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Notice2024-26474

Medicare Program; Medicare Part B Monthly Actuarial Rates, Premium Rates, and Annual Deductible Beginning January 1, 2025

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Published

November 14, 2024

Effective

January 1, 2025

Issuing agencies

Health and Human Services DepartmentCenters for Medicare & Medicaid Services

Abstract

This notice announces the monthly actuarial rates for aged (age 65 and over) and disabled (under age 65) beneficiaries enrolled in Part B of the Medicare Supplementary Medical Insurance (SMI) program beginning January 1, 2025. In addition, this notice announces the monthly premium for aged and disabled beneficiaries, the deductible for 2025, and the income-related monthly adjustment amounts to be paid by beneficiaries with modified adjusted gross income above certain threshold amounts. The monthly actuarial rates for 2025 are $368.10 for aged enrollees and $487.80 for disabled enrollees. The standard monthly Part B premium rate for all enrollees for 2025 is $185.00, which is equal to 50 percent of the monthly actuarial rate for aged enrollees (or approximately 25 percent of the expected average total cost of Part B coverage for aged enrollees) plus the $0.90 repayment amount required under current law. (The 2025 premium is 5.9 percent or $10.30 higher than the 2024 standard premium rate of $174.70, which included a $3.00 repayment amount.) The Part B deductible for 2025 is $257.00 for all Part B beneficiaries. If a beneficiary has to pay an income-related monthly adjustment amount, that individual will have to pay a total monthly premium of about 35, 50, 65, 80, or 85 percent of the total cost of Part B coverage plus a repayment amount of $1.30, $1.80, $2.30, $2.90, or $3.10, respectively. Beginning in 2023, certain Medicare enrollees who are 36 months post kidney transplant, and therefore no longer eligible for full Medicare coverage, can elect to continue Part B coverage of immunosuppressive drugs by paying a premium. For 2025, the standard monthly Part B immunosuppressive drug coverage only premium is $110.40.

Full Text

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<title>Federal Register, Volume 89 Issue 220 (Thursday, November 14, 2024)</title>
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[Federal Register Volume 89, Number 220 (Thursday, November 14, 2024)]
[Notices]
[Pages 90002-90015]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-26474]

[[Page 90002]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-8088-N]
RIN 0938-AV38

Medicare Program; Medicare Part B Monthly Actuarial Rates,
Premium Rates, and Annual Deductible Beginning January 1, 2025

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).

ACTION: Notice of 2025 Medicare Part B rates and amounts.

-----------------------------------------------------------------------

SUMMARY: This notice announces the monthly actuarial rates for aged
(age 65 and over) and disabled (under age 65) beneficiaries enrolled in
Part B of the Medicare Supplementary Medical Insurance (SMI) program
beginning January 1, 2025. In addition, this notice announces the
monthly premium for aged and disabled beneficiaries, the deductible for
2025, and the income-related monthly adjustment amounts to be paid by
beneficiaries with modified adjusted gross income above certain
threshold amounts. The monthly actuarial rates for 2025 are $368.10 for
aged enrollees and $487.80 for disabled enrollees. The standard monthly
Part B premium rate for all enrollees for 2025 is $185.00, which is
equal to 50 percent of the monthly actuarial rate for aged enrollees
(or approximately 25 percent of the expected average total cost of Part
B coverage for aged enrollees) plus the $0.90 repayment amount required
under current law. (The 2025 premium is 5.9 percent or $10.30 higher
than the 2024 standard premium rate of $174.70, which included a $3.00
repayment amount.) The Part B deductible for 2025 is $257.00 for all
Part B beneficiaries. If a beneficiary has to pay an income-related
monthly adjustment amount, that individual will have to pay a total
monthly premium of about 35, 50, 65, 80, or 85 percent of the total
cost of Part B coverage plus a repayment amount of $1.30, $1.80, $2.30,
$2.90, or $3.10, respectively. Beginning in 2023, certain Medicare
enrollees who are 36 months post kidney transplant, and therefore no
longer eligible for full Medicare coverage, can elect to continue Part
B coverage of immunosuppressive drugs by paying a premium. For 2025,
the standard monthly Part B immunosuppressive drug coverage only
premium is $110.40.

DATES: The Medicare Part B rates and amounts announced in this document
are effective January 1, 2025.

FOR FURTHER INFORMATION CONTACT: M. Kent Clemens, (410) 786-6391.

SUPPLEMENTARY INFORMATION:

I. Background

Part B is the voluntary portion of the Medicare program that pays
all or part of the costs for physicians' services; outpatient hospital
services; certain home health services; services furnished by rural
health clinics, ambulatory surgical centers, and comprehensive
outpatient rehabilitation facilities; and certain other medical and
health services not covered by Medicare Part A, Hospital Insurance.
Medicare Part B is available to individuals who are entitled to
Medicare Part A, as well as to U.S. residents who have attained age 65
and are citizens and to non-citizens who were lawfully admitted for
permanent residence and have resided in the United States for 5
consecutive years. Part B requires enrollment and payment of monthly
premiums, as described in 42 CFR part 407, subpart B, and part 408,
respectively. The premiums paid by (or on behalf of) all enrollees fund
approximately one-fourth of the total incurred costs, and transfers
from the general fund of the Treasury pay approximately three-fourths
of these costs.
The Secretary of Health and Human Services (HHS) (the Secretary) is
required by section 1839 of the Social Security Act (the Act) to
announce the Part B monthly actuarial rates for aged and disabled
beneficiaries as well as the monthly Part B premium. The Part B annual
deductible, income-related monthly adjustment amounts, and
immunosuppressive drug premium are included because their
determinations are directly linked to the aged actuarial rate.
The monthly actuarial rates for aged and disabled enrollees are
used to determine the correct amount of general revenue financing per
beneficiary each month. These amounts, according to actuarial
estimates, will equal, respectively, one-half of the expected average
monthly cost of Part B for each aged enrollee (age 65 or over) and one-
half of the expected average monthly cost of Part B for each disabled
enrollee (under age 65).
The Part B deductible to be paid by enrollees is also announced.
Prior to the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 (MMA) (Pub. L. 108-173), the Part B deductible was set in
statute. After setting the 2005 deductible amount at $110.00, section
629 of the MMA (amending section 1833(b) of the Act) required that the
Part B deductible be indexed beginning in 2006. The inflation factor to
be used each year is the annual percentage increase in the Part B
actuarial rate for enrollees age 65 and over. Specifically, the 2025
Part B deductible is calculated by multiplying the 2024 deductible by
the ratio of the 2025 aged actuarial rate to the 2024 aged actuarial
rate. The amount determined under this formula is then rounded to the
nearest $1.00.
The monthly Part B premium rate to be paid by aged and disabled
enrollees is also announced. (Although the costs to the program per
disabled enrollee are different from those for the aged, the statute
provides that the two groups pay the same premium amount.) Beginning
with the passage of section 203 of the Social Security Amendments of
1972 (Pub. L. 92-603), the premium rate, which was determined on a
fiscal-year basis, was limited to the lesser of the actuarial rate for
aged enrollees, or the current monthly premium rate increased by the
same percentage as the most recent general increase in monthly Title II
Social Security benefits.
However, the passage of section 124 of the Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA) (Pub. L. 97-248) suspended this
premium determination process. Section 124 of TEFRA changed the premium
basis to 50 percent of the monthly actuarial rate for aged enrollees
(that is, 25 percent of program costs for aged enrollees). Section 606
of the Social Security Amendments of 1983 (Pub. L. 98-21), section 2302
of the Deficit Reduction Act of 1984 (DEFRA 84) (Pub. L. 98-369),
section 9313 of the Consolidated Omnibus Budget Reconciliation Act of
1985 (COBRA 85) (Pub. L. 99-272), section 4080 of the Omnibus Budget
Reconciliation Act of 1987 (OBRA 87) (Pub. L. 100-203), and section
6301 of the Omnibus Budget Reconciliation Act of 1989 (OBRA 89) (Pub.
L. 101-239) extended the provision that the premium be based on 50
percent of the monthly actuarial rate for aged enrollees (that is, 25
percent of program costs for aged enrollees). This extension expired at
the end of 1990.
The premium rate for 1991 through 1995 was legislated by section
1839(e)(1)(B) of the Act, as added by section 4301 of the Omnibus
Budget Reconciliation Act of 1990 (OBRA 90) (Pub. L. 101-508). In
January 1996, the premium determination basis would have reverted to
the method established by the 1972 Social Security Act Amendments.
However, section 13571 of the Omnibus Budget Reconciliation

[[Page 90003]]

Act of 1993 (OBRA 93) (Pub. L. 103-66) changed the premium basis to 50
percent of the monthly actuarial rate for aged enrollees (that is, 25
percent of program costs for aged enrollees) for 1996 through 1998.
Section 4571 of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-
33) permanently extended the provision that the premium be based on 50
percent of the monthly actuarial rate for aged enrollees (that is, 25
percent of program costs for aged enrollees).
The BBA included a further provision affecting the calculation of
the Part B actuarial rates and premiums for 1998 through 2003. Section
4611 of the BBA modified the home health benefit payable under Part A
for individuals enrolled in Part B. Under this section, beginning in
1998, expenditures for home health services not considered ``post-
institutional'' are payable under Part B rather than Part A. However,
section 4611(e)(1) of the BBA required that there be a transition from
1998 through 2002 for the aggregate amount of the expenditures
transferred from Part A to Part B. Section 4611(e)(2) of the BBA also
provided a specific yearly proportion for the transferred funds. The
proportions were one-sixth for 1998, one-third for 1999, one-half for
2000, two-thirds for 2001, and five-sixths for 2002. For the purpose of
determining the correct amount of financing from general revenues of
the Federal Government, it was necessary to include only these
transitional amounts in the monthly actuarial rates for both aged and
disabled enrollees, rather than the total cost of the home health
services being transferred.
Section 4611(e)(3) of the BBA also specified, for the purpose of
determining the premium, that the monthly actuarial rate for enrollees
age 65 and over be computed as though the transition would occur for
1998 through 2003 and that one-seventh of the cost be transferred in
1998, two-sevenths in 1999, three-sevenths in 2000, four-sevenths in
2001, five-sevenths in 2002, and six-sevenths in 2003. Therefore, the
transition period for incorporating this home health transfer into the
premium was 7 years while the transition period for including these
services in the actuarial rate was 6 years.
Section 811 of the MMA, which amended section 1839 of the Act,
requires that, starting on January 1, 2007, the Part B premium a
beneficiary pays each month be based on that individual's annual
income. (The MMA specified that there be a 5-year transition period to
reach full implementation of this provision. However, section 5111 of
the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171) modified the
transition to a 3-year period, which ended in 2009.) Specifically, if a
beneficiary's modified adjusted gross income is greater than the
legislated threshold amounts (for 2025, $106,000 for a beneficiary
filing an individual income tax return and $212,000 for a beneficiary
filing a joint tax return), the beneficiary is responsible for a larger
portion of the estimated total cost of Part B benefit coverage. In
addition to the standard premium, these beneficiaries now have to pay
an income-related monthly adjustment amount. The MMA made no change to
the actuarial rate calculation, and the standard premium, which will
continue to be paid by beneficiaries whose modified adjusted gross
income is below the applicable thresholds, still represents 25 percent
of the estimated total cost to the program of Part B coverage for an
aged enrollee. However, depending on income and tax filing status, a
beneficiary can now be responsible for 35, 50, 65, 80, or 85 percent of
the estimated total cost of Part B coverage, rather than 25 percent.
Section 402 of the Medicare Access and CHIP Reauthorization Act of 2015
(MACRA) (Pub. L. 114-10) modified the income thresholds beginning in
2018, and section 53114 of the Bipartisan Budget Act of 2018 (BBA of
2018) (Pub. L. 115-123) further modified the income thresholds
beginning in 2019. For years beginning in 2019, the BBA of 2018
established a new income threshold. If a beneficiary's modified
adjusted gross income is greater than or equal to $500,000 for a
beneficiary filing an individual income tax return and $750,000 for a
beneficiary filing a joint tax return, the beneficiary is responsible
for 85 percent of the estimated total cost of Part B coverage. The BBA
of 2018 specified that these new income threshold levels be inflation-
adjusted beginning in 2028. The result of the higher premium is that
the Part B premium subsidy is reduced, and less general revenue
financing is required, for beneficiaries with higher income because
they are paying a larger share of the total cost with their premium.
That is, the premium subsidy continues to be approximately 75 percent
for beneficiaries with income below the applicable income thresholds,
but it will be reduced for beneficiaries with income above these
thresholds.
The Consolidated Appropriations Act, 2021 (Pub. L. 116-260)
established a new basis for Medicare Part B eligibility for post-
kidney-transplant immunosuppressive drug coverage only. Medicare
eligibility due solely to end-stage renal disease generally ends 36
months after a successful kidney transplant. Beginning in 2023, post-
kidney-transplant individuals without certain types of insurance
coverage can elect to enroll in Part B and receive coverage of
immunosuppressive drugs only. The premium for this continuation of
coverage is 15 percent of a different aged actuarial rate, which is
equal to 100 percent of the costs for aged enrollees (rather than the
standard aged actuarial rate, which is equal to one-half of the costs
for aged enrollees). Enrollees paying the immunosuppressive premium are
not subject to the late enrollment penalty and the $3.00 repayment
amounts, but they are subject to the hold-harmless provision (described
later) and the income-related monthly adjustment amounts. The law
requires transfers equal to the reduction in aggregate premiums payable
that results from enrollees with coverage only for immunosuppressive
drugs paying the standard immunosuppressive drug coverage only Part B
premium rather than the standard Part B premium. These transfers are to
be treated as premiums payable for general revenue matching purposes.
Section 4732(c) of the BBA added section 1933(c) of the Act, which
required the Secretary to allocate money from the Part B trust fund to
State Medicaid programs for the purpose of providing Medicare Part B
premium assistance from 1998 through 2002 for low-income Medicaid
beneficiaries who qualify under section 1933 of the Act. This
allocation, while not a benefit expenditure, was an expenditure of the
trust fund and was included in calculating the Part B actuarial rates
through 2002. For 2003 through 2015, the expenditure was made from the
trust fund because the allocation was temporarily extended. However,
because the extension occurred after the financing was determined, the
allocation was not included in the calculation of the financing rates
for these years. Section 211 of MACRA permanently extended this
expenditure, which is included in the calculation of the Part B
actuarial rates for 2016 and subsequent years.
Another provision affecting the calculation of the Part B premium
is section 1839(f) of the Act, as amended by section 211 of the
Medicare Catastrophic Coverage Act of 1988 (MCCA 88) (Pub. L. 100-360).
(The Medicare Catastrophic Coverage Repeal Act of 1989 (Pub. L. 101-
234) did not repeal the revisions to section 1839(f) of the Act made by
MCCA 88.) Section 1839(f) of the Act, referred to as the

[[Page 90004]]

hold-harmless provision, provides that, if an individual is entitled to
benefits under section 202 or 223 of the Act (the Old-Age and Survivors
Insurance Benefit and the Disability Insurance Benefit, respectively)
and has the Part B premium deducted from these benefit payments, the
premium increase will be reduced, if necessary, to avoid causing a
decrease in the individual's net monthly payment. This decrease in
payment occurs if the increase in the individual's Social Security
benefit resulting from the cost-of-living adjustment under section
215(i) of the Act is less than the increase in the premium.
Specifically, the reduction in the premium amount applies if the
individual is entitled to benefits under section 202 or 223 of the Act
for November and December of a particular year and the individual's
Part B premiums for December and the following January are deducted
from the respective month's section 202 or 223 benefits. The hold-
harmless provision does not apply to beneficiaries who are required to
pay an income-related monthly adjustment amount.
A check for benefits under section 202 or 223 of the Act is
received in the month following the month for which the benefits are
due. The Part B premium that is deducted from a particular check is the
Part B payment for the month in which the check is received. Therefore,
a benefit check for November is not received until December, but
December's Part B premium has been deducted from it.
Generally, if a beneficiary qualifies for hold-harmless protection,
the reduced premium for the individual for that January and for each of
the succeeding 11 months is the greater of either--
<bullet> The monthly premium for January reduced as necessary to
make the December monthly benefits, after the deduction of the Part B
premium for January, at least equal to the preceding November's monthly
benefits, after the deduction of the Part B premium for December; or
<bullet> The monthly premium for that individual for that December.
In determining the premium limitations under section 1839(f) of the
Act, the monthly benefits to which an individual is entitled under
section 202 or 223 of the Act do not include retroactive adjustments or
payments and deductions on account of work. Also, once the monthly
premium amount is established under section 1839(f) of the Act, it will
not be changed during the year even if there are retroactive
adjustments or payments and deductions on account of work that apply to
the individual's monthly benefits.
Individuals who have enrolled in Part B late or who have re-
enrolled after the termination of a coverage period are subject to an
increased premium under section 1839(b) of the Act. The increase is a
percentage of the premium and is based on the new premium rate before
any reductions under section 1839(f) of the Act are made.
Section 1839 of the Act, as amended by section 601(a) of the
Bipartisan Budget Act of 2015 (Pub. L. 114-74), specified that the 2016
actuarial rate for enrollees age 65 and older be determined as if the
hold-harmless provision did not apply. The premium revenue that was
lost by using the resulting lower premium (excluding the forgone
income-related premium revenue) was replaced by a transfer of general
revenue from the Treasury, which will be repaid over time to the
general fund.
Similarly, section 1839 of the Act, as amended by section 2401 of
the Continuing Appropriations Act, 2021 and Other Extensions Act (Pub.
L. 116-159), specified that the 2021 actuarial rate for enrollees age
65 and older be determined as the sum of the 2020 actuarial rate for
enrollees age 65 and older and one-fourth of the difference between the
2020 actuarial rate and the preliminary 2021 actuarial rate (as
determined by the Secretary) for such enrollees. The premium revenue
lost by using the resulting lower premium (excluding the forgone
income-related premium revenue) was replaced by a transfer of general
revenue from the Treasury, which will be repaid over time.
Starting in 2016, in order to repay the balance due (which includes
the transfer amounts and the forgone income-related premium revenue
from the Bipartisan Budget Act of 2015 and the Continuing
Appropriations Act, 2021 and Other Extensions Act), the Part B premium
otherwise determined will be increased by $3.00. (In the final
repayment year, the repayment amount may be less than $3.00 to avoid an
overpayment. The final repayment year will be 2025, and the repayment
amount is $0.90.) The repayment amounts will be added to the Part B
premium otherwise determined each year and will be paid back to the
general fund of the Treasury, and they will continue until the balance
due is paid back.
High-income enrollees pay the repayment amount plus an additional
amount as part of the income-related monthly adjustment amount (IRMAA)
premium dollars, which reduce (dollar for dollar) the amount of general
revenue received by Part B from the general fund of the Treasury. (For
2025, high-income enrollees pay a $0.90 repayment amount plus an
additional $0.40, $0.90, $1.40, $2.00, or $2.20.) Because of this
general revenue offset, the repayment IRMAA premium dollars are not
included in the direct repayments made to the general fund of the
Treasury from Part B in order to avoid a double repayment. (Only the
$0.90 monthly repayment amounts are included in the direct repayments.)
These repayment amounts will continue until the balance due is
zero. (In the final year of the repayment, the additional amounts may
be modified to avoid an overpayment.) The repayment amounts (excluding
those for high-income enrollees) are subject to the hold-harmless
provision. The original balance due was $9,066,409,000, consisting of
$1,625,761,000 in forgone income-related premium revenue plus a
transfer amount of $7,440,648,000 from the provisions of the Bipartisan
Budget Act of 2015. The increase in the balance due in 2021 was
$8,799,829,000, consisting of $946,046,000 in forgone income-related
premium income plus a transfer amount of $7,853,783,000 from the
provisions of the Continuing Appropriations Act, 2021 and Other
Extensions Act. The balance due is expected to be zero by the end of
2025.

II. Provisions of the Notice

A. Notice of Medicare Part B Monthly Actuarial Rates, Monthly Premium
Rates, and Annual Deductible

The Medicare Part B monthly actuarial rates applicable for 2025 are
$368.10 for enrollees age 65 and over and $487.80 for disabled
enrollees under age 65. In section II.B. of this notice, we present the
actuarial assumptions and bases from which these rates are derived. The
Part B standard monthly premium rate for all enrollees for 2025 is
$185.00. The Part B standard monthly immunosuppressive drug coverage
only premium is $110.40.
The following are the 2025 Part B monthly premium rates to be paid
by (or on behalf of) beneficiaries with full Part B coverage who file
either individual tax returns (and are single individuals, heads of
households, qualifying widows or widowers with dependent children, or
married individuals filing separately who lived apart from their
spouses for the entire taxable year) or joint tax returns.

[[Page 90005]]

[GRAPHIC] [TIFF OMITTED] TN14NO24.014

For beneficiaries with Part B immunosuppressive drug coverage only
who file either individual tax returns (and are single individuals,
heads of households, qualifying widows or widowers with dependent
children, or married individuals filing separately who lived apart from
their spouses for the entire taxable year) or joint tax returns, the
2025 Part B monthly premium rates are shown below.
[GRAPHIC] [TIFF OMITTED] TN14NO24.013

In addition, the monthly premium rates to be paid by (or on behalf
of) beneficiaries with full Part B coverage who are married and lived
with their spouses at any time during the taxable year, but who file
separate tax returns from their spouses, are as follows:
[GRAPHIC] [TIFF OMITTED] TN14NO24.012

The monthly premium rates to be paid by (or on behalf of)
beneficiaries with Part B immunosuppressive drug coverage only who are
married and lived with their spouses at any time during the taxable
year, but who file separate tax returns from their spouses, are as
follows:
[GRAPHIC] [TIFF OMITTED] TN14NO24.015

[[Page 90006]]

The Part B annual deductible for 2025 is $257.00 for all
beneficiaries.

B. Statement of Actuarial Assumptions and Bases Employed in Determining
the Monthly Actuarial Rates and the Monthly Premium Rate for Part B
Beginning January 2025

The actuarial assumptions and bases used to determine the monthly
actuarial rates and the monthly premium rates for Part B are
established by CMS' Office of the Actuary. The estimates underlying
these determinations are prepared by actuaries meeting the
qualification standards and following the actuarial standards of
practice established by the Actuarial Standards Board.
1. Actuarial Status of the Part B Account in the Supplementary Medical
Insurance Trust Fund
Under section 1839 of the Act, the starting point for determining
the standard monthly premium is the amount that would be necessary to
finance Part B on an incurred basis. This is the amount of income that
would be sufficient to pay for services furnished during that year
(including associated administrative costs) even though payment for
some of these services will not be made until after the close of the
year. The portion of income required to cover benefits not paid until
after the close of the year is added to the trust fund and used when
needed.
Because the premium rates are established prospectively, they are
subject to projection error. Additionally, legislation enacted after
the financing was established, but effective for the period in which
the financing is set, may affect program costs. As a result, the income
to the program may not equal incurred costs. Trust fund assets must
therefore be maintained at a level that is adequate to cover an
appropriate degree of variation between actual and projected costs, and
the amount of incurred, but unpaid, expenses. Numerous factors
determine what level of assets is appropriate to cover variation
between actual and projected costs. For 2025, the three most important
of these factors are (1) the difference from prior years between the
actual performance of the program and estimates made at the time
financing was established; (2) the likelihood and potential magnitude
of expenditure changes resulting from enactment of legislation
affecting Part B costs in a year subsequent to the establishment of
financing for that year; and (3) the expected relationship between
incurred and cash expenditures. These factors are analyzed on an
ongoing basis, as the trends can vary over time.
Table 1 summarizes the estimated actuarial status of the trust fund
as of the end of the financing period for 2023 and 2024.
[GRAPHIC] [TIFF OMITTED] TN14NO24.016

2. Monthly Actuarial Rate for Enrollees Age 65 and Older
The monthly actuarial rate for enrollees age 65 and older is one-
half of the sum of monthly amounts for (1) the projected cost of
benefits; and (2) administrative expenses for each enrollee age 65 and
older, after adjustments to this sum to allow for interest earnings on
assets in the trust fund and an adequate contingency margin. The
contingency margin is an amount appropriate to provide for possible
variation between actual and projected costs and to amortize any
surplus assets or unfunded liabilities.
The monthly actuarial rate for enrollees age 65 and older for 2025
is determined by first establishing per enrollee costs by type of
service from program data through 2023 and then projecting these costs
for subsequent years. The projection factors used for financing periods
from January 1, 2022, through December 31, 2025, are shown in table 2.
As indicated in table 3, the projected per enrollee amount required
to pay for one-half of the total of benefits and administrative costs
for enrollees age 65 and over for 2025 is $371.36. Based on current
estimates, the assets at the end of 2024 are sufficient to cover the
amount of incurred, but unpaid, expenses, to provide for substantial
variation between actual and projected costs. Thus, a near-zero
contingency margin can be included to decrease assets to a more
appropriate level. The monthly actuarial rate of $368.10 provides an
adjustment of -$0.01 for a contingency margin and -$3.25 for interest
earnings.
Starting in 2011, manufacturers and importers of brand-name
prescription drugs pay a fee that is allocated to the Part B account of
the SMI trust fund. For 2025, the total of these brand-name drug fees
is estimated to be $2.8 billion. The contingency margin for 2025 has
been reduced to account for this additional revenue.
The traditional goal for the Part B reserve has been that assets
minus liabilities at the end of a year should represent between 15 and
20 percent of the following year's total incurred expenditures. To
accomplish this goal, a 17-percent reserve ratio, which is a fully
adequate contingency reserve level, has been the normal target used to
calculate the Part B premium. At the end of 2024, the reserve ratio is
expected to be 21.8 percent. When the reserve ratio is higher than 20
percent, the typical approach in the premium determination is to target
a gradual reduction in the reserve ratio over several years until 20
percent is reached.
The actuarial rate of $368.10 per month for aged beneficiaries, as

[[Page 90007]]

announced in this notice for 2025, reflects the combined effect of the
factors and legislation previously described and the projected
assumptions listed in table 2.
3. Monthly Actuarial Rate for Disabled Enrollees
Disabled enrollees are those persons under age 65 who are enrolled
in Part B because of entitlement to Social Security disability benefits
for more than 24 months or because of entitlement to Medicare under the
end-stage renal disease (ESRD) program. Projected monthly costs for
disabled enrollees (other than those with ESRD) are prepared in a
manner parallel to the projection for the aged using appropriate
actuarial assumptions (see table 2). Costs for the ESRD program are
projected differently because of the different nature of services
offered by the program.
As shown in table 4, the projected per enrollee amount required to
pay for one-half of the total of benefits and administrative costs for
disabled enrollees for 2025 is $471.73. The monthly actuarial rate of
$487.80 also provides an adjustment of -$2.90 for interest earnings and
$18.97 for a contingency margin, reflecting the same factors described
previously for the aged actuarial rate at magnitudes applicable to the
disabled rate determination. Based on current estimates, the assets
associated with disabled Medicare beneficiaries at the end of 2024 are
not sufficient to cover the amount of incurred, but unpaid, expenses
and to provide for a significant degree of variation between actual and
projected costs, and accordingly a positive margin is needed.
The actuarial rate of $487.80 per month for disabled beneficiaries,
as announced in this notice for 2025, reflects the combined net effect
of the factors described previously for aged beneficiaries and the
projection assumptions listed in table 2.
4. Sensitivity Testing
Several factors contribute to uncertainty about future trends in
medical care costs. It is appropriate to test the adequacy of the rates
using alternative cost growth rate assumptions, the results of which
are shown in table 5. One set represents increases that are higher and,
therefore, more pessimistic than the current estimate, and the other
set represents increases that are lower and, therefore, more optimistic
than the current estimate. The values for the alternative assumptions
were determined from a statistical analysis of the historical variation
in the respective increase factors.
As indicated in table 5, the monthly actuarial rates would result
in an excess of assets over liabilities of $127,119 million by the end
of December 2025 under the cost growth rate assumptions shown in table
2 and under the assumption that the provisions of current law are fully
implemented. This result amounts to 19.8 percent of the estimated total
incurred expenditures for the following year.
Assumptions that are somewhat more pessimistic (and that therefore
test the adequacy of the assets to accommodate projection errors)
produce a surplus of $80,649 million by the end of December 2025 under
current law, which amounts to 11.2 percent of the estimated total
incurred expenditures for the following year. Under fairly optimistic
assumptions, the monthly actuarial rates would result in a surplus of
$175,715 million by the end of December 2025, or 31.0 percent of the
estimated total incurred expenditures for the following year.
The sensitivity analysis indicates that, in a typical year, the
premium and general revenue financing established for 2025, together
with existing Part B account assets, would be adequate to cover
estimated Part B costs for 2025 under current law, should actual costs
prove to be somewhat greater than expected.
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BILLING CODE 4120-01-C

III. Collection of Information Requirements

This document does not impose information collection requirements--
that is, reporting, recordkeeping, or third-party disclosure
requirements. Consequently, there is no need for review by the Office
of Management and Budget under the authority of the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.).

IV. Regulatory Impact Analysis

A. Statement of Need

This notice announces the monthly actuarial rates and premium
rates, as required by section 1839(a) of the Act, and the annual
deductible, as required by section 1833(b) of the Act, for
beneficiaries enrolled in Part B of the Medicare Supplementary Medical
Insurance (SMI) program beginning January 1, 2025. It also responds to
section 1839(a)(1) of the Act, which requires the Secretary to provide
for

[[Page 90012]]

publication of these amounts in the Federal Register during the
September that precedes the start of each calendar year. As section
1839 prescribes a detailed methodology for calculating these amounts,
we do not have the discretion to adopt an alternative approach on these
issues.

B. Overall Impact

We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), Executive Order 14094 titled ``Modernizing
Regulatory Review'' (April 6, 2023), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the
Social Security Act, section 202 of the Unfunded Mandates Reform Act of
1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C.
804(2)).
Executive Orders 12866 and 13563 direct 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). The
Executive Order 14094 titled ``Modernizing Regulatory Review'' amends
section 3(f)(1) of Executive Order 12866 (Regulatory Planning and
Review). The amended section 3(f) of Executive Order 12866 defines a
``significant regulatory action'' as an action that is likely to result
in a rule that may: (1) have an annual effect on the economy of $200
million or more, (adjusted every 3 years by the Administrator of OMB's
Office of Information and Regulatory Affairs (OIRA) for changes in
gross domestic product); or adversely affect in a material way the
economy, a sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, territorial, or
tribal governments or communities; (2) create a serious inconsistency
or otherwise interfere with an action taken or planned by another
agency; (3) materially alter the budgetary impacts of entitlement
grants, user fees, or loan programs or the rights and obligations of
recipients thereof; or (4) raise legal or policy issues for which
centralized review would meaningfully further the President's
priorities or the principles set forth in this Executive order, as
specifically authorized in a timely manner by OIRA in each case.
An RIA must be prepared for rules with significant regulatory
action/s as per section 3(f)(1) of Executive Order 12866 ($200 million
or more in any 1 year).
Based on our estimates, OIRA has determined that this rulemaking is
significant per section 3(f)(1) as measured by the $200 million or more
in any 1 year. The 2025 standard Part B premium of $185.00 is $10.30
higher than the 2024 premium of $174.70. We estimate that the total
premium increase, for the approximately 64 million Part B enrollees in
2025, will be $7.9 billion, which is an annual effect on the economy of
$200 million or more. Accordingly, we have prepared an RIA that to the
best of our ability presents the costs and benefits of this notice. OMB
has reviewed this notice and HHS has provided the following assessment
of its impact.

C. Detailed Economic Analysis

As discussed earlier, this notice announces that the monthly
actuarial rates applicable for 2025 are $368.10 for enrollees age 65
and over and $487.80 for disabled enrollees under age 65. It also
announces the 2025 monthly Part B premium rates to be paid by (or on
behalf of) beneficiaries with full Part B coverage who file either
individual tax returns (and are single individuals, heads of
households, qualifying widows or widowers with dependent children, or
married individuals filing separately who lived apart from their
spouses for the entire taxable year) or joint tax returns.
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D. Accounting Statement and Table

As required by OMB Circular A-4 (available at <a href="http://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf">www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf</a>), in table 6 we
have prepared an accounting statement showing the estimated aggregate
Part B premium increase for all enrollees in 2025.
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E. Regulatory Flexibility Act (RFA)

The RFA requires agencies to analyze options for regulatory relief
of small businesses, if a rule or other regulatory document has a
significant impact on a substantial number of small entities. 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 being
nonprofit organizations or by meeting the Small Business
Administration's (SBA) definition of a small business (having revenues
of less than $9.0 million to $47 million in any 1 year). Individuals
and States are not included in the definition of a small entity. This
notice announces the monthly actuarial rates for aged (age 65 and over)
and disabled (under age

[[Page 90014]]

65) beneficiaries enrolled in Part B of the Medicare SMI program
beginning January 1, 2025. Also, this notice announces the monthly
premium for aged and disabled beneficiaries as well as the income-
related monthly adjustment amounts to be paid by beneficiaries with
modified adjusted gross income above certain threshold amounts. As a
result, we are not preparing an analysis for the RFA because the
Secretary has determined that this notice 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 or other regulatory document 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 604 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. As we
discussed previously, we are not preparing an analysis for section
1102(b) of the Act because the Secretary has determined that this
notice will not have a significant effect on a substantial number of
small rural hospitals.

F. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 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. In 2024, that
threshold is approximately $183 million. Part B enrollees who are also
enrolled in Medicaid have their monthly Part B premiums paid by
Medicaid. The cost to each State Medicaid program from the 2025 premium
increase is estimated to be more than the threshold. This notice does
not impose mandates that will have a consequential effect of the
threshold amount or more on State, local, or tribal governments or on
the private sector.

G. Federalism

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. This notice will not have a substantial direct effect on
state or local governments, preempt state law, or otherwise have
Federalism implications.

H. Congressional Review

This notice is subject to the Congressional Review Act and has been
transmitted to the Congress and the Government Accountability Office's
Comptroller General for review.

V. Waiver of Proposed Rulemaking

We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment prior to a rule taking
effect in accordance with section 1871 of the Act and section 553(b) of
the Administrative Procedure Act (APA). Section 1871(a)(2) of the Act
provides that no rule, requirement, or other statement of policy (other
than a national coverage determination) that establishes or changes a
substantive legal standard governing the scope of benefits, the payment
for services, or the eligibility of individuals, entities, or
organizations to furnish or receive services or benefits under Medicare
shall take effect unless it is promulgated through notice and comment
rulemaking. Unless there is a statutory exception, section 1871(b)(1)
of the Act generally requires the Secretary of the Department of Health
and Human Services (the Secretary) to provide for notice of a proposed
rule in the Federal Register and provide a period of not less than 60
days for public comment before establishing or changing a substantive
legal standard regarding the matters enumerated by the statute.
Similarly, under 5 U.S.C. 553(b) of the APA, the agency is required to
publish a notice of proposed rulemaking in the Federal Register before
a substantive rule takes effect. Section 553(d) of the APA and section
1871(e)(1)(B)(i) of the Act usually require a 30-day delay in effective
date after issuance or publication of a rule, subject to exceptions.
Sections 553(b)(B) and 553(d)(3) of the APA provide for exceptions from
the advance notice and comment requirement and the delay in effective
date requirements. Sections 1871(b)(2)(C) and 1871(e)(1)(B)(ii) of the
Act also provide exceptions from the notice and 60-day comment period
and the 30-day delay in effective date. Section 553(b)(B) of the APA
and section 1871(b)(2)(C) of the Act expressly authorize an agency to
dispense with notice and comment rulemaking for good cause if the
agency makes a finding that notice and comment procedures are
impracticable, unnecessary, or contrary to the public interest.
The annual updated amounts for the Part B monthly actuarial rates
for aged and disabled beneficiaries, the Part B premium, and the Part B
deductible set forth in this notice do not establish or change a
substantive legal standard regarding the matters enumerated by the
statute or constitute a substantive rule that would be subject to the
notice requirements in section 553(b) of the APA. However, to the
extent that an opportunity for public notice and comment could be
construed as required for this notice, we find good cause to waive this
requirement.
Section 1839 of the Act requires the Secretary to determine the
monthly actuarial rates for aged and disabled beneficiaries, as well as
the monthly Part B premium (including the income-related monthly
adjustment amounts to be paid by beneficiaries with modified adjusted
gross income above certain threshold amounts), for each calendar year
in accordance with the statutory formulae, in September preceding the
year to which they will apply. Further, the statute requires that the
agency promulgate the Part B premium amount, in September preceding the
year to which it will apply, and include a public statement setting
forth the actuarial assumptions and bases employed by the Secretary in
arriving at the amount of an adequate actuarial rate for enrollees age
65 and older. We include the Part B annual deductible, which is
established in accordance with a specific formula described in section
1833(b) of the Act, because the determination of the amount is directly
linked to the rate of increase in actuarial rate under section
1839(a)(1) of the Act. We have calculated the monthly actuarial rates
for aged and disabled beneficiaries, the Part B deductible, and the
monthly Part B premium as directed by the statute; since the statute
establishes both the time frame in which the monthly actuarial rates
for aged and disabled beneficiaries and the monthly Part B premium must
be published and the information that the Secretary must factor into
those amounts, we do not have any discretion in that regard. We find
notice and comment procedures to be unnecessary for this notice, and we
find good cause to waive such procedures under section 553(b)(B) of the
APA and section 1871(b)(2)(C) of the Act, if such procedures may be
construed to be required at all. Through this notice, we are simply
notifying the public of the updates to the monthly actuarial rates for
aged and disabled beneficiaries and the Part B deductible, as well as
the monthly Part B premium amounts and the income-related monthly
adjustment amounts to be paid by certain beneficiaries, in accordance

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with the statute, for CY 2025. We also note that, even if notice and
comment procedures were required for this notice, we would find good
cause, for the previously stated reason, to waive the delay in
effective date of the notice, as additional delay would be contrary to
the public interest under section 1871(e)(1)(B)(ii) of the Act.
Publication of this notice is consistent with section 1839 of the Act,
and we believe that any potential delay in the effective date of the
notice, if such delay were required at all, could cause unnecessary
confusion for both the agency and Medicare beneficiaries.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on October 31, 2024.

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-26474 Filed 11-8-24; 4:15 pm]
BILLING CODE 4120-01-P

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