[Federal Register Volume 73, Number 125 (Friday, June 27, 2008)]
[Rules and Regulations]
[Pages 36463-36469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-14040]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 406, 407, and 408

[CMS-4129-F]
RIN 0938-AO77


Medicare Program; Special Enrollment Period and Medicare Premium 
Changes

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

ACTION: Final rule.

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SUMMARY: This final rule provides 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 final rule also codifies 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 the 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: Effective Date: These regulations are effective on August 26, 
2008.

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

SUPPLEMENTARY INFORMATION:

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

[[Page 36464]]

disabilities and those who have permanent kidney failure (end-stage 
renal disease).
    Medicare Parts A and B are the subject of this final 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 aged enrollees. 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) of the Act 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 (DRA) (Pub. 
L. 109-171) 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 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.

[[Page 36465]]

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 a 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 will be 
used to establish four income-related monthly adjustment amounts that 
will 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 
2007 income ranges, as set forth in section 1839(i)(3)(C)(i) of the 
Act, started 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     Joint tax filers with       Premium
            income:                      income:            percentage
------------------------------------------------------------------------
Greater than $80,000 and less    Greater than $160,000                35
 than or equal to $100,000.       and less than or equal
                                  to $200,000.
Greater than $100,000 and less   Greater than $200,000                50
 than or equal to $150,000.       and less than or equal
                                  to $300,000.
Greater than $150,000 and less   Greater than $300,000                65
 than or equal to $200,000.       and less than or equal
                                  to $400,000.
Greater than $200,000..........  Greater than $400,000..              80
------------------------------------------------------------------------

    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 will 
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.
    In the October 27, 2006 Federal Register (71 FR 62923), SSA issued 
a final rule establishing regulations governing the determination of 
income-related monthly adjustment amounts. 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 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 SSA's October 27, 2006 final rule (71 FR 
62923).

II. Provisions of the Proposed Regulation and Analysis of and Responses 
to Public Comments

    We received four timely public comments in response to the Special 
Enrollment Period and Medicare Premium Changes proposed rule published 
in the September 28, 2007 Federal Register. In this section of the 
final rule, we address all comments received regarding the provisions 
of our proposed rule.
    We proposed 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). 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, which we have provided 
for in new Sec.  407.21. 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.
    Comment: Three commenters expressed concern that although Sec.  
406.25 of the September 2007 proposed rule tracks the language of 
section 5115 of the DRA, Sec.  407.21 is not worded exactly the same as 
Sec.  406.25 and could be interpreted as imposing different standards. 
Specifically, they believe that the requirements of Sec.  406.25 (``an 
individual [that] is serving as a volunteer outside the United States 
through a program that covers at least a 12-month period'') and the 
requirement of Sec.  407.21 (``if while serving as a volunteer outside 
of the United States the individual is in a program that covers a 12-
month period of service outside of the United States'') are two 
different standards.

[[Page 36466]]

    The commenters also note that there is a slight difference between 
the wordings in the preamble for these two sections. They believe that 
Sec.  406.25 and Sec.  407.21 should be substantively identical.
    Response: To ensure that the SEP standards are interpreted 
consistently, we are revising the regulation text of Sec.  406.25 and 
Sec.  407.21.
    In Sec.  406.33(a)(3), we proposed 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.'' We did not receive any public 
comment on this proposal and are adopting the provision with only a 
technical change, as discussed further in this section.
    In Sec.  406.33(a)(5) and (6), we proposed to exclude from the 
calculation of the premium surcharge those months the individual 
qualifies for the SEP described in Sec.  406.25(a). We did not receive 
any public comment on this proposal and are adopting the provision with 
technical changes, as discussed further in this section.
    We proposed 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.
    Comment: Two commenters noted that section 5115 of the DRA requires 
that volunteers serve in a program that covers at least a 12-month 
period, as opposed to requiring that their actual service outside the 
country last for at least 12 months. These commenters stated that, 
under rare, unforeseeable circumstances, a volunteer in a program that 
covers at least a 12-month period may be required to return to the 
United States in less than 12 months. They believe that these 
volunteers should qualify for the SEP provided by section 5115 of the 
DRA.
    Response: We agree and have revised Sec.  407.21 to clarify that 
the volunteer has to serve in a program that covers at least a 12-month 
period.
    In Sec.  408.20 (e)(3)(iii), we proposed to 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. We 
did not receive any public comment on this proposal and are adopting 
the provision as proposed.
    In Sec.  408.24(a)(10), we proposed to 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 also proposed to make 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). We did not receive any public 
comment on these proposals and are adopting the provisions as proposed.
    Finally, we proposed to add a new Sec.  408.28 to specify that, 
beginning January 1, 2007, Medicare beneficiaries will be informed 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. We did not receive any public comment on this proposal and 
are adopting the provision as proposed.
    After review and analysis of public comment, we are also making the 
following technical changes in this final rule:
     In Sec.  406.33(a)(3), the cross-reference ``Sec.  406.24 
of this part'' is revised to read ``Sec.  406.24 of this subpart''.
     In Sec.  406.33(a)(5), the cross-reference ``Sec.  406.25 
of this subpart'' is revised to read ``for a SEP under 406.25(a) of 
this subpart''.
     In Sec.  406.33(a)(6), the cross-reference ``Sec.  
406.25(b) of this part'' is revised to read ``Sec.  406.25(b) of this 
subpart''.
     In Sec.  407.21(b), the cross-reference ``paragraph (b) of 
this section'' is revised to read ``paragraph (a) of this section''.
    Lastly, we are making a technical change to the section heading for 
Sec.  406.24 to clarify that the special enrollment period relates to 
coverage under group health plans.

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 (ICRs).

A. ICRs Related to Special Enrollment Period for Volunteers Outside 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)(1) and (2) state that an 
individual volunteer must demonstrate that his or her volunteer service 
is through a program that covers at least a 12-month period and 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 verifying that the volunteer was in a 12-month program 
and 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 1,500 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) 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 1,500 individuals will be 
subject to this requirement on a yearly basis. The total

[[Page 36467]]

estimated burden is 375 annual burden hours.

B. ICRs Related to 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) Serve as a volunteer in a program that covers at least a 12-
month period of service; (2) be a 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) be able to 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.
    The burden associated with the requirements in Sec.  407.21(a)(1) 
and (2) is the time and effort associated with verifying that the 
volunteer was in a 12-month program, and demonstrating the tax-exempt 
status of the organization sponsoring the individual, and submitting 
the information to CMS. The burden associated with these requirements 
is discussed in detail in the explanation of the burden for Sec.  
406.25.
    The burden associated with the Sec.  407.21(a)(3) is the time and 
effort 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. The burden 
associated with this requirement is discussed in detail in the 
explanation of the burden for Sec.  406.25.

                          Table A.--Estimated Annual Reporting and Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
                                                                                    Burden per
     Regulation section(s)       OMB Control No.    Respondents      Responses       response      Total annual
                                                                                      (hours)     burden (hours)
----------------------------------------------------------------------------------------------------------------
Sec.   406.25(a)(1 and 2) and   0938-New........            1500            1500             .25             375
 Sec.   407.21(a)(1 and 2).
Sec.   406.25(a)(3) and Sec.    0938-New........            1500            1500             .25             375
 407.21(a)(3).
                               ---------------------------------------------------------------------------------
    Total.....................  ................  ..............  ..............  ..............             750
----------------------------------------------------------------------------------------------------------------

    We have submitted a copy of this final rule to OMB for its review 
of the information collection requirements contained in this section. 
In addition, we are seeking OMB approval for the aforementioned 
information collection requirements under a separate notice and comment 
process. These requirements are not final until they are approved by 
OMB.

IV. 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 1,500 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 in 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 604 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 final 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 (and subsequent final 
rule)

[[Page 36468]]

that imposes substantial direct requirement costs on State and local 
governments, preempts State law, or otherwise has Federalism 
implications. We have determined that this final 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.

0
For the reasons set forth in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR Chapter IV as follows:

PART 406--HOSPITAL INSURANCE ELIGIBILITY AND ENTITLEMENT

0
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

0
2. Section 406.24 is amended by revising the section heading to read as 
follows:


Sec.  406.24  Special enrollment period related to coverage under group 
health plans.

* * * * *

0
3. Section 406.25 is added to read as follows:


Sec.  406.25  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 that meets the following 
requirements:
    (1) The individual is serving as a volunteer outside of the United 
States in a program that covers at least a 12-month period.
    (2) The individual is in a program that is sponsored by an 
organization described in section 501(c)(3) of the Internal Revenue 
Code of 1986 and is exempt from taxation under section 501(a) of 
Internal Revenue Code of 1986.
    (3) The individual 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.
    (4) The individual--
    (i) At the time he or she first met the requirements of Sec.  
406.10 through 406.15 or Sec.  406.20(b), elected not to enroll in 
premium hospital insurance during the individual's initial enrollment 
period; or
    (ii) Terminated enrollment in premium hospital insurance during a 
month in which the individual met the requirements of this section for 
a SEP.
    (b) Duration of SEP. The SEP is the 6-month period beginning on the 
first day of the month that includes the date that the individual no 
longer meets the requirements of paragraph (a) of this section.
    (c) Effective date of coverage. Coverage under a SEP authorized by 
this section begins on the first day of the month following the month 
in which the individual enrolls.

0
4. Section 406.33 is amended by--
0
A. Revising paragraph (a)(3).
0
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 subpart, 
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 requirements for a SEP under Sec.  
406.25(a) of this subpart.
    (6) Any months during the 6-month SEP described in Sec.  406.25(b) 
of this subpart during which premium hospital insurance coverage is in 
effect.
* * * * *

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

0
5. 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

0
6. 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 SMI when first eligible, or who terminates 
SMI enrollment, if the individual meets the following requirements:
    (1) The individual is serving as a volunteer outside of the United 
States in a program that covers at least a 12-month period.
    (2) The individual is in a program that is sponsored by an 
organization described in section 501(c)(3) of the Internal Revenue 
Code of 1986 and is exempt from taxation under section 501(a) of the 
Internal Revenue Code of 1986.
    (3) The individual demonstrates that he or she has health insurance 
that covers medical services that the individual receives outside of 
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 that includes the date that the individual no 
longer satisfies the provisions of paragraph (a) of this section.
    (c) Effective date of coverage. Coverage under a SEP authorized by 
this section, begins on the first day of the month following the month 
in which the individual enrolls.

PART 408--PREMIUMS FOR SUPPLEMENTARY MEDICAL INSURANCE

0
7. 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

0
8. 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.
* * * * *

0
9. Section 408.24 is amended by--
0
A. Adding paragraph (a)(10).
0
B. Revising paragraph (b)(2)(i).
    The addition and revision read as follows:

[[Page 36469]]

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 Part B (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) of this section; 
and
* * * * *

0
10. 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 
(SMI) 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.

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

    Dated: January 31, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: April 7, 2008.
Michael O. Leavitt,
Secretary.
[FR Doc. E8-14040 Filed 6-26-08; 8:45 am]
BILLING CODE 4120-01-P