[Federal Register Volume 76, Number 127 (Friday, July 1, 2011)]
[Rules and Regulations]
[Pages 38552-38554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-16526]



20 CFR Part 418

[Docket No. SSA-2009-0078]
RIN 0960-AH06

Amendments to Regulations Regarding Major Life-Changing Events 
Affecting Income-Related Monthly Adjustment Amounts to Medicare Part B 

AGENCY: Social Security Administration (SSA).

ACTION: Final rule.


SUMMARY: This final rule adopts, without change, the interim final rule 
with request for comments we published in the Federal Register on July 
15, 2010 at 75 FR 41084. The interim final rule concerned what we 
consider major life-changing events for the Medicare Part B income-
related monthly adjustment amount (IRMAA) and what evidence we require 
to support a claim of a major life-changing event. This final rule 
allows us to respond appropriately to circumstances brought about by 
the current economic climate and other unforeseen events, as described 

DATES: The interim final rule with request for comments published on 
July 15, 2010 is confirmed as final effective July 1, 2011.

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.



    The interim final rule concerned what we consider major life-
changing events for the Medicare Part B IRMAA and what evidence we 
require to support a claim of a major life-changing event.
    Medicare Part B is a voluntary medical insurance program that 
provides coverage for services such as physicians care, diagnostic 
services, and medical supplies. A beneficiary enrolled in Medicare Part 
B pays monthly premiums, deductibles, and co-insurance associated with 
covered services. The Centers for Medicare & Medicaid Services (CMS) 
promulgates rules and regulations about the Medicare program, including 
the standard monthly premium. We determine and deduct the amount of 
certain Medicare Part B premiums from beneficiaries' Social Security 
benefits and make rules and regulations necessary to carry out these 
    The Federal Government subsidizes the cost of Medicare Part B 
medical coverage. However, beneficiaries with modified adjusted gross 
incomes (MAGI) above a specified threshold must pay a higher percentage 
of their cost than those with MAGIs below the threshold.\1\ We refer to 
this subsidy reduction as an IRMAA. CMS determines and publishes the 
annual MAGI threshold and ranges. The Internal Revenue Service (IRS) 
provides us with MAGI information.

    \1\ MAGI is defined in 42 U.S.C. 1395r(i)(4). The threshold 
amount is defined in 42 U.S.C. 1395r(i)(2).

    We use MAGI and Federal income tax filing status for the tax year 
two years before the effective year to determine whether a beneficiary 
must pay an IRMAA, and if so, how much.\2\ If information is not yet 
available for the tax year two years before the effective year, we will 
use information from the tax year three years before the effective year 
until the later information becomes available. A beneficiary who 
experiences a major life-changing event may request that we use a more 
recent tax year to make a new IRMAA determination.

    \2\ MAGI ranges are established in 42 U.S.C. 1395r(i)(3), (5). 
The MAGI dollar amounts listed in 1395r(i)(3) may increase annually 
based on changes in the Consumer Price Index under 42 U.S.C. 

    If a beneficiary provides evidence that the qualifying major life-
changing event significantly reduced his or her MAGI, we will determine 
the IRMAA based on data from a more recent tax year.\3\ We define a 
significant reduction in MAGI

[[Page 38553]]

as any change that results in a reduction or elimination of IRMAA.\4\ 
The Social Security Act provides that major life-changing events 
include marriage, divorce, death of spouse, or other events specified 
in our regulations.\5\

    \3\ 20 CFR 418.1201.
    \4\ 20 CFR 418.1215.
    \5\ 42 U.S.C. 1395r(i)(4)(C)(ii)(II).

    Prior to the publication of our interim final rule, our regulations 
identified only the following additional events as major life-changing 
events: (1) The termination of a marriage, (2) annulment of a marriage, 
(3) reduced hours or stoppage of work, (4) reductions in income due to 
certain losses of income-producing property, 5) a reduction in or loss 
of income due to a scheduled cessation of a pension, and 6) a reduction 
in or loss of income from an insured pension plan due to termination or 
reorganization of the plan.\6\ Our regulations also provided that we 
did not consider events other than those described in 20 CFR 418.1205 
to be major life-changing events. In addition, under those regulations, 
we did not consider events that affected expenses but not income, or 
that resulted in the loss of dividend income, to be major life-changing 

    \6\ 20 CFR 418.1205.
    \7\ 20 CFR 418.1210.

    We have added a new paragraph (g) to 20 CFR 418.1205 to include the 
receipt of certain settlement payments from an employer or former 
employer in the list of major life-changing events. To qualify as a 
major life-changing event, a settlement payment received by a 
beneficiary or the spouse of a beneficiary must be the result of an 
employer's or former employer's closure, bankruptcy, or reorganization. 
This change allows a beneficiary to request that we base the IRMAA on 
the MAGI from a more recent tax year.
    We also have revised 20 CFR 418.1205(e) to include the loss of 
investment property as a result of fraud or theft due to a criminal act 
by a third party.
    We have also made several other changes to this section of our 
regulations. First, we have specifically provided in final section 
418.1205(e) that the beneficiary's spouse may not direct the loss of 
income-producing property. Previously, our regulations stated that the 
loss could not be at the direction of the beneficiary. We amended our 
regulations to include both the beneficiary and spouse.
    Second, we have revised section 418.1205(e) to clarify that the 
loss of income-producing property due to the ordinary risk of 
investment is not a major life-changing event. In some cases, 
beneficiaries and adjudicators have misinterpreted our current 
regulations in this regard.
    We have made a similar change to 20 CFR 418.1210(b) to clarify that 
we do not consider events that result in the loss of dividend income 
because of the ordinary risk of investment to be major life-changing 
    We have replaced ``insured pension plan'' with ``employer's pension 
plan'' in 20 CFR 418.1205(f). Previously, our regulations provided that 
``a reduction in or loss of income from an insured pension plan due to 
termination or reorganization of the pension plan or a scheduled 
cessation of pension'' qualified as a major life-changing event.\8\ 
This language change qualifies both insured and uninsured pension 
    We also have revised sections 418.1205(e) and (f) and 418.1255(e) 
and (f) to remove the wording that required a reduction in or loss of 
income from these life-changing events. The change made the wording of 
the revised subsections consistent with that of the subsections 
explaining other life-changing events found in 20 CFR 418.1205 and 20 
CFR 418.1255.

Required Evidence

    We also revised 20 CFR 418.1255 to clarify the type of evidence we 
require when a beneficiary asks us to use a more recent tax year to 
calculate an IRMAA based on certain changes in circumstance. If a 
beneficiary or his or her spouse experiences a loss of income-producing 
property due to criminal fraud or theft by a third party, we require 
proof of the conviction, such as a court document, and evidence of 
loss. If a beneficiary or his or her spouse experiences a scheduled 
cessation, termination, or reorganization of an employer's pension 
plan, we require evidence documenting the change in or loss of the 
pension. If a beneficiary or his or her spouse receives a settlement 
from an employer or a former employer because of the employer's 
closure, bankruptcy, or reorganization, we require evidence documenting 
the settlement and the reason(s) for the settlement. These changes make 
it easier for beneficiaries to meet their burden of proving that they 
have experienced a major life-changing event.

Technical Revisions

    We have revised paragraph (d) of 20 CFR 418.1230 and paragraphs 
(c)(2) and (3) of 20 CFR 418.1265 to reflect the addition of new 
paragraph 418.1205(g), which concerns the receipt of certain 
settlements as life-changing events, as discussed above.

Public Comments

    On July 15, 2010, we published an interim final rule with request 
for comments in the Federal Register at 75 FR 41084 and provided a 
sixty-day comment period. We received one comment from a member of the 
public. We carefully considered the concerns expressed in this comment 
but did not make any changes to the final rule.
    We have summarized the commenter's view and have responded to the 
significant issues raised by the commenter that are within the scope of 
the interim final rule.
    Comment: The commenter believes that we are too selective in what 
we consider a major life-changing event, ignoring other possible 
circumstances where an individual might experience an event that would 
have a major impact on his or her financial situation. Specifically, 
the commenter discussed a scenario in which an individual's long-term 
retirement income includes dividends from shares of a company that is 
later sold, forcing the individual to redeem that stock and experience 
a one-time gain that he or she must rely on for retirement. The 
commenter believes that the primary purpose of the MAGI is to require 
individuals with consistently higher incomes to pay higher premiums for 
their Medicare coverage. The commenter suggested that we apply MAGI 
only when the threshold is reached consistently, for example, in two 
out of three successive years.
    The commenter also expressed concern about our revision to 20 CFR 
418.1210(b). The commenter believed that using the phrase ``because of 
the ordinary risk of investment'' to qualify the type of dividend 
income loss not considered a major life-changing event suggests that 
any dividend loss not due to ordinary risk of investment should, in 
turn, qualify as a major life-changing event.
    Response: We believe that the commenter was writing about the IRMAA 
and mistakenly referred to MAGI. We respond accordingly.
    We may grant a request to use a more recent taxable year only if 
the individual's MAGI for that year is significantly less than the 
income for the normally applicable year due to a major life changing 
event. The Act requires that we determine whether IRMAA applies to an 
individual on an annual basis. We base each annual determination on a 
beneficiary's income from the specific tax year identified in section 
1839(i)(4)(B) of the Act, which is generally the tax year from two 
years prior. Thus, we are unable to make

[[Page 38554]]

IRMAA determinations based on a beneficiary's income for two out of 
three successive years. However, because we make determinations 
annually, a beneficiary will not be subject to an IRMAA in consecutive 
years unless the MAGI amount used is above the threshold in consecutive 
years. A one-time increase in MAGI should affect a beneficiary's IRMAA 
for only one year.
    Additionally, the changes made to 20 CFR 418.1210 in the interim 
final rule help address the scenario discussed by the commenter. In the 
scenario, an individual received a one-time gain in income due to a 
forced sale of stock, but experienced a loss of dividend income in 
subsequent years because of the loss of the stock. The changes we made 
to 20 CFR 418.1210 clarify that we do not consider events that result 
in the loss of dividend income to be major life-changing events if the 
reasons for such loss are due to the ordinary risk of investment. 
Conversely, a loss of income-producing financial securities, if the 
circumstances causing the loss are truly beyond a beneficiary's or his 
or her spouse's control and do not involve the ordinary risk of 
investment, may qualify as a major life-changing event in the form of a 
loss of income-producing property under 20 CFR 418.1205(e).
    Accordingly, the interim final rule remains unchanged and we are 
adopting it as final.

Regulatory Procedures

Executive Order 12866 as Supplemented by Executive Order 13563

    We have consulted with the Office of Management and Budget (OMB) 
and determined that this final rule meets the criteria for a 
significant regulatory action under Executive Order 12866 as 
supplemented by Executive Order 13563. Thus, the final rule was 
reviewed by OMB.

Regulatory Flexibility Act

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

Paperwork Reduction Act

    OMB previously approved the new public reporting requirements posed 
by this rule under a separate Information Collection Request (OMB No. 
0960-0735). We are therefore not seeking OMB approval for these 
requirements here under the Paperwork Reduction Act.

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

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.

Michael J. Astrue,
Commissioner of Social Security.

    Accordingly, the interim rule amending 20 CFR chapter III, part 
418, subpart B that was published at 75 FR 41084 on July 15, 2010, is 
adopted as a final rule without change.

[FR Doc. 2011-16526 Filed 6-30-11; 8:45 am]