plus
    (3) An income-related monthly adjustment amount.
    (b) The Centers for Medicare & Medicaid Services (CMS) in the 
Department of Health and Human Services (HHS) publishes the Medicare 
Part B standard monthly premium each year. CMS also establishes rules 
for entitlement to a nonstandard premium, as well as premium penalties 
for late enrollment or reenrollment (42 CFR 408.20 through 408.27).
    (c) We use information that we get from IRS to determine if 
beneficiaries who are enrolled in Medicare Part B are required to pay 
an income-related monthly adjustment amount. We also change income-
related monthly adjustment amount determinations using information 
provided by a beneficiary 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.  418.1010  Definitions.

    (a) Terms relating to the Act and regulations. For the purposes of 
this subpart:
    (1) Administrator means the Administrator of the Centers for 
Medicare & Medicaid Services (CMS).
    (2) CMS means the Centers for Medicare & Medicaid Services in the 
Department of Health and Human Services.
    (3) Commissioner means the Commissioner of Social Security.
    (4) IRS means the Internal Revenue Service in the Department of the 
Treasury.
    (5) Section means a section of the regulations in this part unless 
the context indicates otherwise.
    (6) The Act means the Social Security Act, as amended.
    (7) Title means a title of the Act.
    (8) 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 amended tax return using the required IRS form(s) has been filed by 
an individual or couple and accepted by 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 full cost of 
providing Medicare Part B coverage that is paid by the Federal 
Government through transfers into 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 Part B coverage if you 
have income above the threshold. The amount of your income-related 
monthly adjustment amount is based on your modified adjusted gross 
income.
    (5) Medicare Part B standard monthly premium means the monthly 
Medicare Part B premium amount which is set annually by CMS, according 
to regulations in 42 CFR 408.20 through 408.27.
    (6) 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.
    (7) Modified adjusted gross income ranges are the four bands of 
modified adjusted gross income above the threshold. The dollar amounts 
of the modified adjusted gross income ranges are specified in Sec.  
418.1110.
    (8) Non-standard premium means a Medicare Part B premium that some 
beneficiaries pay for Medicare Part B, rather than the standard 
premium. The rules for applying a non-standard premium are in 42 CFR 
408.20(e). The non-standard premium does not apply to beneficiaries who 
must pay an income-related monthly adjustment amount.
    (9) Premium is a payment that an enrolled beneficiary pays for 
Medicare Part B coverage. The rules that CMS uses to annually establish 
the premium amount are found in 42 CFR 408.20 through 408.27.
    (10) Representative means an individual as defined in Sec.  
404.1703 of this chapter.
    (11) Tax filing status means the filing status shown on your 
individual income tax return. It may be single, married filing jointly, 
married filing separately, head of household, or qualifying widow(er) 
with dependent child.
    (12) Threshold means a modified adjusted gross income amount above 
which the beneficiary will have to pay an income-related monthly 
adjustment amount described in paragraph (b)(3) of this section. The 
dollar amount of the threshold is specified in Sec.  418.1105.
    (13) 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.  418.1101  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 Part B standard monthly 
premium plus any applicable increase in that premium as described in 42 
CFR 408.22 for your Medicare Part B coverage when your modified 
adjusted gross income is above the threshold described in Sec.  
418.1105.
    (b) Your income-related monthly adjustment amount is based on your 
applicable modified adjusted gross income as described in Sec.  
418.1110 and your tax filing status.
    (c) We will determine your income-related monthly adjustment amount 
using the method described in Sec.  418.1115 and Sec.  418.1130.


Sec.  418.1105  What is the threshold?

    (a) The threshold is a level of modified adjusted gross income 
above which the beneficiary will have to pay the income-related monthly 
adjustment amount.
    (b) In 2007, the modified adjusted gross income threshold is 
$80,000 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 $160,000 for 
individuals with a Federal income tax filing status of married filing 
jointly.
    (c) Starting at the end of calendar year 2007 and each year 
thereafter, the threshold amounts for the following year will be set by 
CMS by increasing the preceding year's threshold amount by the 
percentage increase in the Consumer Price Index rounded to the

[[Page 10934]]

nearest $1,000. CMS will publish the threshold amounts annually in 
September in the Federal Register. Published threshold amounts will be 
effective January 1 of the next calendar year, for the full calendar 
year.


Sec.  418.1110  What are the modified adjusted gross income ranges?

    (a) The 2007 modified adjusted gross income ranges for each Federal 
tax filing category are listed 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.
    (b) In 2007, 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 $80,000 and less than or equal to $100,000;
    (2) Greater than $100,000 and less than or equal to $150,000;
    (3) Greater than $150,000 and less than or equal to $200,000; and
    (4) Greater than $200,000.
    (c) In 2007, 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 $160,000 and less than or equal to $200,000;
    (2) Greater than $200,000 and less than or equal to $300,000;
    (3) Greater than $300,000 and less than or equal to $400,000; and
    (4) Greater than $400,000.
    (d) In 2007, 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 $80,000 and less than or equal to $120,000; and
    (2) Greater than $120,000.
    (e) CMS will annually revise the modified adjusted gross income 
ranges and publish them in the Federal Register starting in September 
of 2007 for 2008. Each year thereafter, all modified adjusted gross 
income range amounts will be set by CMS by increasing the preceding 
year's modified adjusted gross income range amounts by any percentage 
increase in the Consumer Price Index rounded to the nearest $1,000, and 
CMS will publish the amounts for the following year in September of 
each year.


Sec.  418.1115  How do we determine your income-related monthly 
adjustment amount?

    (a) We will determine your income-related monthly adjustment amount 
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 2007 in the column on the left in each table. 
The middle column in each table shows the percentage of the 
unsubsidized Medicare Part B premium that will be paid by individuals 
with modified adjusted gross income that falls within each of the 
ranges. The column on the right in each table shows the percentage of 
the unsubsidized Medicare Part B premium that will be subsidized by the 
Federal Supplementary Medical Insurance Trust Fund. Based on your tax 
filing status for the tax year we use to make a determination about 
your income-related 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 amount of income-related monthly adjustment 
for each range will be set annually as described in paragraph (c) of 
this section. The modified adjusted gross income ranges will be 
adjusted annually as described in Sec.  418.1110(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, then the Federal 
Supplementary Medical Insurance Trust Fund premium subsidy of 75 
percent is reduced to the percentage listed in the right column. You 
will pay an amount based on the percentage listed in the center column.

------------------------------------------------------------------------
                                                            Federal
    Modified adjusted gross income        Beneficiary       premium
           effective in 2007                premium         subsidy
                                           (percent)       (percent)
-----------------------------------------------------------------------
More than $80,000 but less than or                  35              65
 equal to $100,000....................
More than $100,000 but less than or                 50              50
 equal to $150,000....................
More than $150,000 but less than or                 65              35
 equal to $200,000....................
More than $200,000....................              80              20
------------------------------------------------------------------------

    (2) Table of applicable percentages for joint returns. If your 
Federal tax filing status is married filing jointly for the tax year we 
use and your modified adjusted gross income for that tax year is in the 
range listed in the left column in the following table, then the 
Federal Supplementary Medical Insurance Trust Fund premium subsidy of 
75 percent is reduced to the percentage listed in the right column. You 
will pay an amount based on the percentage listed in the center column.

------------------------------------------------------------------------
                                                            Federal
    Modified adjusted gross income        Beneficiary       premium
           effective in 2007                premium         subsidy
                                           (percent)       (percent)
-----------------------------------------------------------------------
More than $160,000 but less than or                 35              65
 equal to $200,000....................
More than $200,000 but less than or                 50              50
 equal to $300,000....................
More than $300,000 but less than or                 65              35
 equal to $400,000....................

[[Page 10935]]

 
More than $400,000....................              80              20
------------------------------------------------------------------------

    (3) Table of applicable percentages for married individuals filing 
separate returns. If your Federal tax filing status for the tax year we 
use is married filing separately and 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, then the 
Federal Supplementary Medical Insurance Trust Fund premium subsidy of 
75 percent is reduced to the percentage listed in the right column. You 
will pay an amount based on the percentage listed in the center column.

------------------------------------------------------------------------
                                                            Federal
    Modified adjusted gross income        Beneficiary       premium
           effective in 2007                premium         subsidy
                                           (percent)       (percent)
-----------------------------------------------------------------------
More than $80,000 but less than or                  65              35
 equal to $120,000....................
More than $120,000....................              80              20
------------------------------------------------------------------------

    (c) CMS will annually publish in the Federal Register the dollar 
amounts for the income-related monthly adjustment amount described in 
paragraph (b) of this section.


Sec.  418.1120  What is the effective date of our initial determination 
about your income-related monthly adjustment amount?

    (a) Generally, an income-related monthly adjustment amount will be 
effective for all months that you are enrolled in Medicare Part B 
during the year for which we determine you must pay an income-related 
monthly adjustment amount. We will follow the rules in 42 CFR part 408, 
subpart C, regarding premium collections to withhold your income-
related monthly adjustment amount from a benefit payment or to 
determine if you will be billed directly.
    (b) When we have used modified adjusted gross income information 
from 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 IRS, we will review the new information to 
determine if we should revise our initial determination. 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 you were enrolled or re-enrolled in Medicare Part B if later than 
January.
    (c) When we use your amended tax return, as described in Sec.  
418.1150, the effective date will be January 1 of the year(s) that is 
affected, or the first month in that year that you were enrolled or 
reenrolled in Medicare Part B if later than January.

    Example:  You are enrolled in Medicare Part B throughout 2011. 
We use your 2009 modified adjusted gross income as reported to us by 
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 IRS. The modified adjusted gross income reported on 
your 2009 amended tax return is significantly less than originally 
reported to IRS. We use the modified adjusted gross income that was 
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 adjust for any differences between the amount paid in 
2011 and the amount that should have been paid based on the amended 
tax return.

    (d) When we use evidence that you provide which proves that the IRS 
modified adjusted gross income information we used is incorrect, as 
described in Sec.  418.1340, the effective date will be January of the 
year(s) that is affected or the first month in that year that you were 
enrolled or reenrolled in Medicare Part B 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 Sec.  
418.1201, the effective date is described in Sec.  418.1235.


Sec.  418.1125  How will the income-related monthly adjustment amount 
affect your total Medicare Part B premium?

    (a) If you must pay an income-related monthly adjustment amount, 
your total Medicare Part B premium will be the sum of:
    (1) The Medicare Part B standard monthly premium, determined using 
the rules in 42 CFR 408.20; plus
    (2) Any applicable increase in the Medicare Part B standard monthly 
premium as described in 42 CFR 408.22; plus
    (3) Your income-related monthly adjustment amount.
    (b) In 2007 and 2008, your income-related monthly adjustment amount 
you must pay will be adjusted as described in Sec.  418.1130.
    (c) The nonstandard Medicare Part B premium amount described in 42 
CFR 408.20 does not apply to individuals who must pay an income-related 
monthly adjustment amount. Such individuals must pay the full Medicare 
Part B standard monthly premium plus any applicable penalties for late 
enrollment or reenrollment plus the income-related adjustment.


Sec.  418.1130  How will we phase in the income-related monthly 
adjustment amount?

    (a) In 2007 and 2008, we will phase in the full amount of the 
income-related monthly adjustment amount. For the year in the left 
column you will pay the percentage of the income-related monthly 
adjustment amount specified in the right column.

------------------------------------------------------------------------
                                                      Percentage of the
                                                       income-related
                       Year                          monthly adjustment
                                                    amount that you will
                                                             pay
------------------------------------------------------------------------
2007..............................................                    33
2008..............................................                    67
------------------------------------------------------------------------

    (b) Phase-in of the subsidy reduction will be complete in 2009.


Sec.  418.1135  What modified adjusted gross income information will we 
use to determine your income-related monthly adjustment amount?

    (a) In general, we will use your modified adjusted gross income 
provided by IRS for the tax year beginning 2 years prior to the 
effective year of the income-related monthly adjustment amount 
determination.

[[Page 10936]]

Modified adjusted gross income is based on information you provide to 
IRS when you file your Federal income tax return.
    (b) We will use your modified adjusted gross income for the tax 
year beginning 3 years prior to the effective year of the income-
related monthly adjustment amount determination when IRS does not 
provide the information specified in paragraph (a) of this section. If 
IRS can provide modified adjusted gross income for the tax year 3 years 
prior to the income-related monthly adjustment amount effective year, 
we will temporarily use that information to determine your income-
related monthly adjustment amount and make adjustments as described in 
Sec.  418.1120(b) to all affected income-related monthly adjustment 
amounts when information for the year specified in paragraph (a) of 
this section is provided by IRS.
    (c) When we have used the information in paragraph (b) of this 
section, you may provide us with evidence of your modified adjusted 
gross income for the year in paragraph (a) of this section. You must 
provide a retained copy of your signed Federal income tax return for 
that year, if available. If you filed a return for that year, but did 
not retain a copy, you must request a transcript or a copy of your 
return from IRS and provide it to us. When we use this evidence, we 
will later confirm this information with IRS records.
    (d) When you meet the conditions specified in Sec.  418.1150 
because you have amended your Federal income tax return, or when you 
believe we have used information provided by IRS which is incorrect, as 
described in Sec.  418.1340, we will use information that you provide 
directly to us regarding your modified adjusted gross income.
    (e) We may use information that you give us about your modified 
adjusted gross income for a more recent tax year than those discussed 
in paragraphs (a) or (b) of this section as described in Sec. Sec.  
418.1201 through 418.1250.


Sec.  418.1140  What will happen if the modified adjusted gross income 
information from IRS is different from the modified adjusted gross 
income information we used to determine your income-related monthly 
adjustment amount?

    In general, we will use modified adjusted gross income information 
from IRS to determine your income-related monthly adjustment. We will 
make retroactive adjustments to your income-related monthly adjustment 
amount as described in paragraphs (a) through (d) of this section.
    (a) When we have used modified adjusted gross income from the tax 
year 3 years prior to the effective year as described in Sec.  
418.1135(b), and IRS provides modified adjusted gross income 
information from the tax year 2 years prior to the effective year, we 
will use the new information to make an initial determination for the 
effective year. We will make retroactive adjustments back to January 1 
of the effective year, or the first month you were enrolled or 
reenrolled in Medicare Part B if later than January.
    (b) When we have used the modified adjusted gross income 
information that you provided for the tax year 2 years prior to the 
effective year and the modified adjusted gross income information we 
receive from IRS for that same year is different from the information 
you provided, we will use the modified adjusted gross income 
information provided to us by IRS to make a new initial determination. 
We will make retroactive adjustments back to January 1 of the effective 
year, or the first month you were enrolled or reenrolled in Medicare 
Part B if later than January.
    (c) When we have used information from your amended Federal tax 
return that you provide, as explained in Sec.  418.1150, or you provide 
proof that the information IRS provided to us is incorrect as described 
in Sec.  418.1340, we will not make any adjustments to your income-
related monthly adjustment amount for the effective year or years based 
on IRS information that we later receive.
    (d) When we use modified adjusted gross income information that you 
provided due to a qualifying life-changing event and we receive 
different information from IRS, we will use the IRS information to make 
retroactive corrections to all months affected in the effective year(s) 
during which you were enrolled in Medicare Part B, except when 
paragraph (c) of this section applies.


Sec.  418.1145  How do we determine your income-related monthly 
adjustment amount if IRS does not provide information about your 
modified adjusted gross income?

    In general, if we do not receive any information for you from IRS 
showing that you had modified adjusted gross income above the threshold 
in the tax year we request, we will not make an income-related monthly 
adjustment amount determination.


Sec.  418.1150  When will we use your amended tax return filed with 
IRS?

    You may provide your amended tax return for a tax year we used 
within 3 calendar years following the close of the tax year for which 
you filed the amended tax return. You must provide us with your 
retained copy of your amended U.S. Individual Income Tax Return on the 
required IRS form and a copy of the IRS letter confirming the amended 
tax return was filed or a transcript from IRS if they did not send a 
letter. If you cannot provide your retained copy of the amended tax 
return, you must obtain a copy of the return from IRS. We will then 
make any necessary retroactive corrections as defined in Sec.  418.1120 
to your income-related monthly adjustment amount.

Determinations Using a More Recent Tax Year's Modified Adjusted Gross 
Income


Sec.  418.1201  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 use a more recent tax year than the years described in 
Sec.  418.1135(a) or (b) to reduce or eliminate your income-related 
monthly adjustment amount when all of the following occur:
    (a) You experience a major life-changing event as defined in Sec.  
418.1205; and
    (b) That major life-changing event results in a significant 
reduction in your modified adjusted gross income for the year which you 
request we use and the next year, if applicable. For purposes of this 
section, a significant reduction in your modified adjusted gross income 
is one that results in the decrease or elimination of your income-
related monthly adjustment amount; and
    (c) You request that we use a more recent tax year's modified 
adjusted gross income; and
    (d) You provide evidence as described in Sec. Sec.  418.1220 
through 418.1230.


Sec.  418.1205  What is a major life-changing event?

    For the purposes of this subpart, we will consider the following to 
be major life-changing events:
    (a) Your spouse dies;
    (b) You marry;
    (c) You divorce;
    (d) You or your spouse stop working or reduce the hours you work;
    (e) You or your spouse experience a reduction in your income due to 
a loss of income-producing property, provided that the loss is not at 
your direction (e.g., due to the sale or transfer of the property). 
Examples of the type of property loss include, but are not limited to, 
loss of income from real property within a Presidentially or

[[Page 10937]]

Gubernatorially-declared disaster area, destruction of livestock or 
crops by natural disaster or disease, or loss of income from real 
property due to arson.
    (f) You or your spouse experience a reduction in or loss of certain 
forms of pension income due to termination or reorganization of the 
pension plan or a scheduled cessation of pension benefits.


Sec.  418.1210  What is not a major life-changing event?

    We will not consider events other than those described in Sec.  
418.1205 to be major life-changing events. Certain types of events are 
not considered major life-changing events for the purposes of this 
subpart, such as:
    (a) Events that affect your expenses, but not your income; or
    (b) Events that result in the loss of dividend income.


Sec.  418.1215  What more recent tax year will we use?

    We will consider evidence of your modified adjusted gross income 
that you provide for a tax year that is more recent than the year 
described in Sec.  418.1135 (a) or (b) when you meet all of the 
requirements described in Sec.  418.1201. We will always ask you for 
your retained copy of your filed Federal income tax return for the more 
recent year you request that we use and will use that information to 
make an initial determination. If you have not filed your Federal 
income tax return for the more recent year you request that we use, you 
must provide us with evidence that is equivalent to a copy of a filed 
Federal income tax return. Evidence that is equivalent to a copy of a 
filed Federal income tax return is defined in Sec.  418.1230(c).


Sec.  418.1220  What evidence will you need to support your request for 
us to use a more recent tax year?

    When you request that we use a more recent tax year to determine 
your income-related monthly adjustment amount, we will ask for evidence 
of the major life-changing event and how the event significantly 
reduced your modified adjusted gross income as described in Sec. Sec.  
418.1225 and 418.1230. Unless we have information in our records that 
raises a doubt about the evidence, additional evidence documenting 
these same facts will not be needed.


Sec.  418.1225  What kind of major life-changing event evidence will 
you need to support your request?

    (a) If your spouse died and we do not have evidence of the death in 
our records, we will require proof of death as described in Sec.  
404.720(b) or (c) or Sec.  404.721 of this chapter.
    (b) If you marry and we do not have evidence of the marriage in our 
records, we will require proof of marriage as described in Sec. Sec.  
404.725 through 404.727 of this chapter.
    (c) If your marriage ends and we do not have evidence that the 
marriage has ended in our records, we will require proof that the 
marriage has ended as described in Sec.  404.728(b) or (c) of this 
chapter.
    (d) If you or your spouse stop working or reduce your work hours, 
we will require evidence documenting the change in work activity. 
Examples of acceptable documentation include, but are not limited to, a 
signed statement from your employer, proof of the transfer of your 
business, or your signed statement under penalty of perjury, describing 
your work separation or a reduction in hours.
    (e) If you or your spouse experience a loss of income from income-
producing property, we will require evidence documenting the loss. 
Examples of the type of evidence include, but are not limited to, 
insurance claims or an insurance adjuster's statement.
    (f) If you or your spouse experience a reduction in or loss of 
pension income, we will require evidence documenting the reduction or 
loss. Examples include, but are not limited to, a statement from the 
Pension Benefit Guaranty Corporation or your pension fund administrator 
that explains the reduction or termination of your benefits.


Sec.  418.1230  What kind of significant modified adjusted gross income 
reduction evidence will you need to support your request?

    (a) You must provide evidence that one or more of the major life-
changing events described in Sec.  418.1205 resulted in a significant 
reduction in your modified adjusted gross income for the tax year you 
request we use.
    (b) The preferred evidence is a retained copy of your filed Federal 
income tax return or amended tax return with an IRS letter of receipt 
of the amended tax return, or a copy of your return or amended tax 
return that you obtain from IRS for the more recent tax year you 
request we use.
    (c) When a copy of your filed Federal income tax return is not 
available for the more recent tax year in which your modified adjusted 
gross income was significantly reduced, we will accept equivalent 
evidence. Equivalent evidence is the appropriate proof(s) in paragraphs 
(c)(1), (2) and (3) of this section, plus your signed statement under 
penalty of perjury that the information you provide is true and 
correct. When the major life-changing event changes your tax filing 
status, or the income-related monthly adjustment amount determination 
could be affected by your tax filing status, you will also be required 
to sign a statement regarding your intended income tax filing status 
for the tax year you request we use.
    (1) If you experience one or more of the events described in Sec.  
418.1205(a), (b), or (c), you must provide evidence as to how the 
event(s) significantly reduced your modified adjusted gross income. 
Examples of the type of evidence include, but are not limited to, 
evidence of your spouse's modified adjusted gross income and/or your 
modified adjusted gross income for the tax year we use.
    (2) If you experienced one or more of the events described in Sec.  
418.1205(d), (e) or (f), you must provide evidence of how the event(s) 
significantly reduced your modified adjusted gross income, such as a 
statement explaining any modified adjusted gross income changes for the 
tax year we use, and a copy of your filed Federal income tax return (if 
you have filed one).
    (3) If your spouse experiences one or more of the events described 
in Sec.  418.1205(d), (e), or (f), you must provide evidence of the 
resulting significant reduction in your modified adjusted gross income. 
The evidence requirements are described in paragraph (c)(2) of this 
section.
    (d) When we use information described in paragraph (c) of this 
section, we will request that you provide your retained copy of your 
Federal income tax return for the year we used when you file your 
taxes, so that we can make timely adjustments. We will later verify the 
information you provide when we receive information about that tax year 
from IRS, as described in Sec.  418.1140(d).


Sec.  418.1235  What is the effective date of an income-related monthly 
adjustment amount initial determination that is based on a more recent 
tax year?

    (a) When you make your request prior to January 1, 2007, our 
initial determination is effective on January 1, 2007.
    (b) Subject to paragraph (c) of this section, when you make your 
request during or after 2007 and your modified adjusted gross income 
for the more recent tax year is significantly reduced as a result of a 
major life-changing event, our initial determination is generally 
effective on January 1 of the year in which you make your request. If 
your first month of enrollment or

[[Page 10938]]

reenrollment in Medicare Part B is after January of the year for which 
you make your request, our initial determination is effective on the 
first day of your Medicare Part B enrollment or reenrollment.
    (c) We will make a determination about your income-related monthly 
adjustment amount for the year preceding the year that you make your 
request in the limited circumstances explained in Sec.  418.1320(a)(4). 
When we make a determination for the preceding year, our initial 
determination is generally effective on January 1 of that year. If your 
first month of enrollment or reenrollment in Medicare Part B is after 
January of that year, our initial determination is effective on the 
first day of your Medicare Part B enrollment or reenrollment.
    (d) When you make your request during or after 2007 and your 
modified adjusted gross income is significantly reduced beginning in 
the year following the year in which you make your request as a result 
of one or more of the events described in Sec.  418.1205(a) through 
(f), our initial determination is effective on January 1 of the next 
year.


Sec.  418.1240  When will we stop using your more recent tax year's 
modified adjusted gross income to determine your income-related monthly 
adjustment amount?

    We will use your more recent tax year's modified adjusted gross 
income to determine your income-related monthly adjustment amount 
effective with the month and year described in Sec.  418.1235 and for 
each year thereafter until one of the following occurs:
    (a) We receive your modified adjusted gross income from IRS for the 
more recent tax year we used or a later tax year;
    (b) Your more recent tax year modified adjusted gross income that 
we used is for a tax year more than 3 years prior to the income-related 
monthly adjustment amount effective year;
    (c) You request we use a more recent tax year based on another 
major life-changing event as described in Sec.  418.1201; or
    (d) You notify us of a change in your modified adjusted gross 
income for the more recent tax year we used as described in Sec.  
418.1245.


Sec.  418.1245  Should you notify us if your modified adjusted gross 
income for the more recent tax year changes?

    If you know that the information you provided to us about the more 
recent tax year that we used has changed, you should tell us so that we 
can determine if your income-related monthly adjustment amount should 
be eliminated or adjusted. We will accept new modified adjusted gross 
income information at any time after your request until the end of the 
calendar year following the more recent tax year(s) that we used. For 
us to make a new initial determination using your new modified adjusted 
gross income information, you must provide evidence as described in 
Sec.  418.1230 to support the reduction or increase in your modified 
adjusted gross income. If you amend your Federal income tax return for 
the more recent tax year we used, we will use the rules in Sec.  
418.1150.


Sec.  418.1250  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 IRS, as 
described in Sec.  418.1135, that we have available for each effective 
year; and
    (3) Any modified adjusted gross income information from you, as 
described in Sec.  418.1135, that we have available for each effective 
year.
    (b) For each new initial determination that results in a change in 
your income-related monthly adjustment amount, we will make retroactive 
adjustments that will apply to all enrolled months of the effective 
year.
    (c) We will continue to use a new initial determination described 
in paragraph (a) of this section to determine additional yearly income-
related monthly adjustment amount(s) until an event described in Sec.  
418.1240 occurs.
    (d) We will make an initial determination about your income-related 
monthly adjustment amount when we receive modified adjusted gross 
income for the effective year from IRS, as described in Sec.  
418.1140(d).

Determinations and the Administrative Review Process


Sec.  418.1301  What is an initial determination regarding your income-
related monthly adjustment amount?

    An initial determination is the determination we make about your 
income-related monthly adjustment amount that is subject to 
administrative review. For the purposes of administering the income-
related monthly adjustment amount, initial determinations include but 
are not limited to determinations about:
    (a) The amount of your income-related monthly adjustment amount 
based on information provided by IRS; and
    (b) Any change in your income-related monthly adjustment amount 
based on one of the circumstances listed in Sec.  418.1320(a)(1) 
through (a)(4).


Sec.  418.1303  What is not an initial determination regarding your 
income-related monthly adjustment amount?

    Administrative actions that are not initial determinations may be 
reviewed by us, but they are not subject to the administrative review 
process as provided by Sec. Sec.  418.1310 through 418.1330 and they 
are not subject to judicial review. These actions include, but are not 
limited to, our dismissal of a request for reconsideration as described 
in Sec.  418.1335 and our dismissal of a request for a new initial 
determination as described in Sec.  418.1320(c).


Sec.  418.1305  How will we notify you and what information will we 
provide about our initial determination?

    (a) We will mail a written notice of all initial determinations to 
you. The notice of the initial determination will state the important 
facts and give the reasons for our conclusions. Generally, we will not 
send a notice if your income-related monthly adjustment amount stops 
because of your death.
    (b) The written notice that we send will tell you:
    (1) What our initial determination is;
    (2) The reason for our determination;
    (3) The effect of the initial determination; and
    (4) Your right to a reconsideration or a new initial determination.


Sec.  418.1310  What is the effect of an initial determination?

    An initial determination is binding unless you request a 
reconsideration within the time period described in Sec. Sec.  404.909 
and 404.911 of this chapter or we revise the initial determination or 
issue a new initial determination.


Sec.  418.1315  When may you request a reconsideration?

    If you are dissatisfied with our initial determination about your 
income-related monthly adjustment amount, you may request that we 
reconsider it. In addition, a person who shows in writing that his or 
her rights may be adversely affected by the initial determination may 
request a reconsideration. When you request a reconsideration, we will 
use the rules in

[[Page 10939]]

Sec. Sec.  404.907 through 404.922 of this chapter. If you request a 
reconsideration solely because you believe that the information that 
IRS gave us is incorrect, we will dismiss your request for 
reconsideration and notify you that you may contact IRS as explained in 
Sec.  418.1335.


Sec.  418.1320  When may you request that we make a new initial 
determination?

    (a) You may request that we make a new initial determination in the 
following circumstances:
    (1) You provide a copy of your filed Federal income tax return for 
the tax year 2 years prior to the effective year when IRS has provided 
information for the tax year 3 years prior to the effective year. You 
may request a new initial determination from the date you receive a 
notice from us regarding your income-related monthly adjustment amount 
until the end of the effective year, with one exception. If you receive 
the notice during the last three months of a calendar year, you may 
request a new initial determination from the date you receive the 
notice until March 31 of the following year. We will follow the rules 
and procedures in Sec.  418.1120(b) and Sec.  418.1140(b) to make a new 
initial determination and any necessary retroactive adjustments back to 
January 1 of the effective year, or the first month you were enrolled 
in Medicare Part B if later than January.
    (2) You provide a copy of an amended tax return filed with IRS, as 
defined in Sec.  418.1010(b)(1). We will use your amended tax return 
for the same tax year as the year used to determine your income-related 
monthly adjustment amount. You must request the new initial 
determination within the timeframe described in Sec.  418.1150.
    (3) You provide proof from IRS of a correction of your modified 
adjusted gross income information or Federal income tax filing status 
for the year we used. We will use your proof of the correction for the 
same tax year as the year used for your modified adjusted gross income 
provided by IRS, as explained in Sec.  418.1340. Within 60 days 
following the date you receive a notice from us regarding your income-
related monthly adjustment amount, you may request a new initial 
determination. We will use the rules and procedures in Sec.  418.1340.
    (4) You have a major life-changing event. You may request a new 
initial determination based on a major life-changing event when you 
meet all the requirements described in Sec.  418.1201. You may make 
such a request at any time during the calendar year in which you 
experience a significant reduction in your modified adjusted gross 
income caused by a major life-changing event. When you have a major 
life-changing event that occurs in the last 3 months of a calendar year 
and your modified adjusted gross income for that year is significantly 
reduced as a result of the event, you may request that we make a new 
initial determination based on your major life-changing event from the 
date of the event until March 31 of the next year. We will follow the 
rules in Sec.  418.1235 when we make a new initial determination based 
on your major life-changing event.
    (b) We will notify you of the new initial determination as 
described in Sec.  418.1305.
    (c) We will dismiss your request to make a new initial 
determination if it does not meet the conditions specified above. Our 
dismissal of your request for a new initial determination is not an 
initial determination subject to further administrative or judicial 
review.


Sec.  418.1325  What are the rules for the administrative review 
process?

    For the purpose of this subpart, in making initial determinations 
and reconsiderations, we will use the same rules for the administrative 
review process that we use for determinations and decisions about your 
rights regarding non-medical issues under title II of the Act, as 
described in subpart J of part 404 of this chapter. If you are 
dissatisfied with our reconsideration, you may request further review, 
including a hearing before an administrative law judge of the Office of 
Medicare Hearings and Appeals at HHS, review by the Medicare Appeals 
Council, and judicial review, consistent with HHS' regulations at 42 
CFR part 405, subpart I. A request for a new initial determination is 
not the same as a request for reconsideration or further administrative 
review.


Sec.  418.1330  Is reopening of a determination or decision ever 
appropriate?

    The rules in Sec. Sec.  404.987 through 404.991a of this chapter 
will apply to reopenings of determinations made by us. The rules in 42 
CFR 405.980 through 405.986 will apply to reopenings of decisions by an 
administrative law judge of the Office of Medicare Hearings and Appeals 
at HHS and by the Medicare Appeals Council.


Sec.  418.1335  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 IRS gave us is incorrect, we will dismiss your 
request for a reconsideration and notify you to obtain proof of a 
correction from IRS and request a new initial determination (Sec.  
418.1340). Our dismissal of your request for reconsideration is not an 
initial determination subject to further administrative or judicial 
review.


Sec.  418.1340  What should you do if our initial determination is 
based on modified adjusted gross income information you believe to be 
incorrect?

    If you believe that IRS or you provided incorrect modified adjusted 
gross income information to us that we used to determine your income-
related monthly adjustment amount, you can request information from us 
on how to contact IRS regarding the information we used.
    (a) If IRS determines that the information it provided is not 
correct, IRS will provide you with documentation of the error, such as 
a copy of your Federal income tax return. If you would like us to use 
the revised or corrected information to determine your income-related 
monthly adjustment amount, you will need to request that we use that 
information and provide us with the IRS documentation confirming the 
error. We will make any necessary retroactive corrections as defined in 
Sec.  418.1120 to your income-related monthly adjustment amount.
    (b) If you provided information to us about your modified adjusted 
gross income that we used to determine your income-related monthly 
adjustment amount, and that information is not correct, you may provide 
revised or corrected information. We will use the revised or corrected 
information if it reduces or eliminates your income-related monthly 
adjustment amount. We will make any necessary retroactive corrections 
as described in Sec.  418.1120 to your income-related monthly 
adjustment amount. If you are providing corrected information about a 
more recent tax year's modified adjusted gross income that we used due 
to your major life-changing event, as described in Sec.  418.1245, we 
will use the rules in Sec.  418.1250 to determine how it will affect 
your income-related monthly adjustment amount.

[FR Doc. 06-2075 Filed 3-2-06; 8:45 am]
BILLING CODE 4191-02-P