2010-32848. Amendments to Regulations Regarding Eligibility for a Medicare Prescription Drug Subsidy

AGENCY:

Social Security Administration.

ACTION:

Interim final rule with request for comments.

SUMMARY:

We are revising our regulations to incorporate changes to the Medicare prescription drug coverage low-income subsidy (Extra Help) program made by the Affordable Care Act which was enacted on March 23, 2010. Under our interpretation of section 3304 of the Affordable Care Act and this interim final rule, if the death of a beneficiary's spouse would decrease or eliminate the subsidy provided by the Extra Help program, we will, based on a determination, or redetermination, extend the effective period of eligibility for the most recent determination or redetermination until 1 year after the month following the month we are notified of the death of the spouse. These regulatory changes will allow us to implement this provision of the Affordable Care Act when it goes into effect on January 1, 2011. We are also revising our regulations to incorporate changes made by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), which affect the way we account for income and resources when determining eligibility for the Extra Help program. The statute provides that we no longer count as a resource the value of any life insurance policy for Extra Help applications filed, or redeterminations that are effective, on or after January 1, 2010. In addition, we will no longer count as income the help a beneficiary receives when someone else provides food and shelter, or pays household bills for food, mortgage, rent, electricity, water, property taxes, or heating fuel or gas. These revisions will update our rules to reflect these statutory changes.

DATES:

Effective Date: This interim final rule will be effective January 1, 2011.

Comment Date: To ensure that your comments are considered, we must receive them no later than February 28, 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-2010-0033 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-2010-0033. 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 [phone].

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, [phone]. 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 prescription drug coverage is a voluntary program that covers various prescription drugs. The regulations and requirements for the program are codified in 42 CFR Part 423. The Centers for Medicare & Medicaid Services (CMS) promulgates rules and regulations concerning the Medicare program. Anyone who meets the requirements in 42 CFR 423.30(a) can enroll in Medicare prescription drug coverage. Medicare prescription drug coverage beneficiaries are responsible for deductibles, cost-sharing, and monthly premiums towards the cost of covered prescriptions. Costs vary by plan.

Beneficiaries with Medicare prescription drug coverage who have limited income and resources may qualify for Extra Help with their monthly premiums, deductibles, and cost-sharing for Medicare prescription drug coverage. To qualify for Extra Help a Medicare beneficiary must reside in one of the 50 states or the District of Columbia and must have resources and income within specific limits.

Congress passed MIPPA in July of 2008.^[1] Section 116 of MIPPA exempts certain items from income and resources determinations of Extra Help eligibility for applications filed on or after January 1, 2010. We also apply these exemptions to redeterminations that become effective on or after January 1, 2010. The items exempted under section 116 are the cash surrender value of life insurance and in-kind support and maintenance. To implement these requirements of MIPPA, we issued guidance in August 2009 and discontinued counting these exempted items for applications and redeterminations in accordance with the requirements of the statute. Accordingly, we no longer count as income the help a beneficiary receives when someone else provides food and shelter, or pays for food, mortgage, rent, heating fuel or gas, electricity, water, or property taxes. To reflect these statutory exemptions, we have revised sections 418.3335(b) and 418.3350 and deleted section 418.3345 of our regulations.

In March 2010, Congress passed the Affordable Care Act, which extends the effective date of a determination or redetermination of an Extra Help subsidy due to the death of a spouse.^[2] Currently, any adjustment in the amount of Extra Help the beneficiary receives is effective the month after the month in which we are notified of the death of a spouse. In some cases, the death of a spouse could result in a decrease in the amount or loss of Extra Help eligibility for the beneficiary.

Effective January 1, 2011, if the death of the spouse would decrease or eliminate the subsidy provided by the Extra Help program, we will extend the effective period for a determination or redetermination until 1 year after the date on which it would otherwise cease to be effective—that is, the month after the month we are notified of the death of the spouse. In order to reflect the changes made by the Affordable Care Act, we have revised sections 418.3120 and 418.3123 of our regulations.

Our current Extra Help rules at 418.3350(b) state that we do not count as income the unearned income described in sections 416.1124(b), (c)(1) through (c)(12), and (c)(14) through (c)(21). Our current rule omits a reference to paragraph 416.1124(c)(22), which we added after we published section 418.3350 in December 2005. We are updating the reference in section 418.3350 to correct this omission. This is a technical change only and does not affect the substance of our rules.

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 interim final 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 these rules?

We will start to use this rule on the effective date shown under DATES earlier in this preamble.

We are also inviting public comment on the changes made by this rule. We 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 rule. 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 the agency incorporates a statement of the finding and its reasons in the rule issued.^[3]

We find good cause exists for proceeding without prior public notice and comment with respect to the new rules that exempt in-kind support and maintenance and the cash surrender value of life insurance policies from being counted as income or resources for determining Extra Help eligibility because the policies implemented with these rules are nondiscretionary under MIPPA. We implemented the policies on their effective date of January 1, 2010. Accordingly, we find that prior public comment with respect to these changes is unnecessary.

Beginning January 1, 2011, section 3304 of the Affordable Care Act requires us to implement the provision that extends the effective date of a decrease or elimination of an Extra Help subsidy due to the death of a spouse. In light of the March 23, 2010, enactment date of the Affordable Care Act and our need to have authority in place to implement section 3304 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 provision in a timely manner. Therefore, we find that the use of the APA's notice and comment rulemaking procedures would be impracticable in this situation. However, we are inviting public comment on the rule and will consider any relevant 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.^[4] For the reasons stated above, we find it is impracticable and unnecessary to delay the effective date of the changes we are making in this interim final rule. Accordingly, we are making this interim final rule effective January 1, 2011.

Executive Order 12866

We have consulted with the Office of Management and Budget (OMB) and determined that this interim final rule meets 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 final 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 Prescription Drug Coverage; 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: December 23, 2010.

Michael J. Astrue,

Commissioner of Social Security.

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

PART 418—MEDICARE SUBSIDIES

Subpart D—Medicare Part D Subsidies

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

Authority: Secs. 702(a)(5) and 1860D-1, 1860D-14 and -15 of the Social Security Act (42 U.S.C. 902(a)(5), 1395w-101, 1395w-114, and -115).

2. Amend § 418.3120 to revise paragraph (a)(3) and add paragraph (b)(4) to read as follows:

§ 418.3120

What happens if your circumstances change after we determine you are eligible for a subsidy?

(a) * * *

(3) Subject to the provisions of paragraph (b)(4) of this section, your spouse, who lives with you, dies.

* * * * *

(b) * * *

(4) If your spouse who lives with you dies, your spouse's death may result in changes in your income or resources that could decrease or eliminate your subsidy. If we are informed of the death of your spouse and the death would cause a decrease in or elimination of your subsidy, we will notify you that we will not immediately change your subsidy because of your spouse's death. We will defer your redetermination for 1 year from the month following the month we are notified of the death of your spouse, unless we receive a report of another event specified in 418.3120(a) that would affect your eligibility for a subsidy.

3. Amend § 418.3123 to add paragraph (e) to read as follows:

§ 418.3123

When is a change in your subsidy effective?

* * * * *

(e) Special rule for widows and widowers.—If your spouse who lives with you dies and the changes in your income or resources resulting from your spouse's death would decrease or eliminate your subsidy, we will defer your next redetermination for 1 year from the month following the month we are notified of the death of your spouse, unless we receive a report of another event specified in 418.3120(a) that would affect your eligibility for a subsidy.

4. Amend § 412.3335 to revise paragraph (b) to read as follows:

§ 418.3335

What types of unearned income do we count?

* * * * *

(b) For claims filed before January 1, 2010, and redeterminations that are effective before January 1, 2010, we also count in-kind support and maintenance as unearned income. In-kind support and maintenance is any food and shelter given to you or that you receive because someone else pays for it.

§ 418.3345

[Removed]

5. Remove § 418.3345.

6. Revise § 418.3350 to read as follows:

§ 418.3350

What types of unearned income do we not count?

(a) For claims filed on or after January 1, 2010 and redeterminations that are effective on or after January 1, 2010, we do not count as income in-kind support and maintenance.

(b) While we must know the source and amount of all of your unearned income, we do not count all of it to determine your eligibility for the subsidy. We apply to your unearned income the exclusions in § 418.3350(c) in the order listed. However, we do not reduce your unearned income below zero, and we do not apply any unused unearned income exclusion to earned income except for the $20 per month exclusion described in § 416.1124(c)(12) of this chapter. For purposes of determining eligibility for a subsidy and whether you should receive a full or partial subsidy, we treat the $20 per month exclusion as a $240 per year exclusion.

(c) We do not count as income the unearned income described in § 416.1124(b) and (c) of this chapter, except for paragraph (c)(13).

(d) We do not count as income any dividends or interest earned on resources you or your spouse owns.

7. Amend § 418.3405 to revise paragraph (a) to read as follows:

§ 418.3405

What types of resources do we count?

(a) We count liquid resources. Liquid resources are cash, financial accounts, and other financial instruments that can be converted to cash within 20 workdays, excluding certain non-workdays as explained in § 416.120(d) of this chapter. Examples of resources that are ordinarily liquid include: stocks, bonds, mutual fund shares, promissory notes, mortgages, life insurance policies (for claims filed before January 1, 2010, and redeterminations that are effective before January 1, 2010), financial institution accounts (including savings, checking, and time deposits, also known as certificates of deposit), retirement accounts (such as individual retirement accounts or 401(k) accounts), revocable trusts, funds in an irrevocable trust if the trust beneficiary can direct the use of the funds, and similar items. We will presume that these types of resources can be converted to cash within 20 workdays and are countable as resources for subsidy determinations. However, if you establish that a particular resource cannot be converted to cash within 20 workdays, we will not count it as a resource.

* * * * *

8. Amend § 418.3425 to revise paragraph (f) to read as follows:

§ 418.3425

What resources do we exclude from counting?

* * * * *

(f) For claims filed on or after January 1, 2010, and redeterminations that are effective on or after January 1, 2010, life insurance owned by an individual (and spouse, if any).

* * * * *

Footnotes

1.  Public Law 110-275.

2.  Public Law 111-148 § 3304.

3.  5 U.S.C. 553(b)(B).

4.  See 5 U.S.C. 553(d)(3).