[Federal Register Volume 75, Number 234 (Tuesday, December 7, 2010)]
[Rules and Regulations]
[Pages 75884-75896]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30276]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 418

[Docket No. SSA-2010-0029]
RIN 0960-AH22


Regulations Regarding Income-Related Monthly Adjustment Amounts 
to Medicare Beneficiaries' Prescription Drug Coverage Premiums

AGENCY: Social Security Administration.

ACTION: Interim final rule with request for comments.

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SUMMARY: We are adding a new subpart to our regulations, which contains 
the rules we will apply to determine the income-related monthly 
adjustment amount for Medicare prescription drug coverage premiums. 
This new subpart implements changes made to the Social Security Act 
(Act) by the Affordable Care Act. These rules parallel the rules in 
subpart B of this part, which describes the rules we apply when we 
determine the income-related monthly adjustment amount for certain 
Medicare Part B (medical insurance) beneficiaries. These rules describe 
the new subpart; what information we will use to determine whether you 
will pay an income-related monthly adjustment amount and the amount of 
the adjustment when applicable; when we will consider a major life-
changing event that results in a significant reduction in your modified 
adjusted gross income; and how you can appeal our determination about 
your income-related monthly adjustment amount. These rules will allow 
us to implement the provisions of the Affordable Care Act on time that 
relate to the income-related monthly adjustment amount for Medicare 
prescription drug coverage premiums, when they go into effect on 
January 1, 2011.

DATES: Effective date: This interim final rule will be effective on 
December 7, 2010. Comment date: To ensure that your comments are 
considered, we must receive them no later than February 7, 2011.

ADDRESSES: You may submit comments by any one of three methods--
Internet, fax, or mail. Do not submit the same comments multiple times 
or by more than one method. Regardless of which method you choose, 
please state that your comments refer to Docket No. SSA-2010-0029 so 
that we may associate your comments with the correct regulation.
    Caution: You should be careful to include in your comments only 
information that you wish to make publicly available. We strongly urge 
you not to include in your comments any personal information, such as 
Social Security numbers or medical information.
    1. Internet: We strongly recommend that you submit your comments 
via the Internet. Please visit the Federal eRulemaking portal at http://www.regulations.gov. Use the Search function to find docket number 
SSA-2010-0029. The system will issue a tracking number to confirm your 
submission. You will not be able to view your comment immediately 
because we must post each comment manually. It may take up to a week 
for your comment to be viewable.
    2. Fax: Fax comments to (410) 966-2830.
    3. Mail: Mail your comments to the Office of Regulations, Social 
Security Administration, 107 Altmeyer Building, 6401 Security 
Boulevard, Baltimore, Maryland 21235-6401.
    Comments are available for public viewing on the Federal 
eRulemaking portal at http://www.regulations.gov or in person, during 
regular business hours, by arranging with the contact person identified 
below.

FOR FURTHER INFORMATION CONTACT: Craig Streett, Office of Income 
Security Programs, Social Security Administration, 2-R-24 Operations 
Building, 6401 Security Boulevard, Baltimore, MD 21235-6401, (410) 965-
9793. For information on eligibility or filing for benefits, call our 
national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or 
visit our Internet site, Social Security Online, at http://www.socialsecurity.gov.

SUPPLEMENTARY INFORMATION: 

[[Page 75885]]

Electronic Version

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

Background

    Medicare prescription drug coverage (also known as Medicare Part D) 
is a voluntary program that covers prescription drugs, as explained in 
42 CFR Part 423. These regulations cover participants in Medicare 
prescription drug coverage plans as defined in 42 CFR 423.4, including 
standalone Medicare prescription drug plans, Medicare Advantage plans 
with prescription drug coverage, Programs of All-Inclusive Care for the 
Elderly plans, and cost plans offering prescription drug coverage. We 
will refer to these plans collectively as Medicare prescription drug 
coverage plans.
    Beneficiaries enrolled in Medicare prescription drug coverage are 
responsible for deductibles, cost-sharing, and monthly premiums. Costs 
vary by plan. Beneficiaries with limited income and resources may 
qualify for ``Extra Help'' with their monthly premiums, deductibles, 
and cost-sharing.
    The Centers for Medicare & Medicaid Services (CMS) promulgates 
rules and regulations concerning the Medicare program. CMS sets the 
Medicare prescription drug coverage base beneficiary premium, which 
covers approximately 25.5 percent of the cost of the basic Medicare 
prescription drug coverage. The Federal Government subsidizes 
approximately 74.5 percent of the cost of this basic Medicare 
prescription drug coverage with contributions from the Medicare 
Prescription Drug Account in the Federal Supplementary Medical 
Insurance Trust Fund.
    In March 2010, Congress passed the Affordable Care Act, which 
establishes an income-related adjustment to Medicare prescription drug 
coverage premiums.\1\ The Affordable Care Act contains rules for 
determining when, based on income, a beneficiary's monthly premium for 
Medicare prescription drug coverage will include a monthly adjustment 
amount.\2\ The changes made to the Act by section 3308(a) of the 
Affordable Care Act are effective for months after December 2010. 
Beginning in January 2011, an estimated 1.05 million of the 
approximately 29.2 million beneficiaries enrolled in the Medicare 
prescription drug coverage program will be assessed an income-related 
monthly adjustment amount.
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    \1\ Public Law 111-148 Sec.  3308(a).
    \2\ Id.
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    Generally, beneficiaries who have a modified adjusted gross income 
above the threshold level in their most recently filed tax return 
(usually the tax year 2 years prior to the effective year of our 
determination) will pay an income-related monthly adjustment amount for 
their Medicare prescription drug coverage, resulting in these 
beneficiaries paying more of the cost of their Medicare prescription 
drug coverage. The income-related monthly adjustment amount applied is 
in addition to the Medicare Prescription drug coverage plan sponsor's 
monthly premium and any applicable premium increase for late enrollment 
or reenrollment. We are responsible for making any determination 
necessary to carry out the income-related increase in beneficiary 
premiums.

How This Will Affect You

    The phrase ``modified adjusted gross income'' has the same meaning 
given to that term in section 1839(i)(4)(A) of the Act.\3\ The phrase 
``modified adjusted gross income'' means your ``adjusted gross 
income,'' as defined in section 62 of the Internal Revenue Code of 
1986, plus certain other forms of income that may be excluded from 
adjusted gross income for the purpose of determining the amount of 
Federal income tax that you must pay.\4\
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    \3\ Sec.  1860D-13(a)(7)(C) of the Act.
    \4\ Sec.  1839(i)(4)(A) of the Act.
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    We determine the taxable year to use for purposes of determining 
your modified adjusted gross income.\5\ Your modified adjusted gross 
income is generally determined for the ``last taxable year beginning in 
the second calendar year proceeding the year involved.'' \6\ Thus, in 
general, we will use your modified adjusted gross income provided by 
the Internal Revenue Service (IRS) for the tax year 2 years prior to 
the effective year of the income-related monthly adjustment amount 
determination we make.
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    \5\ Sec.  1839(i)(4)(B), (C) of the Act; Sec.  1860D-13(a)(7)(C) 
of the Act.
    \6\ Sec.  1839(i)(4)(B) of the Act.
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    However, an exception allows us to use your modified adjusted gross 
income for the tax year 3 years prior to the effective year of the 
income-related monthly adjustment amount determination.\7\ In addition, 
there are certain circumstances in which we may use a more recent 
taxable year than the taxable year we would otherwise use to determine 
modified adjusted gross income when your income for the more recent 
year is significantly less than the income for the taxable year we 
normally would use. The situations that allow us to use data from a 
more recent taxable year are when you have experienced the death of 
your spouse, a marriage or divorce, or other major life-changing events 
that we specify in our regulations.\8\
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    \7\ Sec.  1839(i)(4)(B) of the Act.
    \8\ Sec.  1839(i)(4)(C) of the Act.
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    The payment of the full amount of the income-related monthly 
adjustment amount will begin in January 2011.\9\ If you are enrolled in 
Medicare prescription drug coverage prior to January 1, 2011, and you 
will be required to pay an income-related monthly adjustment amount in 
2011, we will notify you by sending you a letter at the end of 2010 
about the additional income-related monthly adjustment amount. If you 
receive Social Security monthly benefits, we will also send a letter 
explaining how the income-related monthly adjustment amount will affect 
the amount of those benefits. If you receive Railroad Retirement or 
Civil Service annuity payments, you will receive a letter from the 
agency that pays your annuity explaining how the income-related monthly 
adjustment amount will affect the amount of those benefits.
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    \9\ Sec.  1860D-13(a)(7)(A) of the Act.
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    If you enroll in Medicare prescription drug coverage after January 
1, 2011, your Medicare prescription drug coverage premium may not 
initially include an income-related monthly adjustment amount. If we 
subsequently determine that you must pay an income-related monthly 
adjustment amount for your Medicare prescription drug coverage, we will 
notify you shortly after you enroll in Medicare prescription drug 
coverage. You will be responsible for your income-related monthly 
adjustment amounts for those months after December 2010 for which you 
are enrolled in Medicare prescription drug coverage. If you are 
enrolled in Medicare prescription drug coverage during 2011 or after, 
we will notify you prior to the start of each year if you must pay an 
income-related monthly adjustment amount in that year and how much it 
will be.

How We Determine Your Income-Related Monthly Adjustment Amount

    The amount of your modified adjusted gross income for the 
applicable tax year will determine if you must pay an income-related 
monthly adjustment amount. The modified adjusted gross income threshold 
amount for 2011 through 2019 is $85,000 for individuals who designated 
a filing status on their

[[Page 75886]]

Federal income tax return of single, married filing separately, head of 
household, or qualifying widow(er) with dependent child; and the 
corresponding threshold is $170,000 for individuals who file a joint 
income tax return with their spouse.\10\ After 2019, these thresholds 
will resume adjustment for inflation as required by section 1839(i)(5) 
of the Act.
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    \10\ Section 1839(i)(2) of the Act.
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    We will ask the IRS to send us Federal income tax return 
information about your modified adjusted gross income for the tax year 
2 years before the effective year of our determination of whether an 
income-related monthly adjustment amount will apply. If modified 
adjusted gross income information is not available from the IRS for the 
tax year 2 years before the effective year of our determination, the 
IRS will send us modified adjusted gross income information for the tax 
year 3 years before the effective year, if it exceeds the threshold. 
The IRS will return modified adjusted gross income information only for 
those Medicare beneficiaries whose modified adjusted gross income 
exceeds the threshold for their income tax filing status.
    We will not ask the IRS for information about your modified 
adjusted gross income if we have determined that you are participating 
in the Medicare prescription drug coverage low-income subsidy program 
described in subpart D of this part, if you receive Supplemental 
Security Income payments under title XVI of the Act, or if CMS has 
determined that you are deemed eligible for a full Medicare 
prescription drug coverage subsidy under section 1860D-14(a)(3)(B)(v) 
of the Act, as further explained in 42 CFR 423.773(c)(1).
    We will use information for the tax year 3 years prior to the 
effective year of our determination to determine whether you must pay 
an income-related monthly adjustment amount only until we obtain 
information for the tax year 2 years prior to the effective year of our 
determination. When we use such information to make a determination, we 
will make retroactive corrections that will apply to all months that 
you paid an incorrect income-related monthly adjustment amount. If we 
use information from the IRS for the tax year 3 years before the 
effective year of our determination, you may request that we use 
information that you provide for the tax year 2 years before the 
effective year of our determination.
    In some cases, you may pay a higher premium based on your 
information from the tax year 2 years prior to the effective year of 
our determination. However, providing that information to us, rather 
than having us receive information later from the IRS, will help you 
avoid a retroactive correction. In order for us to make an initial 
determination based on such a request, you must provide a copy of your 
Federal income tax return for that year by providing us with either 
your retained copy of your Federal income tax return, a copy that you 
request from the IRS, or an IRS transcript of your return. If you 
provide your retained copy of your tax return, we will verify this 
information with the IRS.
    If we receive information from the IRS that shows that you had 
modified adjusted gross income that exceeded the established threshold 
for a tax year for which you did not file a tax return, we will make a 
determination about your income-related monthly adjustment amount for 
that year. We will apply the highest applicable percentage adjustment 
based on that information, as required by statute.\11\ Beginning in 
2011, if the IRS provides information to us to indicate a change in 
your modified adjusted gross income for a prior tax year, we will use 
this information to establish corrections for the appropriate effective 
years, regardless of when we receive such information.
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    \11\ Section 1839(i)(4)(B)(iii) of the Act.
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The Sliding Scale Formula and How It Applies to You

    CMS will use a sliding scale formula to establish the four income-
related monthly adjustment amounts annually beginning in 2011. The use 
of this sliding scale formula is prescribed in section 1839(i)(3) of 
the Act. CMS will provide each of the income-related monthly adjustment 
amounts to be used to SSA. The income-related monthly adjustment amount 
will be the adjustment from the approximately 25.5 percent base 
beneficiary premium multiplied by a specified percentage. The 
percentage used in the calculation changes as the amount of modified 
adjusted gross income increases within the ranges used to set the 
income-related monthly adjustment amount. We will use your modified 
adjusted gross income and your Federal income tax filing status (e.g., 
single, married filing jointly, married filing separately) to determine 
whether you must pay an income-related monthly adjustment amount, and 
if so, what your income-related monthly adjustment amount will be.
    The modified adjusted gross income ranges are contained in section 
1839(i)(3)(C) of the Act as adjusted by section 1839(i)(5) and by 
1839(i)(6), as amended by the Affordable Care Act. The range amounts 
for individuals who are married filing jointly are double the range 
amounts for single income tax filers. The IRS recognizes three 
additional filing statuses: head of household, qualifying widow(er) 
with dependent child, and married filing separately. If you file as a 
head of household, a qualifying widow(er) with a dependent child, or 
married filing separately, we will apply the modified adjusted gross 
income range applicable to individuals who file their Federal income 
tax return with a filing status of single.
    Individuals with a filing status of married, filing separately, who 
must pay an income-related monthly adjustment amount because their tax 
information reflects modified adjusted gross income under section 
1839(i)(3)(C)(iii) of the Act and who lived with their spouse at any 
time during the year, will pay either the third or fourth range of 
income-related monthly adjustment amount as described in section 
1839(i)(3)(C)(i) of the Act. Starting in 2010 for calendar year 2011, 
and annually thereafter for each following calendar year, CMS will 
publish the annual modified adjusted gross income ranges and income-
related monthly adjustment amounts that are associated with each range. 
We will use this published information to determine which amount 
applies to you based on your tax filing status in the tax year we are 
using to determine your income-related monthly adjustment amount.
    If you filed an amended tax return for the tax year we used to make 
a determination of your income-related monthly adjustment amount, you 
may request that we use your amended tax return for that year. You must 
provide us with proof that you filed an amended tax return with the 
IRS, including your retained copy of the amended tax return and a 
letter from the IRS verifying receipt of the return or an IRS 
transcript of your amended tax return.
    If you believe that the IRS provided incorrect modified adjusted 
gross income information and we used that information to determine your 
income-related monthly adjustment amount, you may request that we make 
a new income-related monthly adjustment amount determination. You must 
provide proof of the error in the IRS data and evidence of your actual 
modified adjusted gross income, such as a copy of the return that you 
obtain from the IRS. When we use information from your amended or 
corrected Federal income tax return to make a determination, we will 
make retroactive adjustments that will apply to all

[[Page 75887]]

months that you paid an incorrect income-related monthly adjustment 
amount.
    If you believe our determination that you must pay an income-
related monthly adjustment amount for your Medicare prescription drug 
coverage is incorrect because you do not have that coverage, you must 
contact CMS to get your records corrected. We will use the corrected 
information we receive from CMS to correct our records and make all 
necessary adjustments. We will initiate a retroactive refund after we 
correct our records.

Inflation Adjustment of the Income-Related Monthly Adjustment Amount

    The annual inflation adjustment of the thresholds and the modified 
adjusted gross income ranges used to determine whether you must pay an 
income-related monthly adjustment amount is temporarily set aside by 
section 3402 of the Affordable Care Act. From January 1, 2011 through 
December 31, 2019, the dollar amounts used for 2010 will be the 
thresholds used to determine if an income-related monthly adjustment 
amount will apply. The 2010 thresholds in effect until the end of 2019 
will be modified adjusted gross income of $170,000 for beneficiaries 
who file their Federal income taxes as married, filing jointly, and 
$85,000 for beneficiaries who file their Federal income taxes with any 
other filing status. CMS will publish the amounts within each range of 
income in the sliding scale adjusted for inflation each year. After 
2019, these thresholds will resume adjustment for inflation as required 
by section 1839(i)(5) of the Act.

Changes in Your Modified Adjusted Gross Income

    In consultation with the Secretary of the Treasury, we are required 
to establish procedures for determining your modified adjusted gross 
income for a tax year more recent than the information ordinarily 
provided by the IRS.\12\
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    \12\ Section 1839(i)(4)(C) of the Act.
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    The statute requires that we grant your request to use a more 
recent tax year to determine your income-related monthly adjustment 
amount only when all of the following conditions are met:
     You experience a major life-changing event;
     That major life-changing event results in a significant 
reduction in your modified adjusted gross income;
     You request that we use a more recent tax year's modified 
adjusted gross income; and
     You provide evidence of the event and the reduction in 
your modified adjusted gross income.\13\
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    \13\ Section 1839(i)(4)(C) of the Act.
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    These rules also contain the requirements that you must meet in 
order for us to use a more recent tax year's modified adjusted gross 
income to determine whether you must pay an income-related monthly 
adjustment amount and what your income-related monthly adjustment 
amount will be. These rules define qualifying major life-changing 
events and explain what constitutes a significant reduction in your 
modified adjusted gross income by reference to the rules we follow 
under subpart B of this part. We also specify the evidence we will 
require to establish major life-changing events and the resulting 
reduction in your modified adjusted gross income by reference to the 
rules we follow under subpart B of this part.
    Major life-changing events include marriage, divorce, and death of 
a spouse under section 1839(i)(4)(C)(ii)(II) of the Act. We have 
discretion to include in our regulations additional major life-changing 
events that would allow us to grant your request that we use 
information from a more recent tax year to determine your income-
related monthly adjustment amount. As noted above, these rules include 
explanation of the situations when we will determine that you have 
experienced a major life-changing event for purposes of our rules in 
subpart B of part 418. The following are the categories of qualifying 
major life-changing events that we currently recognize:
     Death of a spouse;
     Marriage;
     Marriage ended by divorce or annulment;
     Partial or full work stoppage;
     You or your spouse experiences a loss of income-producing 
property, provided the loss is not at the direction of you or your 
spouse (e.g., due to the sale or transfer of the property) and is not a 
result of the ordinary risk of investment. Examples of the type of 
property loss include, but are not limited to: loss of real property 
within a Presidentially or Gubernatorially-declared disaster area, 
destruction of livestock or crops by natural disaster or disease, loss 
from real property due to arson, or loss of investment property as a 
result of fraud or theft due to a criminal act by a third party;
     You or your spouse experiences a scheduled cessation, 
termination, or reorganization of an employer's pension plan;
     You or your spouse receives a settlement from an employer 
or former employer because of the employer's closure, bankruptcy, or 
reorganization.
    In these rules, we determine what constitutes a significant 
reduction in your income by reference to the rules we follow under 
section 418.1215. Under those rules, we define a significant reduction 
in your modified adjusted gross income as any change that results in a 
reduction or elimination of your income-related monthly adjustment 
amount. Therefore, a significant reduction in your modified adjusted 
gross income is any change that lowers your income below the threshold 
amount or lowers the modified adjusted gross income range in which your 
income falls. We may grant your request to use a more recent tax year's 
modified adjusted gross income to determine your income-related monthly 
adjustment amount only if you provide us with a copy of a filed Federal 
income tax return or equivalent document.\14\
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    \14\ Section 1839(i)(4)(C)(ii) of the Act.
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    When we make an income-related monthly adjustment amount 
determination based on your request due to a qualifying major life-
changing event, the determination will be effective generally on 
January 1 of the calendar year for which we make the determination. If 
you enrolled in Medicare prescription drug coverage after January 1 of 
the year for which we make an income-related monthly adjustment amount 
determination based on your request due to a major life-changing event, 
the determination will be effective the month your Medicare 
prescription drug coverage enrollment becomes effective.
    When we make an income-related monthly adjustment amount 
determination following a major life-changing event using your more 
recent tax-year's modified adjusted gross income, we will continue 
trying to get IRS data for that tax year. When we receive modified 
adjusted gross income information from the IRS for that tax year, we 
will use the information from the IRS to determine the correct income-
related monthly adjustment amount for the year or years for which we 
used information that you provided, and we will make retroactive 
corrections, if necessary. Retroactive corrections will apply to all 
months for which you paid an incorrect income-related monthly 
adjustment amount.

[[Page 75888]]

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

    We will determine whether you must pay an income-related monthly 
adjustment, and the amount of any adjustment, based on information we 
receive from the IRS or you. We will send you a notice of our initial 
determination of your income-related monthly adjustment amount and the 
basis for our determination. The notice will explain that, if you 
disagree with our determination, you may request that we reconsider it 
within 60 days after the date you receive notice of our initial 
determination. The notice will also explain that you may request a new 
initial determination, rather than a reconsideration, if you believe 
the information we used in our initial determination was correct, but 
you want us to use different information about your modified adjusted 
gross income. If you have Medicare Part B without Medicare prescription 
drug coverage, and you enroll later that same year in Medicare 
prescription drug coverage, we will apply our income-related monthly 
adjustment amount determination for Medicare Part B to determine your 
corresponding income-related monthly adjustment amount for your 
Medicare prescription drug coverage. When this subsequent action 
results in increased deductions and a change in the net amount of 
benefits payable, you will get a letter notifying you of the change in 
your benefits and information on your appeal rights.
    For purposes of this subpart, in making initial determinations and 
reconsiderations, we will use the rules for the administrative review 
process that we use for determinations of your rights regarding 
nonmedical issues under title II of the Act. However, in order to 
expedite the processing of requests for reconsideration under these 
rules, we may accept requests for reconsideration that are filed by 
electronic or other means that we determine to be appropriate, other 
than a request in writing, as our title II regulations provide.
    If you are dissatisfied with our reconsidered determination, you 
may request further review, including a hearing before an 
administrative law judge (ALJ) from the Office of Medicare Hearings and 
Appeals (OMHA) at the Department of Health and Human Services (HHS), 
review by the Medicare Appeals Council (MAC) in HHS, and judicial 
review, consistent with the CMS regulations at 42 CFR part 423.
    You may request that we use a modified adjusted gross income for a 
more recent tax year if you have had a major life-changing event that 
significantly reduces your income, or if the IRS has provided to us 
modified adjusted gross income information from 3 years prior to the 
premium effective year. You may also request that we make a new initial 
determination when you have amended your Federal income tax return or 
when you can furnish proof that the IRS has provided incorrect 
information about your modified adjusted gross income for the year that 
we used to determine your income-related monthly adjustment amount. 
These additional options do not affect your right to appeal an initial 
determination that we make that you must pay an income-related monthly 
adjustment amount, but allow you to choose an alternative or additional 
method to request that we use other information to make a new initial 
determination.

Explanation of the New Subpart

    We are adding a new subpart C, Medicare Prescription Drug Coverage 
Income-Related Monthly Adjustment Amount, to part 418 of our rules. 
Subpart C contains the rules that we will use to determine when you 
will be required to pay an income-related monthly adjustment amount in 
addition to your Medicare prescription drug coverage monthly premium 
plus any applicable premium increase for late enrollment or 
reenrollment. Following is a description of each section for subpart C.

Introduction, General Provisions, and Definitions

     Section 418.2001 describes what provisions subpart C 
contains, lists the groups of sections in the subpart, and the subject 
of each group.
     Section 418.2005 explains the purpose of the income-
related monthly adjustment amount and how we will administer the 
income-related monthly adjustment amount.
     Section 418.2010 contains definitions of terms used 
throughout this subpart.

Determination of the Income-Related Monthly Adjustment Amount

     Section 418.2101 explains what the income-related monthly 
adjustment amount is and when it is applied.
     Section 418.2105 defines the modified adjusted gross 
income thresholds and what the modified adjusted gross income threshold 
amounts will be in the years 2011-2019. It also describes how threshold 
amounts will change in later years.
     Section 418.2110 describes the effective date of our 
initial determination about the income-related monthly adjustment 
amount.
     Section 418.2112 describes how you will pay your income-
related monthly adjustment amount.
     Section 418.2115 defines modified adjusted gross income 
ranges and explains how we will use those ranges and your tax filing 
status to determine the amount of your income-related monthly 
adjustment amount when applicable, and what effect Federal income tax 
filing status has on the ranges.
     Section 418.2120 explains how we will determine your 
income-related monthly adjustment amount.
     Section 418.2125 explains how the income-related monthly 
adjustment amount will affect what you pay for Medicare prescription 
drug coverage.
     Section 418.2135 describes what modified adjusted gross 
income information we will use to determine your income-related monthly 
adjustment amount by reference to our rules in section 418.1135.
     Section 418.2140 describes what will happen if the 
modified adjusted gross income that we later receive from the IRS is 
different from the information that we previously used to make a 
determination of your income-related monthly adjustment amount by 
reference to our rules in section 418.1140.
     Section 418.2145 describes how we will determine the 
income-related monthly adjustment amount if the IRS does not provide 
your modified adjusted gross income information by reference to our 
rules in section 418.1145.
     Section 418.2150 describes when we will use a copy of your 
amended Federal income tax return filed with the IRS to determine the 
income-related monthly adjustment amount by reference to our rules in 
section 418.1150.

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

     Section 418.2201 explains when we will use modified 
adjusted gross income information for a more recent tax year to 
determine your income-related monthly adjustment amount by reference to 
our rules in section 418.1201.
     Section 418.2205 describes what is considered a major 
life-changing event that would justify using information from a more 
recent tax year by reference to our rules in section 418.1205.

[[Page 75889]]

     Section 418.2210 explains what is not considered a major 
life-changing event that would justify using information from a more 
recent tax year by reference to our rules in section 418.1210.
     Section 418.2215 explains what we consider a significant 
reduction in your income for the purpose of these rules by reference to 
our rules in section 418.1215.
     Section 418.2220 explains what we do not consider a 
significant reduction in your income for the purpose of these rules by 
reference to our rules in section 418.1220.
     Section 418.2225 explains which more recent tax years we 
may use to determine whether you must pay an income-related monthly 
adjustment amount and the amount of that adjustment by reference to our 
rules in section 418.1225.
     Section 418.2230 explains the effective date of our 
income-related monthly adjustment amount determination based on your 
request to use a more recent tax year by reference to our rules in 
section 418.1230.
     Section 418.2235 explains when we will stop using your 
modified adjusted gross income from a more recent tax year for income-
related monthly adjustment amount determinations by reference to our 
rules in section 418.1235.
     Section 418.2240 explains what you should do if your 
modified adjusted gross income for the more recent tax year changes by 
reference to our rules in section 418.1240.
     Section 418.2245 explains what will happen if you notify 
us of a change in your modified adjusted gross income for the more 
recent tax year.
     Section 418.2250 explains what evidence you will need to 
support your request for us to use a more recent tax year to determine 
your income-related monthly adjustment amount by reference to our rules 
in section 418.1250.
     Section 418.2255 describes what evidence of a major life-
changing event you will need to provide to support your request to use 
a more recent tax year by reference to our rules in section 418.1255.
     Section 418.2260 describes the types of evidence of a 
major life-changing event that we will not accept by reference to our 
rules in section 418.1260.
     Section 418.2265 describes what evidence of a significant 
reduction in your modified adjusted gross income you will need to 
provide to support your request to use a more recent tax year by 
reference to our rules in section 418.1265.
     Section 418.2270 explains what evidence we will not accept 
of a significant reduction in your modified adjusted gross income by 
reference to our rules in section 418.1270.

Determinations and the Administrative Review Process

     Section 418.2301 explains what is an initial determination 
regarding your income-related monthly adjustment, and provides examples 
of determinations that are initial determinations for the purposes of 
these rules by reference to our rules in section 418.1301.
     Section 418.2305 explains that administrative actions that 
are not initial determinations are not subject to the administrative 
review process by reference to our rules in section 418.1305.
     Section 418.2310 explains when you may request that we 
make a new initial determination by reference to our rules in section 
418.1310.
     Section 418.2315 explains how we will notify you when we 
make an initial determination, and what information the notice will 
contain by reference to our rules in section 418.1315.
     Section 418.2320 explains the effect of an initial 
determination.
     Section 418.2322 explains how a Medicare Part B income-
related monthly adjustment amount determination will apply to your 
Medicare prescription drug coverage.
     Section 418.2325 explains when you may request a 
reconsideration by reference to our rules in section 418.1325.
     Section 418.2330 explains what will happen if you request 
a reconsideration because you believe that the IRS information we used 
to make an initial determination about your income-related monthly 
adjustment amount is incorrect.
     Section 418.2332 explains what you can do if you believe 
that the CMS information we used is incorrect.
     Section 418.2335 explains what to do if you believe that 
we based our initial determination on incorrect modified adjusted gross 
income information by reference to our rules in section 418.1335.
     Section 418.2340 tells you the rules for the 
administrative review process by reference to our rules in section 
418.1340.
     Section 418.2345 tells you the rules we will use to decide 
if reopening a prior initial or reconsidered determination made by us 
is appropriate by reference to our rules in section 418.1345.
     Section 418.2350 explains that the HHS rules will apply 
for review of a reconsidered determination, an ALJ decision, or a 
decision by the MAC.
     Section 418.2355 explains that the rules for reopening a 
prior decision made by an ALJ of the OMHA or by the MAC will follow the 
HHS rules governing reopening.

Change to Medicare Part B Income-Related Monthly Adjustment Amounts

    We are also amending our rules on the Medicare Part B 
(supplementary medical insurance) income-related monthly adjustment 
amounts to add section 418.1322. In order to provide consistency with 
the rules at final section 418.2322, this new section explains that if 
we make an income-related monthly adjustment amount determination for 
you for the effective year for purposes of the Medicare prescription 
drug coverage program, we will apply that income-related monthly 
adjustment amount determination for purposes of determining your 
income-related monthly adjustment amount for Medicare Part B for the 
same effective year. As a result, if you have Medicare prescription 
drug coverage without Medicare Part B and you enroll later that same 
year in Medicare Part B, the income-related monthly adjustment amount 
determination for your Medicare prescription drug coverage will also 
apply to your Medicare Part B.
    If we were to delay our determination when you enroll in Medicare 
Part B later in that year, the delay could cause confusion and larger 
retroactive corrections. Conveying your income-related monthly 
adjustment amount determination for Medicare prescription drug coverage 
or Medicare Part B to the other program when enrollment occurs later in 
that year will simplify processing and minimize delays in collections 
of adjustments.
    The new rule will facilitate applying the administrative review 
decision or new initial determination to both programs sooner, because 
this change will eliminate delays in applying the income-related 
monthly adjustment amount determination to both Medicare prescription 
drug coverage and Medicare Part B when you enroll in one of these 
programs later in the year than the other program. We will not request 
information from the IRS about your modified adjusted gross income 
under the following circumstances: if you are eligible for the low-
income subsidy for your Medicare prescription drug coverage described 
in Subpart D of this Part, if you receive supplemental

[[Page 75890]]

security income payments, or CMS has determined that you are deemed 
full Medicare prescription drug coverage subsidy eligible under Sec.  
1860D-14(a)(3)(B)(v) of the Act as further explained in 42 CFR 
423.773(c)(1).

Clarity of These Rules

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

When will we start to use this rule?

    We will start to use these rules on the date shown under the 
``Effective Date'' section earlier in this preamble. However, we are 
also inviting public comments on the changes made by these rules. We 
will consider any relevant comments we receive, and plan to publish 
another final rule document to respond to any such comments we receive, 
and to make any changes to the rules as appropriate based on the 
comments.

Regulatory Procedures

    We follow the Administrative Procedure Act (APA) rulemaking 
procedures specified in 5 U.S.C. 553 when we develop regulations. 
Generally, the APA requires that an agency provide prior notice and 
opportunity for public comment before issuing a final regulation. The 
APA provides exceptions to its notice and public comment procedures 
when an agency finds good cause for dispensing with such procedures 
because they are impracticable, unnecessary, or contrary to the public 
interest and incorporates a statement of the finding and its reasons in 
the rule issued.\15\
---------------------------------------------------------------------------

    \15\ 5 U.S.C. 553(b)(B).
---------------------------------------------------------------------------

    With respect to the new rules we are adding under subpart C of part 
418 of our rules, we must begin to administer the income-related 
monthly adjustment amounts to Medicare prescription drug coverage on 
January 1, 2011, in accordance with section 3308(a) of the Affordable 
Care Act. In light of the March 23, 2010, enactment date of the 
Affordable Care Act and our need to have authority in place to make and 
issue notices of determinations to start collecting income-related 
monthly adjustment amounts for Medicare prescription drug coverage 
beginning January 1, 2011, we do not have sufficient time to provide a 
notice and comment period before promulgating final rules in order to 
begin administering the program in a timely manner. Thus, we find that 
the use of the APA's notice and comment rulemaking procedures would be 
impracticable in this situation.
    With respect to the addition of Sec.  418.1322, we find that good 
cause exists for proceeding without prior public notice and comment 
because these changes allow us to avoid delay in making a second 
income-related monthly adjustment amount determination for Medicare 
Part B when a Medicare prescription drug coverage beneficiary enrolls 
in Medicare Part B later in the effective year. Avoiding such delay by 
applying an income-related monthly adjustment amount determination that 
is based on the same income threshold and ranges simplifies processing 
and minimizes the need for us to make unnecessary retroactive 
corrections. Accordingly, we find that prior public comment would be 
contrary to the public interest with respect to the changes we are 
making to our rules in subpart B of part 418.
    Although we are issuing this rule as an interim final rule, we are 
inviting public comment on the rule, and we will consider any 
responsive comments we receive within 60 days of the publication of the 
rule.
    In addition, for the reasons cited above, we also find good cause 
for dispensing with the 30-day delay in the effective date of this 
rule.\16\ Because we find that it is impracticable to delay the 
effective date of our rule changes in order to begin administering the 
program by the statutory deadline, we are making this rule effective 
upon publication.
---------------------------------------------------------------------------

    \16\ See 5 U.S.C. 553(d)(3).
---------------------------------------------------------------------------

Executive Order 12866

    We have consulted with the Office of Management and Budget (OMB) 
and determined that this rule meets the criteria for a significant 
regulatory action under Executive Order 12866. Therefore, OMB reviewed 
it.

Regulatory Flexibility Act

    We certify that this rule will not have a significant economic 
impact on a substantial number of small entities because it affects 
individuals only. Therefore, a regulatory flexibility analysis is not 
required under the Regulatory Flexibility Act, as amended.

Paperwork Reduction Act

    We solicited public comment and received OMB approval for the 
public reporting burdens contained in these rules in a separate 
Information Collection Request.

(Catalog of Federal Domestic Assistance Program Nos. 93.774 Medicare 
Supplementary Medical Insurance; 96.002 Social Security--Retirement 
Insurance.)

List of Subjects in 20 CFR Part 418

    Administrative practice and procedure, Aged, Blind, Disability 
benefits, Public assistance programs, Reporting and recordkeeping 
requirements, Supplemental Security Income (SSI), Medicare subsidies.

    Dated: November 23, 2010.
Michael J. Astrue,
Commissioner of Social Security.

0
For the reasons set out in the preamble, we amend 20 CFR chapter III, 
part 418 as set forth below:

0
1. The authority citation for subpart B of part 418 continues to read 
as follows:

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


0
2. Add Sec.  418.1322 to read as follows:


Sec.  418.1322  How will a Medicare prescription drug coverage income-
related monthly adjustment amount determination for the effective year 
affect your Medicare Part B?

    If we make an income-related monthly adjustment amount 
determination for you for the effective year under subpart C of this 
part (Medicare Prescription Drug Coverage Income-Related Monthly 
Adjustment Amount), we will apply that income-related monthly 
adjustment amount determination under this subpart to determine your 
Part D income-related monthly adjustment amount for the same effective 
year. Therefore, if you become enrolled in Medicare Part B in the 
effective year after we make an income-related monthly adjustment 
amount determination about your Medicare prescription drug coverage, 
the income-related monthly adjustment amount determination for your 
Medicare prescription drug coverage will also be used to determine your 
Medicare Part B income-related monthly adjustment amount. Any change in 
your

[[Page 75891]]

net benefit due will be accompanied by a letter explaining the change 
in your net benefit and your right to appeal the change.

0
3. Add subpart C to Part 418 to read as follows:

Subpart C--Income-Related Monthly Adjustments to Medicare 
Prescription Drug Coverage Premiums

Sec.

Introduction, General Provisions, and Definitions

418.2001 What is this subpart about?
418.2005 Purpose and administration.
418.2010 Definitions.

Determination of the Income-Related Monthly Adjustment Amount

418.2101 What is the income-related monthly adjustment amount?
418.2105 What is the threshold?
418.2110 What is the effective date of our initial determination 
about your income-related monthly adjustment amount?
418.2112 Paying your income-related monthly adjustment amount.
418.2115 What are the modified adjusted gross income ranges?
418.2120 How do we determine your income-related monthly adjustment 
amount?
418.2125 How will the income-related monthly adjustment amount 
affect your total Medicare prescription drug coverage premium?
418.2135 What modified adjusted gross income information will we use 
to determine your income-related monthly adjustment amount?
418.2140 What will happen if the modified adjusted gross income 
information from the IRS is different from the modified adjusted 
gross income information we used to determine your income-related 
monthly adjustment amount?
418.2145 How do we determine your income-related monthly adjustment 
amount if the IRS does not provide information about your modified 
adjusted gross income?
418.2150 When will we use your amended tax return filed with the 
IRS?

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

418.2201 When will we determine your income-related monthly 
adjustment amount based on the modified adjusted gross income 
information that you provide for a more recent tax year?
418.2205 What is a major life-changing event?
418.2210 What is not a major life-changing event?
418.2215 What is a significant reduction in your income?
418.2220 What is not a significant reduction in your income?
418.2225 Which more recent tax year will we use?
418.2230 What is the effective date of an income-related monthly 
adjustment amount initial determination based on a more recent tax 
year?
418.2235 When will we stop using your more recent tax year's 
modified adjusted gross income to determine your income-related 
monthly adjustment amount?
418.2240 Should you notify us if the information you gave us about 
your modified adjusted gross income for the more recent tax year 
changes?
418.2245 What will happen if you notify us that your modified 
adjusted gross income for the more recent tax year changes?
418.2250 What evidence will you need to support your request that we 
use a more recent tax year?
418.2255 What kind of evidence of a major life-changing event will 
you need to support your request for us to use a more recent tax 
year?
418.2260 What major life-changing event evidence will we not accept?
418.2265 What kind of evidence of a significant modified adjusted 
gross income reduction will you need to support your request?
418.2270 What modified adjusted gross income evidence will we not 
accept?

Determinations and the Administrative Review Process

418.2301 What is an initial determination regarding your income-
related monthly adjustment amount?
418.2305 What is not an initial determination regarding your income-
related monthly adjustment amount?
418.2310 When may you request that we make a new initial 
determination?
418.2315 How will we notify you and what information will we provide 
about our initial determination?
418.2320 What is the effect of an initial determination?
418.2322 How will a Medicare Part B income-related monthly 
adjustment amount determination for the effective year affect your 
Medicare prescription drug coverage?
418.2325 When may you request a reconsideration?
418.2330 Can you request a reconsideration when you believe that the 
IRS information we used is incorrect?
418.2332 Can you request a reconsideration when you believe that the 
CMS information we used is incorrect?
418.2335 What should you do if we base our initial determination on 
modified adjusted gross income information you believe to be 
incorrect?
418.2340 What are the rules for our administrative review process?
418.2345 Is reopening of an initial or reconsidered determination 
made by us ever appropriate?
418.2350 What are the rules for review of a reconsidered 
determination or an ALJ decision?
418.2355 What are the rules for reopening a decision by an ALJ of 
the Office of Medicare Hearings and Appeals (OMHA) or by the 
Medicare Appeals Council (MAC)?

    Authority:  Secs. 702(a)(5), 1860D-13(a) and (c) of the Social 
Security Act (42 U.S.C. 902(a)(5), 1395w-113(a) and (c)).

Introduction, General Provisions, and Definitions


Sec.  418.2001  What is this subpart about?

    This subpart implements sections 1860D-13(a)(7) and 1860D-13(c)(4) 
of the Social Security Act (the Act), as added by section 3308 of the 
Affordable Care Act (Pub. L. 111-148). Section 3308(a) establishes an 
income-related monthly adjustment to Medicare prescription drug 
coverage premiums. Persons enrolled in Medicare prescription drug 
plans, Medicare Advantage plans with prescription drug coverage, 
Programs of All-Inclusive Care for the Elderly plans, and cost plans 
offering prescription drug coverage who have modified adjusted gross 
income over a threshold amount established in the statute will pay an 
income-related monthly adjustment amount in addition to their Medicare 
prescription drug coverage plan's monthly premium and any applicable 
premium increases as described in 42 CFR 423.286. The regulations in 
this subpart explain how we determine whether you are required to pay 
an income-related monthly adjustment amount, and if you are, the amount 
of your adjustment. We have divided the rules into the following groups 
of sections:
    (a) Sections 418.2001 through 418.2010 contain the introduction, a 
statement of the general purpose of the income-related monthly 
adjustment amount, general provisions that apply to the income-related 
monthly adjustment amount, and definitions of terms that we use in this 
subpart.
    (b) Sections 418.2101 through 418.2150 describe what information 
about your modified adjusted gross income we will use to determine if 
you are required to pay an income-related monthly adjustment amount. In 
these sections, we also describe how the income-related monthly 
adjustment amount will affect your total Medicare prescription drug 
coverage premium.
    (c) Sections 418.2201 through 418.2270 contain an explanation of 
the standards that you must meet for us to grant your request to use 
modified adjusted gross income information that you provide for a more 
recent tax year rather than the information described in paragraph (b) 
of this section. These sections explain when we may consider such a 
request, and the evidence that you will be required to provide. These 
sections also explain when an income-related monthly adjustment amount 
determination based on information you provide will be effective, and 
how long

[[Page 75892]]

it will remain in effect. Additionally, these sections describe how we 
make retroactive adjustments of the income-related monthly adjustment 
amount based on information you provide, updated information you 
provide, and information we later receive from the Internal Revenue 
Service.
    (d) Sections 418.2301 through 418.2355 explain how we will notify 
you of our determination regarding your income-related monthly 
adjustment amount and contain the rules that we will apply when you 
disagree with our determination. These sections explain your appeal 
rights and the circumstances under which you may request that we make a 
new initial determination of your income-related monthly adjustment 
amount.


Sec.  418.2005  Purpose and administration.

    (a) The purpose of the income-related monthly adjustment amount is 
for beneficiaries who have modified adjusted gross income above an 
established threshold to reimburse the Federal Government for a portion 
of the Federal subsidy of the Medicare prescription drug coverage. 
Persons who have modified adjusted gross income above the thresholds 
described in Sec.  418.2105 will pay an income-related monthly 
adjustment amount in addition to the premium for their prescription 
drug coverage. The income-related monthly adjustment amount due will be 
determined based on the base beneficiary premium amount that represents 
25.5 percent of the cost of the basic Medicare prescription drug 
coverage. The application of an income-related monthly adjustment 
amount results in an increase in the total amount that those who are 
affected pay for Medicare prescription drug coverage plans. A person 
who has modified adjusted gross income above the threshold amount will 
pay:
    (1) The Medicare prescription drug coverage plan monthly premium; 
plus
    (2) Any applicable increase for late enrollment or reenrollment;
    (3) An income-related monthly adjustment amount; and
    (b) The Centers for Medicare & Medicaid Services in the Department 
of Health and Human Services establishes rules for eligibility for 
Medicare prescription drug coverage and enrollment in Medicare 
prescription drug coverage plans, as well as premium penalties for late 
enrollment or reenrollment (42 CFR 423.30 through 423.56).
    (c) We use information from CMS about enrollment in Medicare 
prescription drug coverage plans to determine the records that we must 
send to the IRS.
    (d) We use information that we get from the IRS to determine if 
persons enrolled in Medicare prescription drug coverage plans are 
required to pay an income-related monthly adjustment amount. We also 
change income-related monthly adjustment amount determinations using 
information you provide under certain circumstances. In addition, we 
notify beneficiaries when the social security benefit amounts they 
receive will change based on our income-related monthly adjustment 
amount determination.


Sec.  418.2010  Definitions.

    (a) Terms relating to the Act and regulations. For the purposes of 
this subpart:
    (1) Administrator means the Administrator of CMS in HHS.
    (2) ALJ means administrative law judge.
    (3) CMS means the Centers for Medicare & Medicaid Services in HHS.
    (4) Commissioner means the Commissioner of Social Security.
    (5) HHS means the Department of Health and Human Services, which 
oversees the Centers for Medicare & Medicaid Services (CMS), the Office 
of Medicare Hearings and Appeals (OMHA) and the Medicare Appeals 
Council (MAC)
    (6) IRS means the Internal Revenue Service in the Department of the 
Treasury.
    (7) MAC means the Medicare Appeals Council in HHS.
    (8) Medicare Prescription Drug Coverage Plan means a Medicare 
prescription drug plan, a Medicare Advantage plan with prescription 
drug coverage, a Program for All-inclusive Care for the Elderly plan 
offering qualified prescription drug coverage, or a cost plan offering 
qualified prescription drug coverage.
    (9) OMHA means the Office of Medicare Hearings and Appeals in HHS.
    (10) Section means a section of the regulations in this part unless 
the context indicates otherwise.
    (11) The Act means the Social Security Act, as amended.
    (12) Title means a title of the Act.
    (13) We, our, or us means the Social Security Administration (SSA).
    (b) Miscellaneous. For the purposes of this subpart:
    (1) Amended tax return means a Federal income tax return for which 
an individual or couple has filed an amended tax return that has been 
accepted by the IRS.
    (2) Effective year means the calendar year for which we make an 
income-related monthly adjustment amount determination.
    (3) Federal premium subsidy is the portion of the cost of providing 
Medicare prescription drug coverage that is paid by the Federal 
Government. The Federal Government pays this amount to Medicare 
Prescription Drug coverage Plans from payments made into the Medicare 
Prescription Drug Account in the Federal Supplementary Medical 
Insurance Trust Fund.
    (4) Income-related monthly adjustment amount is an additional 
amount of premium that you will pay for Medicare prescription drug 
coverage if you have modified adjusted gross income above the threshold 
described in 418.2105.
    (5) Modified Adjusted Gross Income is your adjusted gross income as 
defined by the Internal Revenue Code, plus the following forms of tax-
exempt income:
    (i) Tax-exempt interest income;
    (ii) Income from United States savings bonds used to pay higher 
education tuition and fees;
    (iii) Foreign earned income;
    (iv) Income derived from sources within Guam, American Samoa, or 
the Northern Mariana Islands; and
    (v) Income from sources within Puerto Rico.
    (6) Modified adjusted gross income ranges are the groupings of 
modified adjusted gross income above the threshold. There are four 
ranges for most individuals, based on their tax filing status. There 
are two ranges for those with a tax filing status of married, filing 
separately, who also lived with their spouse for part of the year. The 
dollar amounts of the modified adjusted gross income ranges are 
specified in Sec.  418.2115.
    (7) Premium is a payment that an enrolled beneficiary pays for 
Medicare prescription drug coverage to a Medicare prescription drug 
plan, a Medicare Advantage plan with prescription drug coverage, a 
Program of All-Inclusive Care for the Elderly Plan offering qualified 
prescription drug coverage, or a cost plan offering qualified 
prescription drug coverage. The rules that CMS use annually to 
establish premium amounts for Medicare prescription drug coverage are 
contained in 42 CFR 423.286.
    (8) Representative means, for the purposes of the initial 
determination and reconsidered determination, an individual as defined 
in Sec.  404.1703 of this chapter, and for purposes of an ALJ hearing 
or review by the MAC, an individual as defined in 42 CFR 423.560.
    (9) Tax filing status means the filing status shown on your 
individual income

[[Page 75893]]

tax return. It may be single, married filing jointly, married filing 
separately, head of household, or qualifying widow(er) with dependent 
child.
    (10) Tax year means the year for which you have filed or will file 
your Federal income tax return with the IRS.
    (11) Threshold means a modified adjusted gross income amount above 
which you will have to pay an income-related monthly adjustment amount 
described in paragraph (b)(4) of this section. The dollar amount of the 
threshold is specified in Sec.  418.2105.
    (12) You or your means the person or representative of the person 
who is subject to the income-related monthly adjustment amount.

Determination of the Income-Related Monthly Adjustment Amount


Sec.  418.2101  What is the income-related monthly adjustment amount?

    (a) The income-related monthly adjustment amount is an amount that 
you will pay in addition to the Medicare prescription drug coverage 
plan monthly premium, plus any applicable increase in that premium as 
described in 42 CFR 423.286, for your Medicare prescription drug 
coverage plan when your modified adjusted gross income is above the 
threshold described in Sec.  418.2105.
    (b) Your income-related monthly adjustment amount is based on your 
applicable modified adjusted gross income as described in Sec.  
418.2115 and your tax filing status.
    (c) We will determine your income-related monthly adjustment amount 
using the method described in Sec.  418.2120.


Sec.  418.2105  What is the threshold?

    (a) The threshold is a level of modified adjusted gross income 
above which you will have to pay the income-related monthly adjustment 
amount.
    (b) For calendar years 2011 through and including 2019, the 
modified adjusted gross income threshold is $85,000 for individuals 
with a Federal income tax filing status of single, married filing 
separately, head of household, and qualifying widow(er) with dependent 
child. The threshold is $170,000 for individuals with a Federal income 
tax filing status of married filing jointly.
    (c) Starting at the end of calendar year 2019 and for each calendar 
year thereafter, CMS will set the threshold amounts for the following 
year. CMS will publish the threshold amounts annually in the Federal 
Register. Published threshold amounts will be effective January 1 of 
the next calendar year, and remain unchanged for the full calendar 
year.


Sec.  418.2110  What is the effective date of our initial determination 
about your income-related monthly adjustment amount?

    (a) Generally, an income-related monthly adjustment amount 
determination will be effective for all months that you are enrolled in 
a prescription drug coverage plan during the year for which we 
determine you must pay an income-related monthly adjustment amount.
    (b) When we have used modified adjusted gross income information 
from the IRS for the tax year 3 years prior to the effective year to 
determine your income-related monthly adjustment amount, and modified 
adjusted gross income information for the tax year 2 years prior later 
becomes available from the IRS, we will review the new information to 
determine if we should revise our initial determination concerning the 
income-related monthly adjustment amount. If we revise our initial 
determination, the effective date of the new initial determination will 
be January 1 of the effective year, or the first month your enrollment 
or re-enrollment in a Medicare prescription drug coverage plan became 
effective if later than January.
    (c) When we use your amended tax return, as described in Sec.  
418.2150, the effective date will be January 1 of the year(s) that is 
affected, or the first month in that year that your enrollment or re-
enrollment in a Medicare prescription drug coverage plan became 
effective if later than January.

    Example: You are enrolled in Medicare prescription drug coverage 
throughout 2011. We use your 2009 modified adjusted gross income as 
reported to us by the IRS to determine your 2011 income-related 
monthly adjustment amount. In 2012, you submit to us a copy of your 
2009 amended tax return that you filed with the IRS. The modified 
adjusted gross income reported on your 2009 amended tax return is 
significantly less than originally reported to the IRS. We use the 
modified adjusted gross income reported on your 2009 amended tax 
return to determine your income-related monthly adjustment amount. 
That income-related monthly adjustment amount is effective January 
1, 2011. We will retroactively correct any differences between the 
amount paid in 2011 and the amount you should have paid based on the 
amended tax return.

    (d) When we use evidence that you provide to proves the IRS 
modified adjusted gross income information we used was incorrect, as 
described in Sec.  418.2335, the effective date will be January of the 
year(s) that is affected or the first month in that year that your 
enrollment or re-enrollment in a Medicare prescription drug coverage 
plan became effective if later than January.
    (e) When we use information from a more recent tax year that you 
provide due to a major life-changing event, as described in Sec.  
418.2201, the effective date is described in Sec.  418.2230.


Sec.  418.2112  Paying your income-related monthly adjustment amount.

    (a) We will deduct the income-related monthly adjustment amount 
from your Social Security benefits if they are sufficient to cover the 
amount owed. If the amount of your Social Security benefits is not 
sufficient to pay the full amount of your income-related monthly 
adjustment amount, CMS will bill you for the full amount owed.
    (b) If you do not receive Social Security or Railroad Retirement 
Board benefits, but you receive benefits from the Office of Personnel 
Management, the Office of Personnel Management will deduct the income-
related monthly adjustment amount from your benefits if they are 
sufficient to cover the amount owed. If the amount of your Office of 
Personnel Management benefits is not sufficient to pay the full amount 
of your income-related monthly adjustment amount, CMS will bill you for 
the full amount owed.
    (c) If you do not receive Social Security, Railroad Retirement 
Board, or Office of Personnel Management benefits, CMS will bill you 
for your income-related monthly adjustment amount.


Sec.  418.2115  What are the modified adjusted gross income ranges?

    (a) We list the modified adjusted gross income ranges for the 
calendar years 2011 through and including 2019 for each Federal tax 
filing category in paragraphs (b), (c) and (d) of this section. We will 
use your modified adjusted gross income amount together with your tax 
filing status to determine the amount of your income-related monthly 
adjustment for these calendar years.
    (b) For calendar years 2011 through and including 2019, the 
modified adjusted gross income ranges for individuals with a Federal 
tax filing status of single, head of household, qualifying widow(er) 
with dependent child, and married filing separately when the individual 
has lived apart from his/her spouse for the entire tax year for the 
year we use to make our income-related monthly adjustment amount 
determination are as follows:
    (1) Greater than $85,000 and less than or equal to $107,000;
    (2) Greater than $107,000 and less than or equal to $160,000;

[[Page 75894]]

    (3) Greater than $160,000 and less than or equal to $214,000; and
    (4) Greater than $214,000.
    (c) For calendar years 2011 through and including 2019, the 
modified adjusted gross income ranges for individuals who are married 
and filed a joint tax return for the tax year we use to make the 
income-related monthly adjustment amount determination are as follows:
    (1) Greater than $170,000 and less than or equal to $214,000;
    (2) Greater than $214,000 and less than or equal to $320,000;
    (3) Greater than $320,000 and less than or equal to $428,000; and
    (4) Greater than $428,000.
    (d) For calendar years 2011 through and including 2019, the 
modified adjusted gross income ranges for married individuals who file 
a separate return and have lived with their spouse at any time during 
the tax year we use to make the income-related monthly adjustment 
amount determination are as follows:
    (1) Greater than $85,000 and less than or equal to $129,000; and
    (2) Greater than $129,000.
    (e) In 2019, CMS will set all modified adjusted gross income ranges 
for 2020 and publish them in the Federal Register. In each year 
thereafter, CMS will set all modified adjusted gross income ranges and 
publish the amounts for each range prior to the beginning of each 
subsequent year.


Sec.  418.2120  How do we determine your income-related monthly 
adjustment amount?

    (a) We will determine your income-related monthly adjustment amount 
by using your tax filing status and modified adjusted gross income.
    (b) Tables of applicable percentage. The tables in paragraphs 
(b)(1) through (b)(3) of this section contain the modified adjusted 
gross income ranges for calendar years 2011 through and including 2019, 
and the corresponding percentage of the cost of basic Medicare 
prescription drug coverage that individuals with modified adjusted 
gross incomes that fall within each of the ranges will pay. The monthly 
dollar amounts will be determined by CMS using the formula in Sec.  
1860D-13(a)(7)(B) of the Act. Based on your tax filing status for the 
tax year we use to make a determination about your 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 amounts used for each of the ranges of income-related monthly 
adjustment will be set annually after 2019 as described in paragraph 
(c) of this section. The modified adjusted gross income ranges will be 
adjusted annually after 2019 as described in Sec.  418.2115(e).
    (1) General table of applicable percentages. If your filing status 
for your Federal income taxes for the tax year we use is single; head 
of household; qualifying widow(er) with dependent child; or married 
filing separately and you lived apart from your spouse for the entire 
tax year, we will use the general table of applicable percentages. When 
your modified adjusted gross income for the year we use is in the range 
listed in the left column in the following table, you will pay an 
amount based on the percentage listed in the right column, which 
represents a percentage of the cost of basic Medicare prescription drug 
coverage.

------------------------------------------------------------------------
                                                            Beneficiary
  Modified adjusted gross income effective in 2011-2019     percentage
                                                             (percent)
------------------------------------------------------------------------
More than $85,000 but less than or equal to $107,000....              35
More than $107,000 but less than or equal to $160,000...              50
More than $160,000 but less than or equal to $214,000...              65
More than $214,000......................................              80
------------------------------------------------------------------------

     (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, you will pay an 
amount based on the percentage listed in the right column, which 
represents a percentage of the cost of basic Medicare prescription drug 
coverage.

------------------------------------------------------------------------
                                                            Beneficiary
  Modified adjusted gross income effective in 2011-2019     percentage
                                                             (percent)
------------------------------------------------------------------------
More than $170,000 but less than or equal to $214,000...              35
More than $214,000 but less than or equal to $320,000...              50
More than $320,000 but less than or equal to $428,000...              65
More than $428,000......................................              80
------------------------------------------------------------------------

     (3) Table of applicable percentages for married individuals filing 
separate returns. If, for the tax year we use, your Federal tax filing 
status is married filing separately, you lived with your spouse at some 
time during that tax year, and your modified adjusted gross income is 
in the range listed in the left column in the following table, you will 
pay an amount based on the percentage listed in the right column, which 
represents a percentage of the cost of basic Medicare prescription drug 
coverage.

------------------------------------------------------------------------
                                                            Beneficiary
  Modified adjusted gross income effective in 2011-2019     percentage
                                                             (percent)
------------------------------------------------------------------------
More than $85,000 but less than or equal to $129,000....              65
More than $129,000......................................              80
------------------------------------------------------------------------

     (c) For each year after 2019, CMS will announce the modified 
adjusted gross income ranges for the income-related monthly adjustment 
amount described in paragraph (b) of this section.


Sec.  418.2125  How will the income-related monthly adjustment amount 
affect your total Medicare prescription drug coverage premium?

    (a) If you must pay an income-related monthly adjustment amount, 
your total Medicare prescription drug coverage premium will be the sum 
of:
    (1) Your prescription drug coverage monthly premium, as determined 
by your plan; plus
    (2) Any applicable increase in the prescription drug coverage 
monthly premium as described in 42 CFR 423.286; plus
    (3) Your income-related monthly adjustment amount.
    (b) Regardless of the method you use to pay your Medicare 
prescription drug coverage premiums to your Medicare prescription drug 
coverage plan, you will pay any income-related monthly adjustment 
amount you owe using the method described in 418.2112.


Sec.  418.2135  What modified adjusted gross income information will we 
use to determine your income-related monthly adjustment amount?

    We will follow the rules in Sec.  418.1135, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2140  What will happen if the modified adjusted gross income 
information from the IRS is different from the modified adjusted gross 
income information we used to determine your income-related monthly 
adjustment amount?

    We will follow the rules in Sec.  418.1140, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.

[[Page 75895]]

Sec.  418.2145  How do we determine your income-related monthly 
adjustment amount if the IRS does not provide information about your 
modified adjusted gross income?

    We will follow the rules in Sec.  418.1145, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2150  When will we use your amended tax return filed with the 
IRS?

    We will follow the rules in Sec.  418.1150, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.

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


Sec.  418.2201  When will we determine your income-related monthly 
adjustment amount based on the modified adjusted gross income 
information that you provide for a more recent tax year?

    We will follow the rules in Sec.  418.1201, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2205  What is a major life-changing event?

    We will follow the rules in Sec.  418.1205, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2210  What is not a major life-changing event?

    We will follow the rules in Sec.  418.1210, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2215  What is a significant reduction in your income?

    We will follow the rules in Sec.  418.1215, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2220  What is not a significant reduction in your income?

    We will follow the rules in Sec.  418.1220, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2225  Which more recent tax year will we use?

    We will follow the rules in Sec.  418.1225, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2230  What is the effective date of an income-related monthly 
adjustment amount initial determination based on a more recent tax 
year?

    We will follow the rules in Sec.  418.1230, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2235  When will we stop using your more recent tax year's 
modified adjusted gross income to determine your income-related monthly 
adjustment amount?

    We will follow the rules in Sec.  418.1235, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2240  Should you notify us if the information you gave us 
about your modified adjusted gross income for the more recent tax year 
changes?

    We will follow the rules in Sec.  418.1240, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2245  What will happen if you notify us that your modified 
adjusted gross income for the more recent tax year changes?

    (a) If you notify us that your modified adjusted gross income for 
the more recent tax year has changed from what is in our records, we 
may make a new initial determination for each effective year involved. 
To make a new initial determination(s) we will take into account:
    (1) The new modified adjusted gross income information for the more 
recent tax year you provide; and
    (2) Any modified adjusted gross income information from the IRS, as 
described in Sec.  418.2135, that we have available for each effective 
year; and
    (3) Any modified adjusted gross income information from you, as 
described in Sec.  418.2135, 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 
corrections 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.  
418.2235 occurs.
    (d) We will make a new determination about your income-related 
monthly adjustment amount when we receive modified adjusted gross 
income for the effective year from the IRS, as described in Sec.  
418.1140(d).


Sec.  418.2250  What evidence will you need to support your request 
that we use a more recent tax year?

    We will follow the rules in Sec.  418.1250, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2255  What kind of evidence of a major life-changing event 
will you need to support your request for us to use a more recent tax 
year?

    We will follow the rules in Sec.  418.1255, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2260  What major life-changing event evidence will we not 
accept?

    We will follow the rules in Sec.  418.1260, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2265  What kind of evidence of a significant modified 
adjusted gross income reduction will you need to support your request?

    We will follow the rules in Sec.  418.1265, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2270  What modified adjusted gross income evidence will we 
not accept?

    We will follow the rules in Sec.  418.1270, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.

Determinations and the Administrative Review Process


Sec.  418.2301  What is an initial determination regarding your income-
related monthly adjustment amount?

    We will follow the rules in Sec.  418.1301, except that any 
references in

[[Page 75896]]

that section to regulations in subpart B of this part shall be treated 
as references to the corresponding regulation in this subpart.


Sec.  418.2305  What is not an initial determination regarding your 
income-related monthly adjustment amount?

    We will follow the rules in Sec.  418.1305, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2310  When may you request that we make a new initial 
determination?

    We will follow the rules in Sec.  418.1310, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2315  How will we notify you and what information will we 
provide about our initial determination?

    We will follow the rules in Sec.  418.1315, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2320  What is the effect of an initial determination?

    We will follow the rules in Sec.  418.1320, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2322  How will a Medicare Part B income-related monthly 
adjustment amount determination for the effective year affect your 
Medicare prescription drug coverage?

    If we make an income-related monthly adjustment amount 
determination for you for the effective year under subpart B of this 
part (Medicare Part B Income-Related Monthly Adjustment Amount), we 
will apply that income-related monthly adjustment amount determination 
under this subpart to determine your Part D income-related monthly 
adjustment amount for the same effective year. Therefore, if you obtain 
Medicare prescription drug coverage in the effective year after we make 
an income-related monthly adjustment amount determination about your 
Medicare Part B, the income-related monthly adjustment amount 
determination we made for your Medicare Part B will also apply to your 
Medicare prescription drug coverage. Any change in your net benefit due 
will be accompanied by a letter explaining the change in your net 
benefit and your right to appeal the change.


Sec.  418.2325  When may you request a reconsideration?

    We will follow the rules in Sec.  418.1325, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2330  Can you request a reconsideration when you believe that 
the IRS information we used is incorrect?

    If you request a reconsideration solely because you believe that 
the information that the IRS gave us is incorrect, we will dismiss your 
request for a reconsideration and notify you to obtain proof of a 
correction from the IRS and request a new initial determination (Sec.  
418.2335). Our dismissal of your request for reconsideration is not an 
initial determination subject to further administrative or judicial 
review.


Sec.  418.2332  Can you request a reconsideration when you believe that 
the CMS information we used is incorrect?

    If you request a reconsideration solely because you believe that 
the information that CMS gave us about your participation in a Medicare 
prescription drug coverage plan is incorrect, we will dismiss your 
request for a reconsideration and notify you that you must contact CMS 
to get your records corrected. Our dismissal of your request for 
reconsideration is not an initial determination subject to further 
administrative or judicial review.


Sec.  418.2335  What should you do if we base our initial determination 
on modified adjusted gross income information you believe to be 
incorrect?

    We will follow the rules in Sec.  418.1335, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2340  What are the rules for our administrative review 
process?

    We will follow the rules in Sec.  418.1340, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2345  Is reopening of an initial or reconsidered 
determination made by us ever appropriate?

    We will follow the rules in Sec.  418.1345, except that any 
references in that section to regulations in subpart B of this part 
shall be treated as references to the corresponding regulation in this 
subpart.


Sec.  418.2350  What are the rules for review of a reconsidered 
determination or an ALJ decision?

    You may request a hearing before an OMHA administrative law judge 
consistent with HHS' regulations at 42 CFR part 423. You may seek 
further review of the administrative law judge's decision by requesting 
MAC review and judicial review in accordance with HHS' regulations.


Sec.  418.2355  What are the rules for reopening a decision by an ALJ 
of the Office of Medicare Hearings and Appeals (OMHA) or by the 
Medicare Appeals Council (MAC)?

    The rules in 42 CFR 423.1980 through 423.1986 govern reopenings of 
decisions by an administrative law judge of the OMHA and decisions by 
the MAC. A decision by an administrative law judge of the OMHA may be 
reopened by the administrative law judge or the MAC. A decision by the 
MAC may be reopened only by the MAC.

[FR Doc. 2010-30276 Filed 12-6-10; 8:45 am]
BILLING CODE 4191-02-P