[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\
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\15\ 5 U.S.C. 553(b)(B).
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With respect to the new rules we are adding under subpart C of part
418 of our rules, we must begin to administer the income-related
monthly adjustment amounts to Medicare prescription drug coverage on
January 1, 2011, in accordance with section 3308(a) of the Affordable
Care Act. In light of the March 23, 2010, enactment date of the
Affordable Care Act and our need to have authority in place to make and
issue notices of determinations to start collecting income-related
monthly adjustment amounts for Medicare prescription drug coverage
beginning January 1, 2011, we do not have sufficient time to provide a
notice and comment period before promulgating final rules in order to
begin administering the program in a timely manner. Thus, we find that
the use of the APA's notice and comment rulemaking procedures would be
impracticable in this situation.
With respect to the addition of Sec. 418.1322, we find that good
cause exists for proceeding without prior public notice and comment
because these changes allow us to avoid delay in making a second
income-related monthly adjustment amount determination for Medicare
Part B when a Medicare prescription drug coverage beneficiary enrolls
in Medicare Part B later in the effective year. Avoiding such delay by
applying an income-related monthly adjustment amount determination that
is based on the same income threshold and ranges simplifies processing
and minimizes the need for us to make unnecessary retroactive
corrections. Accordingly, we find that prior public comment would be
contrary to the public interest with respect to the changes we are
making to our rules in subpart B of part 418.
Although we are issuing this rule as an interim final rule, we are
inviting public comment on the rule, and we will consider any
responsive comments we receive within 60 days of the publication of the
rule.
In addition, for the reasons cited above, we also find good cause
for dispensing with the 30-day delay in the effective date of this
rule.\16\ Because we find that it is impracticable to delay the
effective date of our rule changes in order to begin administering the
program by the statutory deadline, we are making this rule effective
upon publication.
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\16\ See 5 U.S.C. 553(d)(3).
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Executive Order 12866
We have consulted with the Office of Management and Budget (OMB)
and determined that this rule meets the criteria for a significant
regulatory action under Executive Order 12866. Therefore, OMB reviewed
it.
Regulatory Flexibility Act
We certify that this rule will not have a significant economic
impact on a substantial number of small entities because it affects
individuals only. Therefore, a regulatory flexibility analysis is not
required under the Regulatory Flexibility Act, as amended.
Paperwork Reduction Act
We solicited public comment and received OMB approval for the
public reporting burdens contained in these rules in a separate
Information Collection Request.
(Catalog of Federal Domestic Assistance Program Nos. 93.774 Medicare
Supplementary Medical Insurance; 96.002 Social Security--Retirement
Insurance.)
List of Subjects in 20 CFR Part 418
Administrative practice and procedure, Aged, Blind, Disability
benefits, Public assistance programs, Reporting and recordkeeping
requirements, Supplemental Security Income (SSI), Medicare subsidies.
Dated: November 23, 2010.
Michael J. Astrue,
Commissioner of Social Security.
0
For the reasons set out in the preamble, we amend 20 CFR chapter III,
part 418 as set forth below:
0
1. The authority citation for subpart B of part 418 continues to read
as follows:
Authority: Secs. 702(a)(5) and 1839(i) of the Social Security
Act (42 U.S.C. 902(a)(5) and 1395r(i)).
0
2. Add Sec. 418.1322 to read as follows:
Sec. 418.1322 How will a Medicare prescription drug coverage income-
related monthly adjustment amount determination for the effective year
affect your Medicare Part B?
If we make an income-related monthly adjustment amount
determination for you for the effective year under subpart C of this
part (Medicare Prescription Drug Coverage Income-Related Monthly
Adjustment Amount), we will apply that income-related monthly
adjustment amount determination under this subpart to determine your
Part D income-related monthly adjustment amount for the same effective
year. Therefore, if you become enrolled in Medicare Part B in the
effective year after we make an income-related monthly adjustment
amount determination about your Medicare prescription drug coverage,
the income-related monthly adjustment amount determination for your
Medicare prescription drug coverage will also be used to determine your
Medicare Part B income-related monthly adjustment amount. Any change in
your
[[Page 75891]]
net benefit due will be accompanied by a letter explaining the change
in your net benefit and your right to appeal the change.
0
3. Add subpart C to Part 418 to read as follows:
Subpart C--Income-Related Monthly Adjustments to Medicare
Prescription Drug Coverage Premiums
Sec.
Introduction, General Provisions, and Definitions
418.2001 What is this subpart about?
418.2005 Purpose and administration.
418.2010 Definitions.
Determination of the Income-Related Monthly Adjustment Amount
418.2101 What is the income-related monthly adjustment amount?
418.2105 What is the threshold?
418.2110 What is the effective date of our initial determination
about your income-related monthly adjustment amount?
418.2112 Paying your income-related monthly adjustment amount.
418.2115 What are the modified adjusted gross income ranges?
418.2120 How do we determine your income-related monthly adjustment
amount?
418.2125 How will the income-related monthly adjustment amount
affect your total Medicare prescription drug coverage premium?
418.2135 What modified adjusted gross income information will we use
to determine your income-related monthly adjustment amount?
418.2140 What will happen if the modified adjusted gross income
information from the IRS is different from the modified adjusted
gross income information we used to determine your income-related
monthly adjustment amount?
418.2145 How do we determine your income-related monthly adjustment
amount if the IRS does not provide information about your modified
adjusted gross income?
418.2150 When will we use your amended tax return filed with the
IRS?
Determinations Using a More Recent Tax Year's Modified Adjusted Gross
Income
418.2201 When will we determine your income-related monthly
adjustment amount based on the modified adjusted gross income
information that you provide for a more recent tax year?
418.2205 What is a major life-changing event?
418.2210 What is not a major life-changing event?
418.2215 What is a significant reduction in your income?
418.2220 What is not a significant reduction in your income?
418.2225 Which more recent tax year will we use?
418.2230 What is the effective date of an income-related monthly
adjustment amount initial determination based on a more recent tax
year?
418.2235 When will we stop using your more recent tax year's
modified adjusted gross income to determine your income-related
monthly adjustment amount?
418.2240 Should you notify us if the information you gave us about
your modified adjusted gross income for the more recent tax year
changes?
418.2245 What will happen if you notify us that your modified
adjusted gross income for the more recent tax year changes?
418.2250 What evidence will you need to support your request that we
use a more recent tax year?
418.2255 What kind of evidence of a major life-changing event will
you need to support your request for us to use a more recent tax
year?
418.2260 What major life-changing event evidence will we not accept?
418.2265 What kind of evidence of a significant modified adjusted
gross income reduction will you need to support your request?
418.2270 What modified adjusted gross income evidence will we not
accept?
Determinations and the Administrative Review Process
418.2301 What is an initial determination regarding your income-
related monthly adjustment amount?
418.2305 What is not an initial determination regarding your income-
related monthly adjustment amount?
418.2310 When may you request that we make a new initial
determination?
418.2315 How will we notify you and what information will we provide
about our initial determination?
418.2320 What is the effect of an initial determination?
418.2322 How will a Medicare Part B income-related monthly
adjustment amount determination for the effective year affect your
Medicare prescription drug coverage?
418.2325 When may you request a reconsideration?
418.2330 Can you request a reconsideration when you believe that the
IRS information we used is incorrect?
418.2332 Can you request a reconsideration when you believe that the
CMS information we used is incorrect?
418.2335 What should you do if we base our initial determination on
modified adjusted gross income information you believe to be
incorrect?
418.2340 What are the rules for our administrative review process?
418.2345 Is reopening of an initial or reconsidered determination
made by us ever appropriate?
418.2350 What are the rules for review of a reconsidered
determination or an ALJ decision?
418.2355 What are the rules for reopening a decision by an ALJ of
the Office of Medicare Hearings and Appeals (OMHA) or by the
Medicare Appeals Council (MAC)?
Authority: Secs. 702(a)(5), 1860D-13(a) and (c) of the Social
Security Act (42 U.S.C. 902(a)(5), 1395w-113(a) and (c)).
Introduction, General Provisions, and Definitions
Sec. 418.2001 What is this subpart about?
This subpart implements sections 1860D-13(a)(7) and 1860D-13(c)(4)
of the Social Security Act (the Act), as added by section 3308 of the
Affordable Care Act (Pub. L. 111-148). Section 3308(a) establishes an
income-related monthly adjustment to Medicare prescription drug
coverage premiums. Persons enrolled in Medicare prescription drug
plans, Medicare Advantage plans with prescription drug coverage,
Programs of All-Inclusive Care for the Elderly plans, and cost plans
offering prescription drug coverage who have modified adjusted gross
income over a threshold amount established in the statute will pay an
income-related monthly adjustment amount in addition to their Medicare
prescription drug coverage plan's monthly premium and any applicable
premium increases as described in 42 CFR 423.286. The regulations in
this subpart explain how we determine whether you are required to pay
an income-related monthly adjustment amount, and if you are, the amount
of your adjustment. We have divided the rules into the following groups
of sections:
(a) Sections 418.2001 through 418.2010 contain the introduction, a
statement of the general purpose of the income-related monthly
adjustment amount, general provisions that apply to the income-related
monthly adjustment amount, and definitions of terms that we use in this
subpart.
(b) Sections 418.2101 through 418.2150 describe what information
about your modified adjusted gross income we will use to determine if
you are required to pay an income-related monthly adjustment amount. In
these sections, we also describe how the income-related monthly
adjustment amount will affect your total Medicare prescription drug
coverage premium.
(c) Sections 418.2201 through 418.2270 contain an explanation of
the standards that you must meet for us to grant your request to use
modified adjusted gross income information that you provide for a more
recent tax year rather than the information described in paragraph (b)
of this section. These sections explain when we may consider such a
request, and the evidence that you will be required to provide. These
sections also explain when an income-related monthly adjustment amount
determination based on information you provide will be effective, and
how long
[[Page 75892]]
it will remain in effect. Additionally, these sections describe how we
make retroactive adjustments of the income-related monthly adjustment
amount based on information you provide, updated information you
provide, and information we later receive from the Internal Revenue
Service.
(d) Sections 418.2301 through 418.2355 explain how we will notify
you of our determination regarding your income-related monthly
adjustment amount and contain the rules that we will apply when you
disagree with our determination. These sections explain your appeal
rights and the circumstances under which you may request that we make a
new initial determination of your income-related monthly adjustment
amount.
Sec. 418.2005 Purpose and administration.
(a) The purpose of the income-related monthly adjustment amount is
for beneficiaries who have modified adjusted gross income above an
established threshold to reimburse the Federal Government for a portion
of the Federal subsidy of the Medicare prescription drug coverage.
Persons who have modified adjusted gross income above the thresholds
described in Sec. 418.2105 will pay an income-related monthly
adjustment amount in addition to the premium for their prescription
drug coverage. The income-related monthly adjustment amount due will be
determined based on the base beneficiary premium amount that represents
25.5 percent of the cost of the basic Medicare prescription drug
coverage. The application of an income-related monthly adjustment
amount results in an increase in the total amount that those who are
affected pay for Medicare prescription drug coverage plans. A person
who has modified adjusted gross income above the threshold amount will
pay:
(1) The Medicare prescription drug coverage plan monthly premium;
plus
(2) Any applicable increase for late enrollment or reenrollment;
(3) An income-related monthly adjustment amount; and
(b) The Centers for Medicare & Medicaid Services in the Department
of Health and Human Services establishes rules for eligibility for
Medicare prescription drug coverage and enrollment in Medicare
prescription drug coverage plans, as well as premium penalties for late
enrollment or reenrollment (42 CFR 423.30 through 423.56).
(c) We use information from CMS about enrollment in Medicare
prescription drug coverage plans to determine the records that we must
send to the IRS.
(d) We use information that we get from the IRS to determine if
persons enrolled in Medicare prescription drug coverage plans are
required to pay an income-related monthly adjustment amount. We also
change income-related monthly adjustment amount determinations using
information you provide under certain circumstances. In addition, we
notify beneficiaries when the social security benefit amounts they
receive will change based on our income-related monthly adjustment
amount determination.
Sec. 418.2010 Definitions.
(a) Terms relating to the Act and regulations. For the purposes of
this subpart:
(1) Administrator means the Administrator of CMS in HHS.
(2) ALJ means administrative law judge.
(3) CMS means the Centers for Medicare & Medicaid Services in HHS.
(4) Commissioner means the Commissioner of Social Security.
(5) HHS means the Department of Health and Human Services, which
oversees the Centers for Medicare & Medicaid Services (CMS), the Office
of Medicare Hearings and Appeals (OMHA) and the Medicare Appeals
Council (MAC)
(6) IRS means the Internal Revenue Service in the Department of the
Treasury.
(7) MAC means the Medicare Appeals Council in HHS.
(8) Medicare Prescription Drug Coverage Plan means a Medicare
prescription drug plan, a Medicare Advantage plan with prescription
drug coverage, a Program for All-inclusive Care for the Elderly plan
offering qualified prescription drug coverage, or a cost plan offering
qualified prescription drug coverage.
(9) OMHA means the Office of Medicare Hearings and Appeals in HHS.
(10) Section means a section of the regulations in this part unless
the context indicates otherwise.
(11) The Act means the Social Security Act, as amended.
(12) Title means a title of the Act.
(13) We, our, or us means the Social Security Administration (SSA).
(b) Miscellaneous. For the purposes of this subpart:
(1) Amended tax return means a Federal income tax return for which
an individual or couple has filed an amended tax return that has been
accepted by the IRS.
(2) Effective year means the calendar year for which we make an
income-related monthly adjustment amount determination.
(3) Federal premium subsidy is the portion of the cost of providing
Medicare prescription drug coverage that is paid by the Federal
Government. The Federal Government pays this amount to Medicare
Prescription Drug coverage Plans from payments made into the Medicare
Prescription Drug Account in the Federal Supplementary Medical
Insurance Trust Fund.
(4) Income-related monthly adjustment amount is an additional
amount of premium that you will pay for Medicare prescription drug
coverage if you have modified adjusted gross income above the threshold
described in 418.2105.
(5) Modified Adjusted Gross Income is your adjusted gross income as
defined by the Internal Revenue Code, plus the following forms of tax-
exempt income:
(i) Tax-exempt interest income;
(ii) Income from United States savings bonds used to pay higher
education tuition and fees;
(iii) Foreign earned income;
(iv) Income derived from sources within Guam, American Samoa, or
the Northern Mariana Islands; and
(v) Income from sources within Puerto Rico.
(6) Modified adjusted gross income ranges are the groupings of
modified adjusted gross income above the threshold. There are four
ranges for most individuals, based on their tax filing status. There
are two ranges for those with a tax filing status of married, filing
separately, who also lived with their spouse for part of the year. The
dollar amounts of the modified adjusted gross income ranges are
specified in Sec. 418.2115.
(7) Premium is a payment that an enrolled beneficiary pays for
Medicare prescription drug coverage to a Medicare prescription drug
plan, a Medicare Advantage plan with prescription drug coverage, a
Program of All-Inclusive Care for the Elderly Plan offering qualified
prescription drug coverage, or a cost plan offering qualified
prescription drug coverage. The rules that CMS use annually to
establish premium amounts for Medicare prescription drug coverage are
contained in 42 CFR 423.286.
(8) Representative means, for the purposes of the initial
determination and reconsidered determination, an individual as defined
in Sec. 404.1703 of this chapter, and for purposes of an ALJ hearing
or review by the MAC, an individual as defined in 42 CFR 423.560.
(9) Tax filing status means the filing status shown on your
individual income
[[Page 75893]]
tax return. It may be single, married filing jointly, married filing
separately, head of household, or qualifying widow(er) with dependent
child.
(10) Tax year means the year for which you have filed or will file
your Federal income tax return with the IRS.
(11) Threshold means a modified adjusted gross income amount above
which you will have to pay an income-related monthly adjustment amount
described in paragraph (b)(4) of this section. The dollar amount of the
threshold is specified in Sec. 418.2105.
(12) You or your means the person or representative of the person
who is subject to the income-related monthly adjustment amount.
Determination of the Income-Related Monthly Adjustment Amount
Sec. 418.2101 What is the income-related monthly adjustment amount?
(a) The income-related monthly adjustment amount is an amount that
you will pay in addition to the Medicare prescription drug coverage
plan monthly premium, plus any applicable increase in that premium as
described in 42 CFR 423.286, for your Medicare prescription drug
coverage plan when your modified adjusted gross income is above the
threshold described in Sec. 418.2105.
(b) Your income-related monthly adjustment amount is based on your
applicable modified adjusted gross income as described in Sec.
418.2115 and your tax filing status.
(c) We will determine your income-related monthly adjustment amount
using the method described in Sec. 418.2120.
Sec. 418.2105 What is the threshold?
(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