TN 19 (03-93)
HI 00805.220 Inadvertent Failure to Bill for or Deduct Premiums - Non-Buy-In Cases
In some cases, long after a person has been awarded SMI and notified of SMI coverage, it is learned that premiums have inadvertently not been billed for or deducted from his/her benefit payments, or that premium billing or benefit deductions were accidentally stopped months earlier.
The coverage remained intact with only the premium billing or collection mechanism being affected. However, by the time premium collection is initiated or resumed, the enrollee may be confused as to whether he/she did or did not have coverage during the non- premium period. Also, the beneficiary may be financially unable to pay the arrearage, or have great difficulty in paying the arrearage, when the problem with premium collection is finally resolved.
NOTE: It is not necessary to determine whether the enrollee was also at fault (e.g., should have known premiums were due and been prepared to pay them when the billing or deduction errors were finally corrected). The type of government error involved requires relief even if there is some carelessness on the part of the beneficiary.
Equitable relief is automatically considered to avoid hardship or the necessity of terminating SMI in cases where premium arrearages of more than 5 months accumulated because of administrative error.
In addition to the right to pay the arrearage through installments, the beneficiary has the following additional options to discharge the premium indebtedness:
waiver of the premiums in cases of severe financial hardship (see subsections HI 00805.220H. and HI 00805.220I.); or
termination of SMI entitlement effective with the month after the last month for which a premium payment was received and reinstatement of SMI effective with the current month for which premium collection activity is being resumed.
This option is available only if there have been no claims made for Part B services during the entire period for which the premiums were not collected (see HI 00805.220F.).
C. Procedure - Arrearage is for 6 or more months
Take the following actions when the arrearage is 6 or more months.
1. Action required
Immediately reinstate premium collection with the current month.
Do not deduct or bill for the arrearage until at least 45 days have elapsed after the notice (see HI 00805.220C.2.) is sent so that the beneficiary has the opportunity to respond.
2. Notice to be sent
Where the premium arrearage is 6 months or more, send the enrollee a notice stating the following:
premium collection was erroneously suspended;
the first month for which the premium collection was inadvertently not made;
the current month when premium collection will be reinstated;
the arrearage will be collected from the next benefit check (the beneficiary will be billed for the arrearage) unless the beneficiary wishes to take advantage of the following options:
the right to have SMI entitlement canceled for those months for which no premiums were billed or deducted. This choice is possible only if no claims for payments were made or will be made for the period of canceled SMI coverage (see HI 00805.220G.);
the right to retain SMI coverage for the period for which premiums were not collected while requesting waiver of the amount of the premiums for the period because severe financial hardship would be caused if the premiums were to be paid (see HI 00805.220H. and HI 00805.220I.);
the right to retain SMI coverage for the period and request an alternative method for payment of the uncollected premium amount.
the beneficiary must advise SSA of his/her choice of options within 30 days of the date of the notice or it will be assumed that he/she will pay the arrearage by deduction from monthly benefits (or in response to a bill, if not receiving monthly benefits).
D. Procedure - Arrearage is less than 6 months
Undertake premium collection activity but, where SMI premiums are due for 5 or fewer months of coverage, do not send a notice as described in HI 00805.220C.
NOTE: Where the premium arrearage is not substantial, payment of the amount owed within the usual grace period will not normally create undue hardship for the enrollee.
However, if the enrollee spontaneously complains of hardship after the action has been taken to bill for or withhold this arrearage, send a notice similar to the one described in HI 00805.220C. to see if waiver, alternate methods of payment, or cancellation of SMI would best serve the beneficiary's interests.
E. Policy - Current premiums must be paid
Establishment of an installment plan, cancellation of SMI for the period of non-collection, or waiver of retroactive premium liability will be considered only if currently due premiums are paid, beginning with the month the individual received notice of premium liability.
F. Policy - Uncollected premium surcharges
All the types of relief described in this section - except for cancellation of SMI coverage for the months from which premiums were not collected - can also be applied in cases of individuals who should have been assessed a premium surcharge for late enrollment (or were assessed a lower surcharge than they should have paid). The surcharge total owed would have to equal 5 months' premiums at the current base rate to be considered automatically.
G. Procedure - Cancellation of SMI/premiums not collected
Cancel SMI coverage for the period during which premiums were not collected if the following requirements are met:
the individual submits a written request to have the SMI coverage canceled during the (named) months;
the request is filed within 30 days of the date of the notice in HI 00805.220B.; and
the individual certifies that he/she has not filed, and will not file, claims for services covered by SMI during the period for which cancellation of SMI is sought.
CAUTION: Caution the individual who is granted SMI cancellation that if he/she erroneously states that no claims for SMI have been, or will be filed, and the opposite is true, any reimbursement received represents an overpayment that will not be waived on any grounds.
H. Policy - Waiver of past-due premiums
The individual should be relieved of the obligation to pay an arrearage of premiums caused by Government error if payment of the amount would deprive him/her of funds which are reasonably necessary for ordinary living expenses.
NOTE: This is the same test used in determining whether recovery of a benefit overpayment would defeat the purpose of title II (see GN 02250.105ff.)
I. Procedure - Development of waiver
1. FO decides if waiver applies
Do not make a determination as to whether equitable relief is applicable, because failure to bill for or deduct premiums is an automatic equitable relief situation. However, when waiver of retroactive premium liability is under consideration, decide whether or not waiver should be granted.
2. FO uses same criteria as Title II
In determining whether the premium arrearage should be waived, use the same criteria and rules that apply in deciding whether it would defeat the purpose of title II to recover a monthly benefit overpayment of the same amount (see GN 02250.105ff.)
3. FO action after development is complete
Forward to the PSC or ODO:
the appropriate documents used in the development (including Form SSA-632-BK, Request for Waiver and Recovery Questionnaire) (see GN 02250.200. - GN 02250.290);
the premium bill or DO-BCM Query Response;
if current premiums cannot be deducted from benefits (e.g., enrollee is a nonbeneficiary), a copy of the receipt given the enrollee for current premiums or other evidence that current premiums have been paid; and
a determination on a Report of Contact as to whether or not payment of the premium arrearage would create a hardship and should therefore be waived.
Forward favorable decisions to the special Post Office Box number addresses for the PSCs shown in HI 01005.802.
Forward unfavorable decisions separately in a white envelope to the appropriate PSC or ODO, Attention: Recovery Reviewer.
4. PSC action
Review unfavorable decisions:
If there is concurrence with the FO decision, prepare a denial notification.
If the decision is questionable, return the file to the FO for further consideration.
If the FO reaffirms its unfavorable decision, do not question it any further.
NOTE: Do not review favorable decisions.
5. FO and PSC actions
Complete the development and processing of these cases as soon as possible, in order to avoid confusion and uncertainty as to the amount of premiums owed.
Although SMI is awarded to Mr. Jones (who is not a social security beneficiary) and he utilizes his SMI coverage beginning 7/1/90, many months elapse without a premium notice.
When the error is discovered in 4/92, a billing notice is sent to Mr. Jones along with the notice described in HI 00805.220B.. He pays the current premium bill and requests waiver of the premium arrearage.
If Mr. Jones establishes that paying the arrearage would deprive him of funds for ordinary living expenses (see HI 00805.220H.), the arrearage is waived.
If he does not qualify for waiver, he may nevertheless be afforded the opportunity to pay the premium arrearage in installments of $20 a month.
(He cannot be offered the opportunity to have his SMI cancelled for the period involved because he used the coverage.)