[Federal Register Volume 72, Number 188 (Friday, September 28, 2007)]
[Proposed Rules]
[Pages 55152-55157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-18467]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 406, 407, and 408

[CMS-4129-P]
RIN 0938-A077


Medicare Program; Special Enrollment Period and Medicare Premium 
Changes

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would provide a special enrollment period 
(SEP) for Medicare Part B and premium Part A for certain individuals 
who are sponsored by prescribed organizations as volunteers outside of 
the United States and who have health insurance that covers them while 
outside the United States. Under the SEP provision, qualifying 
volunteers can delay enrollment in Part B and premium Part A, or 
terminate such coverage, for the period of service outside of the 
United States and reenroll without incurring a premium surcharge for 
late enrollment or reenrollment.
    This proposed rule would also codify provisions that require 
certain beneficiaries to pay an income-related monthly adjustment 
amount (IRMAA) in addition to the standard Medicare Part B premium, 
plus any applicable increase for late enrollment or reenrollment. The 
income-related monthly adjustment amount is to be paid by beneficiaries 
who have a modified adjusted gross income that exceeds certain 
threshold amounts. It also represents the amount of decreases in 
Medicare Part B premium subsidy, that is, the amount of the Federal 
government's contribution to the Federal Supplementary Medicare 
Insurance (SMI) Trust Fund.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on November 27, 
2007.

ADDRESSES: In commenting, please refer to file code CMS-4129-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (no duplicates, 
please):
    1. Electronically. You may submit electronic comments on specific 
issues in this regulation to http://www.cms.hhs.gov/eRulemaking. Click 
on the link ``Submit electronic comments on CMS regulations with an 
open comment period.'' (Attachments should be in Microsoft Word, 
WordPerfect, or Excel; however, we prefer Microsoft Word.)
    2. By regular mail. You may mail written comments (one original and 
two copies) to the following address ONLY: Centers for Medicare & 
Medicaid Services, Department of Health and Human Services, Attention: 
CMS-4129-P, P.O. Box 8017, Baltimore, MD 21244-8017.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments (one 
original and two copies) to the following address ONLY: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-4129-P, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments (one original and two copies) before the 
close of the comment period to one of the following addresses. If you 
intend to deliver your comments to the Baltimore address, please call 
telephone number (410) 786-7195 in advance to schedule your arrival 
with one of our staff members. Room 445-G, Hubert H. Humphrey Building, 
200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    (Because access to the interior of the HHH Building is not readily 
available to persons without Federal government identification, 
commenters are encouraged to leave their comments in the CMS drop slots 
located in the main lobby of the building. A stamp-in clock is 
available for persons wishing to retain a proof of filing by stamping 
in and retaining an extra copy of the comments being filed.)
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    Submission of comments on paperwork requirements. You may

[[Page 55153]]

submit comments on this document's paperwork requirements by mailing 
your comments to the addresses provided at the end of the ``Collection 
of Information Requirements'' section in this document.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Sam DellaVecchia, (410) 786-4481. 
Denise Cox, (410) 786-3195.

SUPPLEMENTARY INFORMATION:
    Submitting Comments: We welcome comments from the public on all 
issues set forth in this rule to assist us in fully considering issues 
and developing policies. You can assist us by referencing the file code 
CMS-4129-P and the specific ``issue identifier'' that precedes the 
section on which you choose to comment.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.cms.hhs.gov/eRulemaking. Click on the link ``Electronic Comments on 
CMS Regulations'' on that Web site to view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

I. Background

A. General

    Medicare is a Federal health insurance program that helps millions 
of Americans pay for health care. Beneficiaries include eligible 
individuals age 65 or older and certain people younger than age 65 who 
also qualify to receive Medicare. These individuals include those who 
have disabilities and those who have permanent kidney failure (end 
stage renal disease).
    Medicare Parts A and B are the subject of this proposed rule. 
Hospital insurance (Part A) helps to pay for inpatient care in 
hospitals, skilled nursing facilities, as well as home health care and 
hospice care. Part B or supplementary medical insurance (SMI) helps to 
pay for physicians' services, outpatient hospital services, durable 
medical equipment, and a number of other medical services and supplies 
that are not covered under Part A.
    Part A is financed primarily through compulsory payroll taxes under 
the Federal Insurance Contributions Act (``FICA''). Individuals age 65 
or over who are entitled to receive Social Security or railroad 
retirement benefits, or who are eligible for Social Security benefits 
and have filed an application for hospital insurance, are entitled to 
receive Part A benefits without paying a monthly premium. However, 
individuals who do not qualify for premium-free Part A, may voluntarily 
enroll in Part A but are required to pay a monthly premium. These 
individuals generally include those who have not worked 10 years in 
Medicare-covered employment or are not the spouse, divorced spouse or 
widow(er) of an individual who has worked 10 years in Medicare-covered 
employment. In addition, they must meet the following requirements: (1) 
Be at least age 65; (2) a resident of the United States; (3) a United 
States citizen or an alien who has been lawfully admitted for permanent 
residence and who has resided continuously in the United States for the 
5 year period immediately preceding the month of enrollment; (4) not 
otherwise eligible to receive Part A benefits without having to pay a 
premium; and (5) entitled to Part B or are eligible and have enrolled.
    Enrollment in Part B is open to all persons who are entitled to 
Part A benefits, as well as to persons who are not entitled to Part A 
benefits provided certain requirements are satisfied. Part B is 
financed primarily through premiums paid by or on behalf of 
beneficiaries, along with transfers made from the General Fund of the 
Treasury. Section 1839(a) of the Social Security Act (the Act) requires 
the Secretary of Health and Human Services to determine the Medicare 
Part B standard monthly premium amount annually. Currently, the 
standard monthly premium represents approximately 25 percent of the 
estimated total Part B program cost for each aged enrollee. The 
remaining 75 percent of the total estimated cost is subsidized by the 
Federal government through transfers to the Federal SMI Trust Fund from 
the General Fund of the Treasury.
    Individuals who do not enroll in Part B or premium Part A when 
first eligible or who enroll and later terminate their coverage may 
only enroll during the general enrollment period, which is January 
through March of each year, unless an exception applies. The coverage 
will be effective the following July 1. Under section 1839(b) of the 
Act, individuals who delay enrolling in premium Part A or Part B for 12 
or more months must pay a premium surcharge.

B. General Enrollment Period Exceptions

1. Special Enrollment Period (SEP)
    Currently, section 1837(i) provides a special enrollment period 
(SEP) for individuals age 65 or over who are working or who are the 
spouses of working individuals who are covered under a group health 
plan (GHP). For disabled individuals, who are under age 65, the SEP 
applies if the individual is covered by a GHP by reason of the current 
employment status of the individual or the individual's spouse, or if 
the individual is covered by a large group health plan (LGHP) by reason 
of the current employment status of the individual or a member of the 
individual's family. In this type of situation, enrollment in Part B 
can take place anytime the individual is covered under the GHP or LGHP 
based on current employment status or during the 8-month period that 
begins the first full month after the GHP or LGHP coverage ends. 
Because section 1818(c) of the Act provides that the enrollment 
provisions in section 1837 (except subsection f thereof) apply to 
persons authorized to enroll in premium Part A, we have extended this 
SEP to premium Part A enrollments.
2. Transfer Enrollment Period (TEP)
    Another exception is the transfer enrollment period (TEP) for 
enrollment in premium Part A. The TEP is for individuals age 65 or 
older who are otherwise eligible to enroll in premium Part A; are 
enrolled in a plan with an organization listed in section 1876 of the 
Act; and whose coverage under the plan is terminated for any reason. 
Here, an individual may enroll in premium Part A beginning any month 
that the individual is enrolled in the plan, and ending with the last 
day of the 8-month period following the last month in which the 
individual is no longer enrolled in the plan.
3. Statutory Changes
    Section 5115(a)(2) of the Deficit Reduction Act of 2005 (Pub. L. 
109-171) (DRA) amended section 1837 of the Act to add a new subsection 
(k), which provides a SEP for certain international volunteers. 
Beginning January 1, 2007, a SEP for Part B is provided to qualifying 
international volunteers who are eligible

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to enroll in Part B because they meet the requirements in section 
1836(1) or (2) of the Act, but who do not enroll in Part B during the 
initial enrollment period or who terminate enrollment during a month in 
which they qualify as an international volunteer. Enrollment can take 
place during the 6-month period beginning on the first day of the month 
which includes the date the individual no longer qualifies under this 
provision. Coverage for an individual who enrolls during a SEP in 
accordance with this provision begins on the first day of the month 
following the month in which the individual enrolls.
    Under new section 1837(k)(3) of the Act, an individual qualifies as 
an international volunteer if he or she is serving in a program outside 
of the United States that covers at least a 12-month period, and that 
is sponsored by an organization described in section 501(c)(3) of the 
Internal Revenue Code of 1986 (the Code) and exempt from taxation under 
section 501(a) of the same Code. The individual must also have health 
insurance coverage to cover medical services while serving overseas in 
the program. Specifically, qualifying organizations under section 
501(c)(3) of the Code that are exempt from taxation under section 
501(a) of the Code are ``corporations, and any community chest, fund, 
or foundation, organized and operated exclusively for religious, 
charitable, scientific, testing for public safety, literary, or 
educational purposes, or to foster national or international amateur 
sports competition (but only if no part of its activities involve the 
provision of athletic facilities or equipment), or for the prevention 
of cruelty to children or animals * * *''. Furthermore, to qualify for 
this exemption, no part of the net earnings of the organization can 
inure to the benefit of any private shareholder or individual and no 
substantial part of the activities can be used for propaganda, or 
otherwise attempt to influence legislation (except as otherwise 
provided in section 510(h) of the Code) or participate or intervene 
(including the publishing or distributing of statements) in political 
campaigns on behalf of (or in opposition to) any candidate for public 
office.

C. Income-Related Monthly Adjustment Amount under Medicare Part B

    Section 811 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173) amends section 1839 
of the Act and establishes a Medicare Part B premium subsidy reduction 
referred to as the ``Income-Related Monthly Adjustment Amount'' 
(IRMAA). Section 1839(i) of the Act requires that an income-related 
monthly adjustment amount be added to beneficiary's Part B premium if 
his or her modified adjusted gross income exceeds the established 
threshold amounts. The IRMAA reduces the amount that the beneficiary's 
premium is subsidized by the Federal government. All beneficiaries will 
continue to receive some subsidy of their premium.
    Section 1839(i) of the Act establishes a sliding scale that we 
would use to establish four income-related monthly adjustment amounts 
that would increase a beneficiary's Medicare Part B premium by specific 
percentages. If a beneficiary's modified adjusted gross income is 
greater than the statutory threshold amounts, the beneficiary will pay 
a larger portion of the estimated total cost of Part B coverage. The 
income ranges, as set forth in section 1839(i)(3)(C)(i) of the Act, 
start at $80,000 for a beneficiary filing an individual tax return, and 
$160,000 for a beneficiary filing a joint income tax return, and are 
listed in the following table:

------------------------------------------------------------------------
Individual tax filers with income:    Joint tax filers        Premium
                                        with income:        percentage
------------------------------------------------------------------------
Greater than $80,000 and less than  Greater than                      35
 or equal to $100,000.               $160,000 and less
                                     than or equal to
                                     $200,000.
Greater than $100,000 and less      Greater than                      50
 than or equal to $150,000.          $200,000 and less
                                     than or equal to
                                     $300,000.
Greater than $150,000 and less      Greater than                      65
 than or equal to $200,000.          $300,000 and less
                                     than or equal to
                                     $400,000.
Greater than $200,000.............  Greater than                      80
                                     $400,000.
------------------------------------------------------------------------

    In calendar year (CY) 2007, individual tax filers with income less 
than or equal to $80,000 and joint tax filers with income less than or 
equal to $160,000 will continue to pay the standard premium which 
represents roughly 25 percent of the estimated total Part B program 
costs. As specified in section 1839(i)(5) of the Act, each dollar 
amount in this table would be adjusted annually based on the Consumer 
Price Index.
    Section 811 of the MMA also provided for a 5-year phase-in of the 
Medicare Part B premium subsidy reduction. However, section 1839(i) was 
subsequently amended by section 5111 of the DRA to provide for a 3-year 
phase-in period. Therefore, the percentages presented in this table 
reflect the Part B premium percentages that certain beneficiaries would 
pay once IRMAA is fully phased-in.
    The ``hold-harmless'' provision in section 1839(f) of the Act 
provides for a reduction to the Part B premium for beneficiaries whose 
Social Security [or Railroad Board (RRB) annuity] cost of living 
adjustments (COLAs) are not sufficient to cover the Part B premium 
increase. If in a given year, the increase in the Part B premium would 
cause an individual's Social Security or RRB check to be less than it 
was the year before, the premium is reduced to ensure that the amount 
of the individual's Social Security benefit (or RRB annuity) stays the 
same. To be held harmless, a beneficiary must have had the Part B 
premium deducted from both the December check of the prior year and the 
January check of the next year. Under section 1839(f) of the Act, the 
``hold-harmless'' provision does not apply to beneficiaries who are 
required to pay an IRMAA based on their modified adjusted gross income. 
These beneficiaries must pay the full Medicare Part B standard monthly 
premium, plus any applicable penalty for late enrollment or 
reenrollment, plus the income-related monthly adjustment amount.
    Section 702(a)(5) of the Act allows SSA 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 SSA with additional 
specific authorization to make rules and regulations to determine which 
beneficiaries are required to pay the different income-related monthly 
adjustment amounts.
    On October 27, 2006, SSA issued a final rule implementing 
regulations governing SSA's determination of income-related monthly 
adjustment amounts (71 FR 62923). This final rule explains: (1) The 
statutory requirement to implement an income-related adjustment to the 
Part B premium subsidy; (2) the information that would be used to 
determine whether a beneficiary must pay an income-related monthly 
adjusted amount and the amount of any adjustment; (3) when SSA will 
consider a major life-changing event that results in a significant 
reduction in a beneficiary's modified

[[Page 55155]]

adjusted gross income; and (4) how a beneficiary can appeal SSA's 
determination about the beneficiary's income-related monthly adjustment 
amount. For a more detailed discussion see the October 27, 2006 SSA 
final rule (71 FR 62923).

II. Provisions of the Proposed Rule

    We are proposing to add a new Sec.  406.25, which would allow 
certain individuals who are sponsored by prescribed organizations as 
volunteers outside of the United States and have health care insurance 
to qualify for a SEP for premium hospital insurance (Part A) special 
enrollment period. We recognize that section 5115 of the DRA, in 
amending section 1839(b) of the Act, explicitly provides only for a SEP 
for Part B. However, since section 1818(c) of the Act applies all of 
the provisions of section 1837 of the Act (except subsection (f) 
thereof) to persons authorized to enroll under section 1818 of the Act, 
we believe that the SEP provided in section 5115 of the DRA also 
applies to enrollment in premium Part A.
    In Sec.  406.33(a)(3), we propose to make a technical correction by 
removing an incorrect phrase ``the 7-month special enrollment period 
under Sec.  406.21(e)'' and replacing it with the phrase ``the special 
enrollment period under Sec.  406.24.''
    In Sec.  406.33(a)(5) and (6), we propose to exclude from the 
calculation of the premium surcharge those months the individual 
qualifies for the SEP described in Sec.  406.25(a).
    We are proposing to add a new Sec.  407.21, which implements 
section 5115 of the DRA by allowing certain individuals who are 
sponsored by prescribed organizations as volunteers outside of the 
United States and have health care insurance that covers medical 
services while serving overseas to qualify for a Medicare Part B SEP.
    In proposed Sec.  408.20(e)(3)(iii), we would implement section 
811(b)(1)(c) of the MMA by excluding from the ``hold harmless'' 
provision (known as the ``nonstandard premium'') individuals who are 
required to pay the income-related monthly adjustment amount (IRMAA). 
Such beneficiaries must pay the full Medicare Part B standard monthly 
premium plus any applicable premium surcharge for late enrollment or 
re-enrollment, plus the income-related monthly adjustment amount.
    In proposed Sec.  408.24(a)(10), we would implement section 5115(a) 
of the DRA by excluding from the calculation of the premium surcharge 
those months the individual meets the requirements of proposed Sec.  
407.21. We are also making a conforming change in Sec.  408.24(b)(2)(i) 
of this section by revising the cross reference to include the new 
paragraph Sec.  408.24(a)(10).
    Finally, we propose to add a new Sec.  408.28, to specify that, 
beginning January 1, 2007, we would inform Medicare beneficiaries that 
they may be required to pay an income-related monthly adjustment amount 
in addition to the standard Part B premium, plus any applicable 
increase for late enrollment or reenrollment, if their modified 
adjusted gross income exceeds the threshold limits specified in 20 CFR 
418.1115.

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements.

Special Enrollment Period for Volunteers Outside of the United States 
(Sec.  406.25)

    Section 406.25 outlines the requirements that an individual 
volunteer must meet to qualify for a SEP. A qualifying individual can 
enroll or reenroll without incurring a surcharge for a late enrollment 
or reenrollment. Specifically, Sec.  406.25(a)(3)(i) states that an 
individual volunteer must demonstrate that his or her period of service 
is sponsored by an organization described in section 501(c)(3) of the 
Internal Revenue Code of 1986 and exempt from taxation under section 
501(a) of the Internal Revenue Code.
    The burden associated with this requirement is the time and effort 
associated with demonstrating the tax-exempt status of the organization 
sponsoring the individual. The estimated burden associated with this 
requirement is 15 minutes per individual. We estimate that 1500 
individuals will be subject to this requirement on a yearly basis for a 
total annual burden of 375 burden hours.
    In addition, Sec.  406.25(a)(3)(ii) requires that an individual 
demonstrate that he or she has health insurance that covers medical 
services received outside of the United States during his or her period 
of service. The burden associated with this requirement is the time and 
effort associated with demonstrating possession of health insurance 
coverage that covers the medical services received outside of the 
United States. We estimate the burden for verifying coverage to be 15 
minutes per individual; we also estimate that 1500 individuals will be 
subject to this requirement on a yearly basis. The total estimated 
burden is 375 annual burden hours.

Special Enrollment Period for Volunteers Outside the United States 
(Sec.  407.21)

    Section 407.21 addresses the provision of a SEP for an individual 
who elects not to enroll or to be deemed enrolled in SMI when first 
eligible and an individual who terminates SMI enrollment. To be 
eligible for the SEP, the individual must meet the criteria outlined in 
the regulations text. As stated in Sec.  407.21(a), the individual 
must: (1) Volunteer in a program for a 12-month or longer period of 
service outside of the United States; (2) volunteer in a program 
sponsored by an organization described in section 501(c)(3) of the 
Internal Revenue Code of 1986 and exempt from taxation under 501(a) of 
such Code; and (3) demonstrate that he or she had health insurance 
coverage that covers medical services received outside of the United 
States during his or her period of service, respectively.
    The burden associated with the introductory text to Sec.  
407.21(a), as well as Sec.  407.21(a)(1) and (a)(2), is the time and 
effort associated with verifying the individual's volunteer period of 
service, verifying the tax-exempt status of the organization sponsoring 
the individual, and submitting the information to CMS. The estimated 
burden associated with these requirements is 15 minutes per individual. 
We estimate that 1500 individuals will be required to verify their 
volunteer service. The total annual burden associated with this 
requirement is 375 burden hours.
    The burden associated with the Sec.  407.21(a)(3) is the time and 
effort

[[Page 55156]]

associated with an individual demonstrating that he or she has health 
insurance that covers medical services received outside of the United 
States during his or her period of service. We estimate the burden for 
verifying coverage to be 15 minutes per individual; we also estimate 
that 1500 individuals will be subject to this requirement on a yearly 
basis. The total estimated burden is 375 annual burden hours.
    We have submitted a copy of this proposed rule to OMB for its 
review of the information collection requirements contained in this 
section. These requirements are not final until they are approved by 
OMB.
    If you comment on these information collection and recordkeeping 
requirements, please mail copies directly to the following:

Centers for Medicare & Medicaid Services, Office of Strategic 
Operations and Regulatory Affairs, Regulations Development Group, Attn: 
William N. Parham III, CMS-4129-P, Room C4-26-05, 7500 Security 
Boulevard, Baltimore, MD 21244-1850; and
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503, Attn: Carolyn Lovett, CMS Desk Officer, CMS-4129-P, [email protected]. Fax (202) 395-6974.

IV. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

V. Regulatory Impact Statement

    We have examined the impact of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). We do not 
anticipate that there will be more than 1500 beneficiaries 
(international volunteers) at any one time who will qualify for a SEP. 
To qualify under this SEP, the Medicare beneficiary must have elected 
not to enroll in Part B or premium Part A during the initial enrollment 
period, or terminated enrollment, because the individual was serving as 
a volunteer outside the United States. In addition, the individual must 
have served as a volunteer outside of the United States through a 
program that covers at least a 12-month period, and that is sponsored 
by an organization described in section 501(C)(3) of the Internal 
Revenue Code of 1986 and exempt from taxation under section 501(a) of 
that Code, and must have health care insurance coverage that covers 
medical services while serving overseas in the program. It is for this 
reason, that we anticipate that the overall expenditure for this 
provision of the Medicare program projected over a 5-year period would 
be negligible. In addition, this rule only codifies the income-related 
monthly adjustment amount provision of MMA. It is for these reasons 
that this rule does not reach the economic threshold and thus is not 
considered a major rule.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
$6 million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity. We are not preparing an 
analysis for the RFA because we have determined that this rule will not 
have a significant economic impact on a substantial number of small 
entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. We are not preparing an 
analysis for section 1102(b) of the Act, because we have determined 
that this proposed rule will not have a significant impact on the 
operations of a substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. That threshold 
level is currently approximately $120 million. This rule will have no 
consequential effect on State, local, or tribal governments or on the 
private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. We have determined that this proposed rule does not 
impose any costs on State or local governments, therefore the 
requirements of E.O. 13132 are not applicable.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 406

    Health facilities, Kidney diseases, Medicare.

42 CFR Part 407

    Medicare.

42 CFR Part 408

    Medicare.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services would amend 42 CFR Chapter IV as follows:

PART 406--HOSPITAL INSURANCE ELIGIBILITY AND ENTITLEMENT

    1. The authority citation for part 406 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

Subpart C--Premium Hospital Insurance

    2. Section 406.25 is added to read as follows:


Sec.  406.25  Special enrollment period for volunteers outside the 
United States.

    (a) General rule. An individual described in paragraph (a)(2) may 
use a SEP as defined in Sec.  406.24(a)(4) of this section if--

[[Page 55157]]

    (1) At the time the individual first met the requirements of Sec.  
406.10 through 406.15 or Sec.  406.20(b), the individual elected not to 
enroll in premium Part A during the individual's initial enrollment 
period; or
    (2) The individual terminated enrollment in premium hospital 
insurance during a month in which the individual was described in 
paragraph (a)(2) of this section.
    (3) For purposes of paragraphs (a)(1) and (a)(2) of this section, 
an individual--
    (i) Is serving as a volunteer outside of the United States through 
a program that covers at least a 12-month period and that is sponsored 
by an organization described in section 501(c)(3) of the Internal 
Revenue Code of 1986 and exempt from taxation under section 501(a) of 
such Code; and
    (ii) Can demonstrate that he or she has health insurance that 
covers medical services that the individual receives outside the United 
States while serving in the program.
    (b) Duration of SEP. The SEP is the 6-month period beginning on the 
first day of the month which includes the date that the individual no 
longer meets the description in paragraph (a)(2) of this section.
    (c) Effective date of coverage. If the individual enrolls in 
premium hospital insurance in accordance with a SEP authorized by this 
section, coverage begins on the first day of the month following the 
month in which the individual enrolls.
    3. Section 406.33 is amended by--
    A. Revising paragraph (a)(3).
    B. Adding paragraphs (a)(5) and (a)(6).
    The revision and additions read as follows:


Sec.  406.33  Determination of months to be counted for premium 
increase: Enrollment.

* * * * *
    (a) * * *
* * * * *
    (3) Any months during the SEP under Sec.  406.24 of this part, 
during which premium hospital insurance coverage is in effect.
* * * * *
    (5) For premiums due for months after December 2006, any months 
during which the individual met the provisions of Sec.  406.25(a) of 
this subpart.
    (6) Any months during the 6-month SEP described in Sec.  406.25(b) 
of this part during which premium hospital insurance coverage is in 
effect.

PART 407--SUPPLEMENTARY MEDICAL INSURANCE (SMI) ENROLLMENT AND 
ENTITLEMENT

    4. The authority citation for part 407 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

Subpart B--Individual Enrollment and Entitlement for SMI

    5. Section 407.21 is added to read as follows:


Sec.  407.21  Special enrollment period for volunteers outside the 
United States.

    (a) General rule. A SEP, as defined in Sec.  406.24(a)(4) of this 
subchapter, is provided for an individual who does not elect to enroll 
or to be deemed enrolled in Part B (SMI) when first eligible, or who 
terminates SMI enrollment, if while serving as a volunteer outside of 
the United States--
    (1) The individual is in a program that covers at least a 12-month 
period of service outside of the United States;
    (2) The program is sponsored by an organization described in 
section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from 
taxation under section 501(a) of such Code; and
    (3) The individual demonstrates that he or she has health insurance 
that covers medical services that the individual receives outside of 
the United States during his or her period of service.
    (b) Duration of SEP. The SEP is the 6-month period beginning on the 
first day of the month which includes the date that the individual no 
longer satisfies the provisions of paragraph (b) of this section.
    (c) Effective date of coverage. For individuals enrolling in an SEP 
under this section, coverage begins on the first day of the month 
following the month in which the individual enrolls.

PART 408--PREMIUMS FOR SUPPLEMENTARY MEDICAL INSURANCE

    6. The authority citation for part 408 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

Subpart B--Amount of Monthly Premiums

    7. Section 408.20 is amended by adding paragraph (e)(3)(iii) to 
read as follows:


Sec.  408.20  Monthly premiums.

* * * * *
    (e) * * *
    (3) * * *
    (iii) Beginning with CY 2007, a nonstandard premium may not be 
applied to individuals who are required to pay an income-related 
monthly adjustment amount described in Sec.  408.28 of this part.
* * * * *
    8. Section 408.24 is amended by--
    A. Adding paragraph (a)(10).
    B. Revising paragraph (b)(2)(i).
    The addition and revision read as follows:


Sec.  408.24  Individuals who enrolled or reenrolled before April 1, 
1981 or after September 30, 1981.

    (a) * * *
* * * * *
    (10) For premiums due for months beginning with January 1, 2007, 
the following:
    (i) Any months after December 2006 during which the individual met 
the conditions under Sec.  407.21(a) of this chapter.
    (ii) Any months of SMI coverage for which the individual enrolled 
during a special enrollment period as provided in Sec.  407.21(b) of 
this chapter.
    (b) * * *
    (2) * * *
    (i) Any of the periods specified in paragraph (a); and
* * * * *
    9. Section 408.28 is added to read as follows:


Sec.  408.28  Increased premiums due to the income-related monthly 
adjustment amount (IRMAA).

    Beginning January 1, 2007, Medicare beneficiaries must pay an 
income-related monthly adjustment amount in addition to the Part B 
standard monthly premium plus any applicable increase for late 
enrollment or reenrollment if the beneficiary's modified adjusted gross 
income exceeds the threshold amounts specified in 20 CFR 418.1115.

(Authority: Catalog of Federal Domestic Assistance Program No. 
93.773, Medicare--Hospital Insurance; and Program No. 93.774, 
Medicare--Supplementary Medical Insurance Program.)

    Dated: March 1 2007.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: June 4, 2007.
Michael O. Leavitt,
Secretary.

    Editorial Note: This document was received at the Office of the 
Federal Register on September 14, 2007.
 [FR Doc. E7-18467 Filed 9-27-07; 8:45 am]
BILLING CODE 4120-01-P