[Federal Register Volume 75, Number 135 (Thursday, July 15, 2010)]
[Rules and Regulations]
[Pages 41084-41087]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-17198]
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SOCIAL SECURITY ADMINISTRATION
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
Premiums
AGENCY: Social Security Administration.
ACTION: Interim rule with request for comments.
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SUMMARY: We are modifying our regulations to clarify and revise 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. Recent changes in
the economy and other unforeseen events have had a significant effect
on many Medicare Part B beneficiaries. The changes we are making in
this interim final rule will allow us to respond appropriately to
circumstances brought about by the current economic climate and other
unforeseen events, as described below.
DATES:
Effective Date: This interim rule will be effective July 15, 2010.
Comment Date: To ensure that your comments are considered, we must
receive them no later than September 13, 2010.
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-2009-0078 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-2009-0078. 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:
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 Part B is a voluntary medical insurance program that
provides coverage for services such as physician's 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
functions.
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 thresholds and ranges.
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\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).
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The Internal Revenue Service (IRS) provides us with MAGI
information. We use MAGI and Federal income tax filing status for the
tax year 2 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 2 years before the effective
year, we will use information from the tax year 3 years before the
effective year until the later information becomes available.
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\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.
1395r(i)(5).
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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. If a beneficiary provides evidence that the qualifying
major life-changing event reduces his or her MAGI below the threshold
amount, we will determine the IRMAA based on data from a more recent
tax year.\3\ We define a significant reduction in MAGI 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
[[Page 41085]]
spouse, or other events specified in our regulations.\5\
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\3\ 20 CFR 418.1201.
\4\ 20 CFR 418.1215.
\5\ 42 U.S.C. 1395r(i)(4)(C)(ii)(II).
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Our current regulations identify the following additional events as
major life-changing events: (1) The annulment of a marriage, (2) a work
stoppage, (3) reduced hours of work, (4) reductions in income due to
certain losses of income-producing property, (5) 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
current regulations also provide that we do not consider events other
than those described in 20 CFR 418.1205 to be major life-changing
events. In addition, under our current regulations we do not consider
events that affect expenses but not income, or that result in the loss
of dividend income, to be major life-changing events.\7\
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\6\ 20 CFR 418.1205.
\7\ 20 CFR 418.1210.
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Recent changes in the economy and other unforeseen events have
significantly affected many Medicare Part B beneficiaries. These
unforeseen events have caused reductions in the MAGI of beneficiaries
for the tax years following the tax year reported to us by the IRS,
which results in IRMAAs that may be higher than a beneficiary's ability
to pay. Several major employers in the United States have closed or
reorganized in recent years. As a result, some companies have provided
settlement payments to current and retired employees in lieu of
periodic pension payments, extended health insurance coverage, or both.
These settlement payments have caused an unexpected one-time increase
in a beneficiary's income for a tax-reporting year, which in turn may
result in the imposition of an IRMAA or a higher IRMAA.
In order to address these recent changes in the economy, we are
adding a new paragraph (g) to 20 CFR 418.1205 to include the receipt of
a settlement payment 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 will allow a
beneficiary to request that we base the IRMAA on the MAGI from a more
recent tax year.
Section 418.1205(e) of our current regulations provides that a
reduction in the income of a beneficiary or the spouse of a beneficiary
due to a loss of income-producing property is a major life-changing
event. In order to qualify as a major life-changing event, the loss of
income-producing property must not be at the direction of the
beneficiary, such as through the sale or transfer of the property.
Section 418.1205(e) provides some examples of qualifying property
losses. Most examples in the current regulation result from natural
disasters, but we also include the loss of income from real property
due to the criminal act of arson as an example of a life-changing
event. Some beneficiaries also have experienced a loss of income-
producing property as the result of another type of criminal act: Fraud
or theft. To address this situation, we are revising 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 are also making several other changes to this section of our
regulations. First, we are specifically providing that the
beneficiary's spouse cannot direct the loss of income-producing
property. While our current regulations state that the loss cannot be
at the direction of the beneficiary, it was our intent to include both
the beneficiary and spouse. Second, we are revising 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 are making 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 as the result of the ordinary risk of
investment to be major life-changing events.
Our current regulations provide 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'' qualifies as a major life-changing event.\8\ Recently, a
number of uninsured pension plans have been terminated or reorganized.
The termination or reorganization of an uninsured pension plan does not
qualify as a major life-changing event under our current regulations.
To ensure that Medicare Part B beneficiaries who experience a loss of
income under these circumstances can request new initial determinations
using a more recent tax year, we are replacing ``insured pension plan''
with ``employer's pension plan'' in 20 CFR 418.1205(f). This language
change will qualify both insured and uninsured pension plans.
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\8\ 20 CFR 418.1205(f).
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We are further revising sections 418.1205(e) and (f) and
418.1255(e) and (f) to remove the wording that requires a reduction in
or loss of income from these life-changing events. This language has
confused beneficiaries and adjudicators and is redundant in light of
the first sentence of current section 418.1201(b), which we are not
revising. That sentence says that in order to use information from a
more recent tax year because of a major life-changing event, the event
must ``result in a significant reduction in your modified adjusted
gross income for the year which you request we use and the next year,
if applicable.'' The change we are making will make 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 are also revising 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
will require proof of the conviction 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 will
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 will require evidence documenting the settlement and
the reason(s) for the settlement. These changes will make it easier for
a beneficiary to meet the burden of proof for establishing a major
life-changing event.
Technical Revisions
We are revising 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 addition of receipt of
certain settlements as life-changing events, as discussed above.
When will we start to use this rule?
We will start to use this rule on the date shown under DATES
earlier in this preamble.
We are also inviting public comment on the changes made by this
rule. We
[[Page 41086]]
will consider any relevant comments we receive. We will publish a final
rule to respond to those comments and to make any appropriate changes.
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 as
impracticable, unnecessary, or contrary to the public interest.\9\
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\9\ 5 U.S.C. 553(b)(B).
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We find that good cause exists for proceeding without prior public
notice and comment because any delay in revising our regulations could
negatively affect the financial welfare of our beneficiaries. This
interim rule addresses, among other things, the unintended consequences
of higher Medicare Part B premium burdens for beneficiaries who have
lost their pensions or suffered other deleterious effects due to the
economic recession. Accordingly, we find that prior public comment
would be contrary to the public interest. However, we are inviting
public comment on the interim rule, and we will consider any responsive
comments we receive within 60 days of the publication of the interim
rule.
We also find good cause for proceeding without prior public notice
and comment regarding the technical revisions we are making in 20 CFR
418.1205(e) and (f) and 20 CFR 418.1255(e) and (f). These revisions
simply make the language defining each life-changing event consistent
and will have no substantive effect on the IRMAA program. Therefore, we
find that public comment is unnecessary regarding those changes.
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
interim rule.\10\ Because unintended and extraordinary hardships to
affected Medicare Part B beneficiaries and their families could occur
if we delay the effective date of this interim rule, we find that it is
contrary to the public interest to delay the effective date of our rule
changes. Additionally, because the technical revisions to 20 CFR
418.1205(e) and (f) and 20 CFR 418.1255(e) and (f) have no substantive
effect on how we determine what is a major life-changing event, we find
that it is unnecessary to delay the effective date of those changes.
Accordingly, we are making this interim rule effective upon
publication.
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\10\ 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 interim rule does meet the criteria for a
significant regulatory action under Executive Order 12866. It was
subject to OMB formal review.
Regulatory Flexibility Act
We certify that this interim 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
The Office of Management and Budget (OMB) previously approved the
new public reporting requirements posed by these rules 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
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: April 20, 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, subpart B as set forth below:
PART 418--MEDICARE SUBSIDIES
Subpart B--[Amended]
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. Amend Sec. 418.1205 to revise paragraphs (e) and (f) and add
paragraph (g) to read as follows:
Sec. 418.1205 What is a major life-changing event?
* * * * *
(e) 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;
(f) You or your spouse experiences a scheduled cessation,
termination, or reorganization of an employer's pension plan;
(g) You or your spouse receives a settlement from an employer or
former employer because of the employer's closure, bankruptcy, or
reorganization.
0
3. Amend Sec. 418.1210 to revise paragraph (b) to read as follows:
Sec. 418.1210 What is not a major life-changing event?
* * * * *
(b) Events that result in the loss of dividend income because of
the ordinary risk of investment.
0
4. Amend Sec. 418.1230 to revise paragraph (d) to read as follows:
Sec. 418.1230 What is the effective date of an income-related monthly
adjustment amount initial determination that is based on a more recent
tax year?
* * * * *
(d) Our initial determination will be effective January 1 of the
year following the year you make your request, when your modified
adjusted gross income will not be significantly reduced as a result of
one or more of the events described in Sec. 418.1205(a) through (g)
until the year following the year you make your request.
0
5. Amend Sec. 418.1255 to revise paragraphs (e) and (f) and add
paragraph (g) to read as follows:
Sec. 418.1255 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?
* * * * *
(e) If you or your spouse experiences a loss of income-producing
property, we will require evidence documenting the loss. Examples of
acceptable evidence include, but are not limited to, insurance claims
or an insurance
[[Page 41087]]
adjuster's statement. If the claim of loss is due to criminal fraud or
theft by a third party, we will also require proof of conviction for
the fraud or theft, such as a court document.
(f) If you or your spouse experiences a scheduled cessation,
termination, or reorganization of an employer's pension plan, we will
require evidence documenting the change in or loss of the pension. An
example of acceptable evidence includes, but is not limited to, a
statement from your pension fund administrator explaining the reduction
or termination of your benefits.
(g) If you or your spouse receives a settlement from an employer or
former employer because of the employer's closure, bankruptcy, or
reorganization, we will require evidence documenting the settlement and
the reason(s) for the settlement. An example of acceptable evidence
includes, but is not limited to, a letter from the former employer
stating the settlement terms and how they affect you or your spouse.
0
6. Amend Sec. 418.1265 to revise paragraphs (c)(2) and (c)(3) to read
as follows:
Sec. 418.1265 What kind of evidence of a significant modified
adjusted gross income reduction will you need to support your request?
* * * * *
(c) * * *
(2) If you experience one or more of the events described in Sec.
418.1205(d), (e), (f), or (g), you must provide evidence of how the
event(s) significantly reduced your modified adjusted gross income,
such as a statement explaining any modified adjusted gross income
changes for the tax year we used and a copy of your filed Federal
income tax return (if you have filed one).
(3) If your spouse experiences one or more of the events described
in Sec. 418.1205(d), (e), (f), or (g), you must provide evidence of
the resulting significant reduction in your modified adjusted gross
income. The evidence requirements are described in paragraph (c)(2) of
this section.
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[FR Doc. 2010-17198 Filed 7-14-10; 8:45 am]
BILLING CODE 4191-02-P