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42 U.S. Code § 1395w-113. Premiums; late enrollment penalty
(a) Monthly beneficiary premium
(1) Computation
(A) In general
The monthly beneficiary premium for a prescription drug plan is the base beneficiary premium computed under paragraph (2) or (8) (as applicable) as adjusted under this paragraph.
(B) Adjustment to reflect difference between bid and national average bid
(i) Above average bid
If for a month the amount of the standardized bid amount (as defined in paragraph (5)) exceeds the amount of the adjusted national average monthly bid amount (as defined in clause (iii)), the base beneficiary premium for the month shall be increased by the amount of such excess.
(ii) Below average bid
If for a month the amount of the adjusted national average monthly bid amount for the month exceeds the standardized bid amount, the base beneficiary premium for the month shall be decreased by the amount of such excess.
(iii) Adjusted national average monthly bid amount defined
For purposes of this subparagraph, the term “adjusted national average monthly bid amount” means the national average monthly bid amount computed under paragraph (4), as adjusted under section 1395w–115(c)(2) of this title.
(C) Increase for supplemental prescription drug benefits
The base beneficiary premium shall be increased by the portion of the PDP approved bid that is attributable to supplemental prescription drug benefits.
(D) Increase for late enrollment penalty
The base beneficiary premium shall be increased by the amount of any late enrollment penalty under subsection (b).
(E) Decrease for low-income assistance
The monthly beneficiary premium is subject to decrease in the case of a subsidy eligible individual under section 1395w–114 of this title.
(F) Increase based on income
The monthly beneficiary premium shall be increased pursuant to paragraph (7).
(G) Uniform premium
Except as provided in subparagraphs (D), (E), and (F), the monthly beneficiary premium for a prescription drug plan in a PDP region is the same for all part D eligible individuals enrolled in the plan.
(2) Base beneficiary premiumSubject to paragraph (8), the base beneficiary premium under this paragraph for a prescription drug plan for a month is equal to the product [1] —
(A)
the beneficiary premium percentage (as specified in paragraph (3)); and
(B)
the national average monthly bid amount (computed under paragraph (4)) for the month.
(3) Beneficiary premium percentageFor purposes of this subsection, the beneficiary premium percentage for any year is the percentage equal to a fraction—
(A)
the numerator of which is 25.5 percent (or, for 2030 and each subsequent year, the percent specified under paragraph (9)); and
(B) the denominator of which is 100 percent minus a percentage equal to—
(i)
the total reinsurance payments which the Secretary estimates are payable under section 1395w–115(b) of this title with respect to the coverage year; divided by
(ii) the sum of—
(I)
the amount estimated under clause (i) for the year; and
(II)
the total payments which the Secretary estimates will be paid to prescription drug plans and MA–PD plans that are attributable to the standardized bid amount during the year, taking into account amounts paid by the Secretary and enrollees.
(4) Computation of national average monthly bid amount
(A) In general
For each year (beginning with 2006) the Secretary shall compute a national average monthly bid amount equal to the average of the standardized bid amounts (as defined in paragraph (5)) for each prescription drug plan and for each MA–PD plan described in section 1395w–21(a)(2)(A)(i) of this title. Such average does not take into account the bids submitted for MSA plans, MA private fee-for-service plan, and specialized MA plans for special needs individuals, PACE programs under section 1395eee of this title (pursuant to section 1395w–131(f) of this title), and under reasonable cost reimbursement contracts under section 1395mm(h) of this title (pursuant to section 1395w–131(e) of this title).
(B) Weighted average
(i) In general
The monthly national average monthly bid amount computed under subparagraph (A) for a year shall be a weighted average, with the weight for each plan being equal to the average number of part D eligible individuals enrolled in such plan in the reference month (as defined in section 1395w–27a(f)(4) of this title).
(ii) Special rule for 2006
For purposes of applying this paragraph for 2006, the Secretary shall establish procedures for determining the weighted average under clause (i) for 2005.
(5) Standardized bid amount definedFor purposes of this subsection, the term “standardized bid amount” means the following:
(A) Prescription drug plans
(i) Basic coverage
In the case of a prescription drug plan that provides basic prescription drug coverage, the PDP approved bid (as defined in paragraph (6)).
(ii) Supplemental coverage
In the case of a prescription drug plan that provides supplemental prescription drug coverage, the portion of the PDP approved bid that is attributable to basic prescription drug coverage.
(B) MA–PD plans
In the case of an MA–PD plan, the portion of the accepted bid amount that is attributable to basic prescription drug coverage.