[Federal Register Volume 77, Number 143 (Wednesday, July 25, 2012)]
[Rules and Regulations]
[Pages 43496-43498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-17935]



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: Final rule.


SUMMARY: This final rule adopts, without change, the interim final rule 
with request for comments we published in the Federal Register on 
December 7, 2010, at 75 FR 75884. The interim final rule contained the 
rules that we apply to determine the income-related monthly adjustment 
amount for Medicare prescription drug coverage (also known as Medicare 
Part D) premiums. This new subpart implemented changes made to the 
Social Security Act (Act) by the Affordable Care Act. The interim final 
rule allowed us to implement the provisions of the Affordable Care Act 
related to the income-related monthly adjustment amount for Medicare 
prescription drug coverage premiums when they went into effect on 
January 1, 2011.

DATES: The interim final rule with request for comments published on 
December 7, 2010 (75 FR 75884) is confirmed as final effective July 25, 

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.



    As we discussed in the interim final rule, in March 2010 Congress 
passed the Affordable Care Act, which established an income-related 
adjustment to Medicare prescription drug coverage premiums.\1\ The 
interim final rule added a new subpart C, Income-Related Monthly 
Adjustments to Medicare Prescription Drug Coverage Premiums, to part 
418 of our rules. Subpart C contains the rules that we 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 

    \1\ Public Law 111-148 Sec.  3308(a).

    The interim final rule also amended our rules on the Medicare Part 
B (supplementary medical insurance) income-related monthly adjustment 
amounts to add section 418.1322. This 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 the same income-related monthly 
adjustment amount determination to your Medicare Part B premium for the 
same effective year.

Public Comments

    On December 7, 2010, we published an interim final rule with 
request for comments in the Federal Register at 75 FR 75884 and 
provided a 60-day comment period. We received one comment from a member 
of the public, comments from one organization, and joint comments from 
four other organizations. We carefully considered the concerns 
expressed in these comments, but did not make any changes to the 
interim final rule. We have summarized the commenters' views and have 
responded to the significant comments that are within the scope of the 
interim final rule.
    Comment: One commenter stated that the reasoning behind charging 
higher Medicare premiums is flawed because citizens who have 
contributed more to the system should have access to the same products 
and benefits at the same rate as other citizens. The commenter 
considered the income-related monthly adjustment to be a tax that could 
only be established by amending the tax code and suggested that a 
better alternative would be to reduce Medicare premiums and apportion 
the costs for primary coverage among the multiple health insurance 
policies that he believes most beneficiaries have.
    Response: We have not adopted this comment because the reduction of 
Federal premium subsidies was legislated by Congress, and our 
regulations must conform to the provisions of the law.
    Comment: One organization suggested that we provide notices to 
beneficiaries affected by the income-related monthly adjustment as 
early as possible, for example, by October 31 for premium adjustments 
beginning the following January. The commenter stated that early notice 
would give enrollees time

[[Page 43497]]

to adjust their finances, raise any disagreements with income 
determinations, and reduce the number of retroactive adjustments that 
are required.
    Response: We did not adopt this comment. The Internal Revenue 
Service provides us with modified adjusted gross income data no later 
than October 15 of each year, as required by law.\2\ We must then 
process the data, verify our data processing, print, and mail the 
notices. For this reason, we cannot provide notice to beneficiaries 
regarding the income-related monthly adjustment amount as early as 
October 31. We do strive to mail the notices promptly and believe that 
delivery before December provides sufficient time for beneficiaries to 
make suitable preparations.

    \2\ 42 U.S.C. 1395w-113(a)(7)(E)(ii).

    These notices contain information about beneficiaries' appeal 
rights and notify the beneficiaries that they have 60 days to file an 
appeal when they disagree with the determination. Our notices also 
inform the beneficiaries of their right to request a new initial 
    Comment: Another comment encouraged us to develop materials to 
explain what beneficiaries who pay an income-related monthly adjustment 
can do if they experience a major life-changing event and a significant 
reduction in income, but have not yet filed a tax return reflecting 
that change.
    Response: We already provide information to beneficiaries 
concerning the issues the commenter raised. When we send a letter 
telling a beneficiary that he or she must pay an income-related monthly 
adjustment, we include comprehensive information about what the 
beneficiary can do if he or she experiences a major life-changing event 
with a significant reduction in income. We also make available at our 
offices and on our web site, publications with information explaining 
this issue.\3\ The Centers for Medicare & Medicaid Services (CMS) also 
provides information on this subject on its Medicare Web site, 

    \3\ See, e.g., Medicare Premiums: Rules for Higher-Income 
Beneficiaries. Available at: http://www.socialsecurity.gov/pubs/10536.pdf.

    Comment: A comment submitted jointly by four organizations proposed 
a change in regulations to clarify that a beneficiary's appeal of the 
imposition of an income-related monthly adjustment on Medicare Part B 
would automatically apply to an income-related monthly adjustment 
imposed on Medicare prescription drug coverage, and vice versa. In 
addition, the organizations suggested that if a beneficiary appeals 
either a Medicare Part B or Medicare prescription drug coverage income-
related monthly adjustment initial determination, we should suspend 
determinations for both parts until the appeals process is complete and 
there is a final determination. The commenters proposed that joining 
the appeals and determinations resulting from those appeals would be 
beneficial in saving time and paperwork.
    Response: We agree that 20 CFR 418.1322 and 418.2322 ensure that we 
apply any income-related monthly adjustment decision made in one 
program to the other. Under these provisions, if we make a new decision 
or change a decision on appeal for one program, we will also apply the 
decision to the other program.
    Thus, if a beneficiary has both Medicare Part B and Medicare 
prescription drug coverage, any changes to an income-related monthly 
adjustment determination made on appeal will affect both programs and 
separate appeals are not necessary. In the current income-related 
monthly adjustment appeal process, we do not suspend the collection of 
the income-related monthly adjustment while the beneficiary appeals the 
determination. We make every effort possible to adjudicate the appeal 
quickly and implement the decision immediately thereafter. If an appeal 
decision results in an overpayment of premiums, we process refunds 
without additional action by the beneficiary.
    Comment: Another commenter proposed a change in regulations to 
allow a request for a new initial determination when a beneficiary 
believes that CMS has provided incorrect Medicare prescription drug 
coverage information. The commenter stated that beneficiaries not 
enrolled in a Medicare prescription drug coverage plan are entitled to 
a workable Social Security Administration (SSA) process to establish 
that an income-related monthly adjustment does not apply. In addition, 
the commenter suggested that regulatory language include a requirement 
that Medicare prescription drug plan sponsors, CMS, and SSA exchange 
updated enrollment information frequently to decrease the probability 
that beneficiaries are charged an income-related monthly adjustment 
    Response: We are not involved in the Medicare prescription drug 
coverage enrollment process and we cannot determine the absence of 
coverage without CMS input. Additionally, adding a process to allow a 
beneficiary to establish the absence of Medicare prescription drug 
coverage could negatively affect beneficiaries who merely change plans 
or re-enroll shortly thereafter. The income-related monthly adjustment 
could be removed and result in the beneficiary owing a lump sum payment 
when the new plan information is received. CMS provides us with 
information about participation in Medicare-approved prescription drug 
coverage, and we refund any incorrectly billed income-related monthly 
adjustment for prescription drug coverage money as soon as possible.
    Comment: The four organizations also suggested that we include the 
language of the subpart B regulations in the subpart C regulations 
rather than incorporating the text by cross-references.
    Response: We have not adopted the comment. We believe that stating 
the language one time promotes administrative simplicity. We use cross-
references in our regulations in other instances, and we are confident 
that they do not confuse the reader or make it more difficult to use 
our regulations. Guidelines issued by the Office of the Federal 
Register authorize agencies to use cross-references in their rules in 
appropriate situations, and we believe that the situations in which we 
have used cross-references in these rules are necessary and 
appropriate. Moreover, adding the subpart B text to our subpart C rules 
would make the subpart C regulations more complicated and more 
difficult to use.

Regulatory Procedures

Executive Order 12866 as supplemented by Executive Order 13563

    We 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, OMB reviewed the final rule.

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

    These rules do not create any new or affect any existing 
collections and, therefore, do not require Office of Management and 
Budget approval under the Paperwork Reduction Act.

(Catalog of Federal Domestic Assistance Program Nos. 93.770 Medicare 

[[Page 43498]]

Drug Coverage; 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.

Michael J. Astrue,
Commissioner of Social Security.

    Accordingly, the interim final rule amending 20 CFR chapter III, 
part 418, subpart B and adding subpart C that was published at 75 FR 
75884 on December 7, 2010, is adopted as a final rule without change.
[FR Doc. 2012-17935 Filed 7-24-12; 8:45 am]