55152 Federal Register / Vol. 72, No. 188 / Friday, September 28, 2007 / Proposed Rules 

In addition, the attributes of M1’s 

intercompany income and M2’s 

corresponding deduction are redetermined to 

produce the same effect as if the transaction 

had occurred between divisions of a single 

corporation. Under paragraph (c)(4)(i) of this 

section, the attributes of M2’s corresponding 

deduction control the attributes of M1’s 

intercompany income. (Although M1 is the 

selling member with respect to the payment 

on April 1 of year 2, it might be the buying 

member in a subsequent period if it owes the 

net payment.) 

(iii) Dealer. The facts are the same as in 

paragraph (i) of this Example 11, except that 

M2 is a dealer in securities, and the contract 

with M1 is not inventory in the hands of M2. 

Under section 475, M2 must mark its 

securities to fair market value at year-end. 

Assume that under section 475, M2’s loss 

from marking to fair market value the 

contract with M1 is $10. Because M2 realizes 

an amount of loss from the mark to fair 

market value of the contract, the transaction 

is a triggering transaction under paragraph 

(g)(3)(i)(A)(1) of this section. Under 

paragraph (g)(3)(ii) of this section, M2 is 

treated as making a $10 payment to M1 to 

terminate the contract immediately before a 

new contract is treated as reissued with an 

up-front payment by M1 to M2 of $10. M1’s 

$10 of income from the termination payment 

is taken into account under the matching rule 

to reflect M2’s deduction under § 1.446–3(h). 

The attributes of M1’s intercompany income 

and M2’s corresponding deduction are 

redetermined to produce the same effect as 

if the transaction had occurred between 

divisions of a single corporation. Under 

paragraph (c)(4)(i) of this section, the 

attributes of M2’s corresponding deduction 

control the attributes of M1’s intercompany 

income. Accordingly, M1’s income is treated 

as ordinary income. Under § 1.446–3(f), the 

deemed $10 up-front payment by M1 to M2 

in connection with the issuance of a new 

contract is taken into account over the term 

of the new contract in a manner reflecting the 

economic substance of the contract (for 

example, allocating the payment in 

accordance with the forward rates of a series 

of cash-settled forward contracts that reflect 

the specified index and the $1,000 notional 

principal amount). (The timing of taking 

items into account is the same if M1, rather 

than M2, is the dealer subject to the markto-market requirement of section 475 at yearend. However in this case, because the 

attributes of the corresponding deduction 

control the attributes of the intercompany 

income, M1’s income from the deemed 

termination payment from M2 might be 

ordinary or capital). Under paragraph 

(g)(3)(ii)(A) of this section, section 475 does 

not apply to mark the notional principal 

contract to fair market value after its deemed 

satisfaction and reissuance. 

(8) Effective/applicability date. The 

rules of this paragraph (g) apply to 

transactions involving intercompany 

obligations occurring in consolidated 

return years beginning on or after the 

date of publication of the Treasury 

decision adopting these rules as final 

regulations in the Federal Register. 

* * * * * 

Kevin M. Brown, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. E7–19134 Filed 9–27–07; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 406, 407, and 408 

[CMS–4129–P] 

RIN 0938–A077 

Medicare Program; Special Enrollment 

Period and Medicare Premium 

Changes 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

provide a special enrollment period 

(SEP) for Medicare Part B and premium 

Part A for certain individuals who are 

sponsored by prescribed organizations 

as volunteers outside of the United 

States and who have health insurance 

that covers them while outside the 

United States. Under the SEP provision, 

qualifying volunteers can delay 

enrollment in Part B and premium Part 

A, or terminate such coverage, for the 

period of service outside of the United 

States and reenroll without incurring a 

premium surcharge for late enrollment 

or reenrollment. 

This proposed rule would also codify 

provisions that require certain 

beneficiaries to pay an income-related 

monthly adjustment amount (IRMAA) 

in addition to the standard Medicare 

Part B premium, plus any applicable 

increase for late enrollment or 

reenrollment. The income-related 

monthly adjustment amount is to be 

paid by beneficiaries who have a 

modified adjusted gross income that 

exceeds certain threshold amounts. It 

also represents the amount of decreases 

in Medicare Part B premium subsidy, 

that is, the amount of the Federal 

government’s contribution to the 

Federal Supplementary Medicare 

Insurance (SMI) Trust Fund. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on November 27, 2007. 

ADDRESSES: In commenting, please refer 

to file code CMS–4129–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (no duplicates, please): 

1. Electronically. You may submit 

electronic comments on specific issues 

in this regulation to http:// 

www.cms.hhs.gov/eRulemaking. Click 

on the link ‘‘Submit electronic 

comments on CMS regulations with an 

open comment period.’’ (Attachments 

should be in Microsoft Word, 

WordPerfect, or Excel; however, we 

prefer Microsoft Word.) 

2. By regular mail. You may mail 

written comments (one original and two 

copies) to the following address ONLY: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–4129–

P, P.O. Box 8017, Baltimore, MD 21244–

8017. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments (one 

original and two copies) to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–4129–P, Mail Stop C4–26–05, 

7500 Security Boulevard, Baltimore, MD 

21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments (one original 

and two copies) before the close of the 

comment period to one of the following 

addresses. If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786–

7195 in advance to schedule your 

arrival with one of our staff members. 

Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; or 7500 

Security Boulevard, Baltimore, MD 

21244–1850. 

(Because access to the interior of the 

HHH Building is not readily available to 

persons without Federal government 

identification, commenters are 

encouraged to leave their comments in 

the CMS drop slots located in the main 

lobby of the building. A stamp-in clock 

is available for persons wishing to retain 

a proof of filing by stamping in and 

retaining an extra copy of the comments 

being filed.) 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Submission of comments on 

paperwork requirements. You may 


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submit comments on this document’s 

paperwork requirements by mailing 

your comments to the addresses 

provided at the end of the ‘‘Collection 

of Information Requirements’’ section in 

this document. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: Sam 

DellaVecchia, (410) 786–4481. Denise 

Cox, (410) 786–3195. 

SUPPLEMENTARY INFORMATION: 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this rule to assist us in fully 

considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–4129–P 

and the specific ‘‘issue identifier’’ that 

precedes the section on which you 

choose to comment. 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http://www.cms.hhs.gov/ 

eRulemaking. Click on the link 

‘‘Electronic Comments on CMS 

Regulations’’ on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

I. Background 

A. General 

Medicare is a Federal health 

insurance program that helps millions 

of Americans pay for health care. 

Beneficiaries include eligible 

individuals age 65 or older and certain 

people younger than age 65 who also 

qualify to receive Medicare. These 

individuals include those who have 

disabilities and those who have 

permanent kidney failure (end stage 

renal disease). 

Medicare Parts A and B are the 

subject of this proposed rule. Hospital 

insurance (Part A) helps to pay for 

inpatient care in hospitals, skilled 

nursing facilities, as well as home 

health care and hospice care. Part B or 

supplementary medical insurance (SMI) 

helps to pay for physicians’ services, 

outpatient hospital services, durable 

medical equipment, and a number of 

other medical services and supplies that 

are not covered under Part A. 

Part A is financed primarily through 

compulsory payroll taxes under the 

Federal Insurance Contributions Act 

(‘‘FICA’’). Individuals age 65 or over 

who are entitled to receive Social 

Security or railroad retirement benefits, 

or who are eligible for Social Security 

benefits and have filed an application 

for hospital insurance, are entitled to 

receive Part A benefits without paying 

a monthly premium. However, 

individuals who do not qualify for 

premium-free Part A, may voluntarily 

enroll in Part A but are required to pay 

a monthly premium. These individuals 

generally include those who have not 

worked 10 years in Medicare-covered 

employment or are not the spouse, 

divorced spouse or widow(er) of an 

individual who has worked 10 years in 

Medicare-covered employment. In 

addition, they must meet the following 

requirements: (1) Be at least age 65; (2) 

a resident of the United States; (3) a 

United States citizen or an alien who 

has been lawfully admitted for 

permanent residence and who has 

resided continuously in the United 

States for the 5 year period immediately 

preceding the month of enrollment; (4) 

not otherwise eligible to receive Part A 

benefits without having to pay a 

premium; and (5) entitled to Part B or 

are eligible and have enrolled. 

Enrollment in Part B is open to all 

persons who are entitled to Part A 

benefits, as well as to persons who are 

not entitled to Part A benefits provided 

certain requirements are satisfied. Part B 

is financed primarily through premiums 

paid by or on behalf of beneficiaries, 

along with transfers made from the 

General Fund of the Treasury. Section 

1839(a) of the Social Security Act (the 

Act) requires the Secretary of Health 

and Human Services to determine the 

Medicare Part B standard monthly 

premium amount annually. Currently, 

the standard monthly premium 

represents approximately 25 percent of 

the estimated total Part B program cost 

for each aged enrollee. The remaining 

75 percent of the total estimated cost is 

subsidized by the Federal government 

through transfers to the Federal SMI 

Trust Fund from the General Fund of 

the Treasury. 

Individuals who do not enroll in Part 

B or premium Part A when first eligible 

or who enroll and later terminate their 

coverage may only enroll during the 

general enrollment period, which is 

January through March of each year, 

unless an exception applies. The 

coverage will be effective the following 

July 1. Under section 1839(b) of the Act, 

individuals who delay enrolling in 

premium Part A or Part B for 12 or more 

months must pay a premium surcharge. 

B. General Enrollment Period 

Exceptions 

1. Special Enrollment Period (SEP) 

Currently, section 1837(i) provides a 

special enrollment period (SEP) for 

individuals age 65 or over who are 

working or who are the spouses of 

working individuals who are covered 

under a group health plan (GHP). For 

disabled individuals, who are under age 

65, the SEP applies if the individual is 

covered by a GHP by reason of the 

current employment status of the 

individual or the individual’s spouse, or 

if the individual is covered by a large 

group health plan (LGHP) by reason of 

the current employment status of the 

individual or a member of the 

individual’s family. In this type of 

situation, enrollment in Part B can take 

place anytime the individual is covered 

under the GHP or LGHP based on 

current employment status or during the 

8-month period that begins the first full 

month after the GHP or LGHP coverage 

ends. Because section 1818(c) of the Act 

provides that the enrollment provisions 

in section 1837 (except subsection f 

thereof) apply to persons authorized to 

enroll in premium Part A, we have 

extended this SEP to premium Part A 

enrollments. 

2. Transfer Enrollment Period (TEP) 

Another exception is the transfer 

enrollment period (TEP) for enrollment 

in premium Part A. The TEP is for 

individuals age 65 or older who are 

otherwise eligible to enroll in premium 

Part A; are enrolled in a plan with an 

organization listed in section 1876 of 

the Act; and whose coverage under the 

plan is terminated for any reason. Here, 

an individual may enroll in premium 

Part A beginning any month that the 

individual is enrolled in the plan, and 

ending with the last day of the 8-month 

period following the last month in 

which the individual is no longer 

enrolled in the plan. 

3. Statutory Changes 

Section 5115(a)(2) of the Deficit 

Reduction Act of 2005 (Pub. L. 109–171) 

(DRA) amended section 1837 of the Act 

to add a new subsection (k), which 

provides a SEP for certain international 

volunteers. Beginning January 1, 2007, a 

SEP for Part B is provided to qualifying 

international volunteers who are eligible 


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to enroll in Part B because they meet the 

requirements in section 1836(1) or (2) of 

the Act, but who do not enroll in Part 

B during the initial enrollment period or 

who terminate enrollment during a 

month in which they qualify as an 

international volunteer. Enrollment can 

take place during the 6-month period 

beginning on the first day of the month 

which includes the date the individual 

no longer qualifies under this provision. 

Coverage for an individual who enrolls 

during a SEP in accordance with this 

provision begins on the first day of the 

month following the month in which 

the individual enrolls. 

Under new section 1837(k)(3) of the 

Act, an individual qualifies as an 

international volunteer if he or she is 

serving in a program outside of the 

United States that covers at least a 12- 

month period, and that is sponsored by 

an organization described in section 

501(c)(3) of the Internal Revenue Code 

of 1986 (the Code) and exempt from 

taxation under section 501(a) of the 

same Code. The individual must also 

have health insurance coverage to cover 

medical services while serving overseas 

in the program. Specifically, qualifying 

organizations under section 501(c)(3) of 

the Code that are exempt from taxation 

under section 501(a) of the Code are 

‘‘corporations, and any community 

chest, fund, or foundation, organized 

and operated exclusively for religious, 

charitable, scientific, testing for public 

safety, literary, or educational purposes, 

or to foster national or international 

amateur sports competition (but only if 

no part of its activities involve the 

provision of athletic facilities or 

equipment), or for the prevention of 

cruelty to children or animals * * *’’. 

Furthermore, to qualify for this 

exemption, no part of the net earnings 

of the organization can inure to the 

benefit of any private shareholder or 

individual and no substantial part of the 

activities can be used for propaganda, or 

otherwise attempt to influence 

legislation (except as otherwise 

provided in section 510(h) of the Code) 

or participate or intervene (including 

the publishing or distributing of 

statements) in political campaigns on 

behalf of (or in opposition to) any 

candidate for public office. 

C. Income-Related Monthly Adjustment 

Amount under Medicare Part B 

Section 811 of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) (Pub. 

L. 108–173) amends section 1839 of the 

Act and establishes a Medicare Part B 

premium subsidy reduction referred to 

as the ‘‘Income-Related Monthly 

Adjustment Amount’’ (IRMAA). Section 

1839(i) of the Act requires that an 

income-related monthly adjustment 

amount be added to beneficiary’s Part B 

premium if his or her modified adjusted 

gross income exceeds the established 

threshold amounts. The IRMAA reduces 

the amount that the beneficiary’s 

premium is subsidized by the Federal 

government. All beneficiaries will 

continue to receive some subsidy of 

their premium. 

Section 1839(i) of the Act establishes 

a sliding scale that we would use to 

establish four income-related monthly 

adjustment amounts that would increase 

a beneficiary’s Medicare Part B 

premium by specific percentages. If a 

beneficiary’s modified adjusted gross 

income is greater than the statutory 

threshold amounts, the beneficiary will 

pay a larger portion of the estimated 

total cost of Part B coverage. The income 

ranges, as set forth in section 

1839(i)(3)(C)(i) of the Act, start at 

$80,000 for a beneficiary filing an 

individual tax return, and $160,000 for 

a beneficiary filing a joint income tax 

return, and are listed in the following 

table: 

Individual tax filers with income: Joint tax filers with income: Premium 

percentage 

Greater than $80,000 and less than or equal to $100,000 ....... Greater than $160,000 and less than or equal to $200,000 ..... 35 

Greater than $100,000 and less than or equal to $150,000 ..... Greater than $200,000 and less than or equal to $300,000 ..... 50 

Greater than $150,000 and less than or equal to $200,000 ..... Greater than $300,000 and less than or equal to $400,000 ..... 65 

Greater than $200,000 ............................................................... Greater than $400,000 ............................................................... 80 

In calendar year (CY) 2007, individual 

tax filers with income less than or equal 

to $80,000 and joint tax filers with 

income less than or equal to $160,000 

will continue to pay the standard 

premium which represents roughly 25 

percent of the estimated total Part B 

program costs. As specified in section 

1839(i)(5) of the Act, each dollar amount 

in this table would be adjusted annually 

based on the Consumer Price Index. 

Section 811 of the MMA also 

provided for a 5-year phase-in of the 

Medicare Part B premium subsidy 

reduction. However, section 1839(i) was 

subsequently amended by section 5111 

of the DRA to provide for a 3-year 

phase-in period. Therefore, the 

percentages presented in this table 

reflect the Part B premium percentages 

that certain beneficiaries would pay 

once IRMAA is fully phased-in. 

The ‘‘hold-harmless’’ provision in 

section 1839(f) of the Act provides for 

a reduction to the Part B premium for 

beneficiaries whose Social Security [or 

Railroad Board (RRB) annuity] cost of 

living adjustments (COLAs) are not 

sufficient to cover the Part B premium 

increase. If in a given year, the increase 

in the Part B premium would cause an 

individual’s Social Security or RRB 

check to be less than it was the year 

before, the premium is reduced to 

ensure that the amount of the 

individual’s Social Security benefit (or 

RRB annuity) stays the same. To be held 

harmless, a beneficiary must have had 

the Part B premium deducted from both 

the December check of the prior year 

and the January check of the next year. 

Under section 1839(f) of the Act, the 

‘‘hold-harmless’’ provision does not 

apply to beneficiaries who are required 

to pay an IRMAA based on their 

modified adjusted gross income. These 

beneficiaries must pay the full Medicare 

Part B standard monthly premium, plus 

any applicable penalty for late 

enrollment or reenrollment, plus the 

income-related monthly adjustment 

amount. 

Section 702(a)(5) of the Act allows 

SSA to make the rules and regulations 

necessary or appropriate to carry out the 

functions of SSA. Other provisions in 

section 811 of the MMA provide SSA 

with additional specific authorization to 

make rules and regulations to determine 

which beneficiaries are required to pay 

the different income-related monthly 

adjustment amounts. 

On October 27, 2006, SSA issued a 

final rule implementing regulations 

governing SSA’s determination of 

income-related monthly adjustment 

amounts (71 FR 62923). This final rule 

explains: (1) The statutory requirement 

to implement an income-related 

adjustment to the Part B premium 

subsidy; (2) the information that would 

be used to determine whether a 

beneficiary must pay an income-related 

monthly adjusted amount and the 

amount of any adjustment; (3) when 

SSA will consider a major life-changing 

event that results in a significant 

reduction in a beneficiary’s modified 


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adjusted gross income; and (4) how a 

beneficiary can appeal SSA’s 

determination about the beneficiary’s 

income-related monthly adjustment 

amount. For a more detailed discussion 

see the October 27, 2006 SSA final rule 

(71 FR 62923). 

II. Provisions of the Proposed Rule 

We are proposing to add a new 

§ 406.25, which would allow certain 

individuals who are sponsored by 

prescribed organizations as volunteers 

outside of the United States and have 

health care insurance to qualify for a 

SEP for premium hospital insurance 

(Part A) special enrollment period. We 

recognize that section 5115 of the DRA, 

in amending section 1839(b) of the Act, 

explicitly provides only for a SEP for 

Part B. However, since section 1818(c) 

of the Act applies all of the provisions 

of section 1837 of the Act (except 

subsection (f) thereof) to persons 

authorized to enroll under section 1818 

of the Act, we believe that the SEP 

provided in section 5115 of the DRA 

also applies to enrollment in premium 

Part A. 

In § 406.33(a)(3), we propose to make 

a technical correction by removing an 

incorrect phrase ‘‘the 7-month special 

enrollment period under § 406.21(e)’’

and replacing it with the phrase ‘‘the 

special enrollment period under 

§ 406.24.’’

In § 406.33(a)(5) and (6), we propose 

to exclude from the calculation of the 

premium surcharge those months the 

individual qualifies for the SEP 

described in § 406.25(a). 

We are proposing to add a new 

§ 407.21, which implements section 

5115 of the DRA by allowing certain 

individuals who are sponsored by 

prescribed organizations as volunteers 

outside of the United States and have 

health care insurance that covers 

medical services while serving overseas 

to qualify for a Medicare Part B SEP. 

In proposed § 408.20(e)(3)(iii), we 

would implement section 811(b)(1)(c) of 

the MMA by excluding from the ‘‘hold 

harmless’’ provision (known as the 

‘‘nonstandard premium’’) individuals 

who are required to pay the incomerelated monthly adjustment amount 

(IRMAA). Such beneficiaries must pay 

the full Medicare Part B standard 

monthly premium plus any applicable 

premium surcharge for late enrollment 

or re-enrollment, plus the incomerelated monthly adjustment amount. 

In proposed § 408.24(a)(10), we would 

implement section 5115(a) of the DRA 

by excluding from the calculation of the 

premium surcharge those months the 

individual meets the requirements of 

proposed § 407.21. We are also making 

a conforming change in § 408.24(b)(2)(i) 

of this section by revising the cross 

reference to include the new paragraph 

§ 408.24(a)(10). 

Finally, we propose to add a new 

§ 408.28, to specify that, beginning 

January 1, 2007, we would inform 

Medicare beneficiaries that they may be 

required to pay an income-related 

monthly adjustment amount in addition 

to the standard Part B premium, plus 

any applicable increase for late 

enrollment or reenrollment, if their 

modified adjusted gross income exceeds 

the threshold limits specified in 20 CFR 

418.1115. 

III. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We are soliciting public comment on 

each of these issues for the following 

sections of this document that contain 

information collection requirements. 

Special Enrollment Period for 

Volunteers Outside of the United States 

(§ 406.25) 

Section 406.25 outlines the 

requirements that an individual 

volunteer must meet to qualify for a 

SEP. A qualifying individual can enroll 

or reenroll without incurring a 

surcharge for a late enrollment or 

reenrollment. Specifically, 

§ 406.25(a)(3)(i) states that an individual 

volunteer must demonstrate that his or 

her period of service is sponsored by an 

organization described in section 

501(c)(3) of the Internal Revenue Code 

of 1986 and exempt from taxation under 

section 501(a) of the Internal Revenue 

Code. 

The burden associated with this 

requirement is the time and effort 

associated with demonstrating the taxexempt status of the organization 

sponsoring the individual. The 

estimated burden associated with this 

requirement is 15 minutes per 

individual. We estimate that 1500 

individuals will be subject to this 

requirement on a yearly basis for a total 

annual burden of 375 burden hours. 

In addition, § 406.25(a)(3)(ii) requires 

that an individual demonstrate that he 

or she has health insurance that covers 

medical services received outside of the 

United States during his or her period 

of service. The burden associated with 

this requirement is the time and effort 

associated with demonstrating 

possession of health insurance coverage 

that covers the medical services 

received outside of the United States. 

We estimate the burden for verifying 

coverage to be 15 minutes per 

individual; we also estimate that 1500 

individuals will be subject to this 

requirement on a yearly basis. The total 

estimated burden is 375 annual burden 

hours. 

Special Enrollment Period for 

Volunteers Outside the United States 

(§ 407.21) 

Section 407.21 addresses the 

provision of a SEP for an individual 

who elects not to enroll or to be deemed 

enrolled in SMI when first eligible and 

an individual who terminates SMI 

enrollment. To be eligible for the SEP, 

the individual must meet the criteria 

outlined in the regulations text. As 

stated in § 407.21(a), the individual 

must: (1) Volunteer in a program for a 

12-month or longer period of service 

outside of the United States; (2) 

volunteer in a program sponsored by an 

organization described in section 

501(c)(3) of the Internal Revenue Code 

of 1986 and exempt from taxation under 

501(a) of such Code; and (3) 

demonstrate that he or she had health 

insurance coverage that covers medical 

services received outside of the United 

States during his or her period of 

service, respectively. 

The burden associated with the 

introductory text to § 407.21(a), as well 

as § 407.21(a)(1) and (a)(2), is the time 

and effort associated with verifying the 

individual’s volunteer period of service, 

verifying the tax-exempt status of the 

organization sponsoring the individual, 

and submitting the information to CMS. 

The estimated burden associated with 

these requirements is 15 minutes per 

individual. We estimate that 1500 

individuals will be required to verify 

their volunteer service. The total annual 

burden associated with this requirement 

is 375 burden hours. 

The burden associated with the 

§ 407.21(a)(3) is the time and effort 


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associated with an individual 

demonstrating that he or she has health 

insurance that covers medical services 

received outside of the United States 

during his or her period of service. We 

estimate the burden for verifying 

coverage to be 15 minutes per 

individual; we also estimate that 1500 

individuals will be subject to this 

requirement on a yearly basis. The total 

estimated burden is 375 annual burden 

hours. 

We have submitted a copy of this 

proposed rule to OMB for its review of 

the information collection requirements 

contained in this section. These 

requirements are not final until they are 

approved by OMB. 

If you comment on these information 

collection and recordkeeping 

requirements, please mail copies 

directly to the following: 

Centers for Medicare & Medicaid 

Services, Office of Strategic 

Operations and Regulatory Affairs, 

Regulations Development Group, 

Attn: William N. Parham III, CMS–

4129–P, Room C4–26–05, 7500 

Security Boulevard, Baltimore, MD 

21244–1850; and 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Room 10235, New Executive 

Office Building, Washington, DC 

20503, Attn: Carolyn Lovett, CMS 

Desk Officer, CMS–4129–P, 

carolyn_lovett@omb.eop.gov. Fax 

(202) 395–6974. 

IV. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

V. Regulatory Impact Statement 

We have examined the impact of this 

rule as required by Executive Order 

12866 (September 1993, Regulatory 

Planning and Review), the Regulatory 

Flexibility Act (RFA) (September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Social Security Act, the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), and Executive Order 13132. 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

if regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). A regulatory impact 

analysis (RIA) must be prepared for 

major rules with economically 

significant effects ($100 million or more 

in any 1 year). We do not anticipate that 

there will be more than 1500 

beneficiaries (international volunteers) 

at any one time who will qualify for a 

SEP. To qualify under this SEP, the 

Medicare beneficiary must have elected 

not to enroll in Part B or premium Part 

A during the initial enrollment period, 

or terminated enrollment, because the 

individual was serving as a volunteer 

outside the United States. In addition, 

the individual must have served as a 

volunteer outside of the United States 

through a program that covers at least a 

12-month period, and that is sponsored 

by an organization described in section 

501(C)(3) of the Internal Revenue Code 

of 1986 and exempt from taxation under 

section 501(a) of that Code, and must 

have health care insurance coverage that 

covers medical services while serving 

overseas in the program. It is for this 

reason, that we anticipate that the 

overall expenditure for this provision of 

the Medicare program projected over a 

5-year period would be negligible. In 

addition, this rule only codifies the 

income-related monthly adjustment 

amount provision of MMA. It is for 

these reasons that this rule does not 

reach the economic threshold and thus 

is not considered a major rule. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses. For purposes of the RFA, 

small entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of $6 million to $29 million in any 1 

year. Individuals and States are not 

included in the definition of a small 

entity. We are not preparing an analysis 

for the RFA because we have 

determined that this rule will not have 

a significant economic impact on a 

substantial number of small entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 603 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. We are not 

preparing an analysis for section 1102(b) 

of the Act, because we have determined 

that this proposed rule will not have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

That threshold level is currently 

approximately $120 million. This rule 

will have no consequential effect on 

State, local, or tribal governments or on 

the private sector. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

We have determined that this proposed 

rule does not impose any costs on State 

or local governments, therefore the 

requirements of E.O. 13132 are not 

applicable. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects 

42 CFR Part 406 

Health facilities, Kidney diseases, 

Medicare. 

42 CFR Part 407 

Medicare. 

42 CFR Part 408 

Medicare. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services would amend 42 CFR 

Chapter IV as follows: 

PART 406—HOSPITAL INSURANCE 

ELIGIBILITY AND ENTITLEMENT 

1. The authority citation for part 406 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart C—Premium Hospital 

Insurance 

2. Section 406.25 is added to read as 

follows: 

§ 406.25 Special enrollment period for 

volunteers outside the United States. 

(a) General rule. An individual 

described in paragraph (a)(2) may use a 

SEP as defined in § 406.24(a)(4) of this 

section if—


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(1) At the time the individual first met 

the requirements of § 406.10 through 

406.15 or § 406.20(b), the individual 

elected not to enroll in premium Part A 

during the individual’s initial 

enrollment period; or 

(2) The individual terminated 

enrollment in premium hospital 

insurance during a month in which the 

individual was described in paragraph 

(a)(2) of this section. 

(3) For purposes of paragraphs (a)(1) 

and (a)(2) of this section, an 

individual—

(i) Is serving as a volunteer outside of 

the United States through a program 

that covers at least a 12-month period 

and that is sponsored by an organization 

described in section 501(c)(3) of the 

Internal Revenue Code of 1986 and 

exempt from taxation under section 

501(a) of such Code; and 

(ii) Can demonstrate that he or she has 

health insurance that covers medical 

services that the individual receives 

outside the United States while serving 

in the program. 

(b) Duration of SEP. The SEP is the 6- 

month period beginning on the first day 

of the month which includes the date 

that the individual no longer meets the 

description in paragraph (a)(2) of this 

section. 

(c) Effective date of coverage. If the 

individual enrolls in premium hospital 

insurance in accordance with a SEP 

authorized by this section, coverage 

begins on the first day of the month 

following the month in which the 

individual enrolls. 

3. Section 406.33 is amended by—

A. Revising paragraph (a)(3). 

B. Adding paragraphs (a)(5) and (a)(6). 

The revision and additions read as 

follows: 

§ 406.33 Determination of months to be 

counted for premium increase: Enrollment. 

* * * * * 

(a) * * * 

* * * * * 

(3) Any months during the SEP under 

§ 406.24 of this part, during which 

premium hospital insurance coverage is 

in effect. 

* * * * * 

(5) For premiums due for months after 

December 2006, any months during 

which the individual met the provisions 

of § 406.25(a) of this subpart. 

(6) Any months during the 6-month 

SEP described in § 406.25(b) of this part 

during which premium hospital 

insurance coverage is in effect. 

PART 407—SUPPLEMENTARY 

MEDICAL INSURANCE (SMI) 

ENROLLMENT AND ENTITLEMENT 

4. The authority citation for part 407 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart B—Individual Enrollment and 

Entitlement for SMI 

5. Section 407.21 is added to read as 

follows: 

§ 407.21 Special enrollment period for 

volunteers outside the United States. 

(a) General rule. A SEP, as defined in 

§ 406.24(a)(4) of this subchapter, is 

provided for an individual who does not 

elect to enroll or to be deemed enrolled 

in Part B (SMI) when first eligible, or 

who terminates SMI enrollment, if 

while serving as a volunteer outside of 

the United States—

(1) The individual is in a program that 

covers at least a 12-month period of 

service outside of the United States; 

(2) The program is sponsored by an 

organization described in section 

501(c)(3) of the Internal Revenue Code 

of 1986 and exempt from taxation under 

section 501(a) of such Code; and 

(3) The individual demonstrates that 

he or she has health insurance that 

covers medical services that the 

individual receives outside of the 

United States during his or her period 

of service. 

(b) Duration of SEP. The SEP is the 6- 

month period beginning on the first day 

of the month which includes the date 

that the individual no longer satisfies 

the provisions of paragraph (b) of this 

section. 

(c) Effective date of coverage. For 

individuals enrolling in an SEP under 

this section, coverage begins on the first 

day of the month following the month 

in which the individual enrolls. 

PART 408—PREMIUMS FOR 

SUPPLEMENTARY MEDICAL 

INSURANCE 

6. The authority citation for part 408 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart B—Amount of Monthly 

Premiums 

7. Section 408.20 is amended by 

adding paragraph (e)(3)(iii) to read as 

follows: 

§ 408.20 Monthly premiums. 

* * * * * 

(e) * * * 

(3) * * * 

(iii) Beginning with CY 2007, a 

nonstandard premium may not be 

applied to individuals who are required 

to pay an income-related monthly 

adjustment amount described in 

§ 408.28 of this part. 

* * * * * 

8. Section 408.24 is amended by—

A. Adding paragraph (a)(10). 

B. Revising paragraph (b)(2)(i). 

The addition and revision read as 

follows: 

§ 408.24 Individuals who enrolled or 

reenrolled before April 1, 1981 or after 

September 30, 1981. 

(a) * * * 

* * * * * 

(10) For premiums due for months 

beginning with January 1, 2007, the 

following: 

(i) Any months after December 2006 

during which the individual met the 

conditions under § 407.21(a) of this 

chapter. 

(ii) Any months of SMI coverage for 

which the individual enrolled during a 

special enrollment period as provided 

in § 407.21(b) of this chapter. 

(b) * * * 

(2) * * * 

(i) Any of the periods specified in 

paragraph (a); and 

* * * * * 

9. Section 408.28 is added to read as 

follows: 

§ 408.28 Increased premiums due to the 

income-related monthly adjustment amount 

(IRMAA). 

Beginning January 1, 2007, Medicare 

beneficiaries must pay an incomerelated monthly adjustment amount in 

addition to the Part B standard monthly 

premium plus any applicable increase 

for late enrollment or reenrollment if the 

beneficiary’s modified adjusted gross 

income exceeds the threshold amounts 

specified in 20 CFR 418.1115. 

(Authority: Catalog of Federal Domestic 

Assistance Program No. 93.773, Medicare—

Hospital Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program.) 

Dated: March 1 2007. 

Leslie V. Norwalk, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: June 4, 2007. 

Michael O. Leavitt, 

Secretary. 

Editorial Note: This document was 

received at the Office of the Federal Register 

on September 14, 2007. 

[FR Doc. E7–18467 Filed 9–27–07; 8:45 am] 

BILLING CODE 4120–01–P 


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