TN 108 (06-24)

HI 00805.281 Examples of the Elimination or Rollback of Premium Surcharges for Individuals With GHP/LGHP Coverage

A. Examples -- Elimination or rollback of premium surcharge

1. Premium surcharge rollback (SEP and GEP overlap)

Rose, a social security beneficiary since age 62, was automatically enrolled in HI at aged 65 on 12/2020 Rose refused SMI because of the covered under spouse's GHP based on current employment status.

Rose enrolls in 1/2023 during the GEP. Rose elects SMI coverage effective 2/2023, although Rose could be entitled earlier under the SEP provisions. There is no premium surcharge assessed for late enrollment because Rose submitted evidence that has been coverage under the GHP all months at age 65.

2. Premium surcharge rollback (GEP enrollment)

Norma filed an application for HI at age 65 in 8/2020. Norma refused SMI because of employment and coverage under a GHP. Norma retired on 7/17/2023 but did not enroll in SMI until 3/2024 during the GEP, with an effective date 04/2024. Although Norma cannot have an SEP, because of the months Norma was covered under the GHP based on current employment status (12/2020 – 7/2023) can be excluded from the premium surcharge calculation.

3. Disabled individual with LGHP coverage

Ken Taylor has been entitled to HI as a disabled beneficiary since 5/84. Ken refused SMI because of coverage under the spouse's LGHP. Mrs. Taylor retired on 8/10/99. Since Ken did not enroll in SMI under the SEP provisions prior to Mrs. Taylor's retirement, Ken can enroll during the 8-month period beginning 9/99 (the month following the last month of LGHP coverage based on current employment status.)

In 12/99, Ken inquires about enrolling in SMI. Since Ken was enrolled in an LGHP when first eligible for SMI, Ken meets the requirements for an SEP and is entitled to SMI effective 1/00.

Ken has to pay a premium surcharge because only the months from 1/87 through 8/99 are excludable from the surcharge. The computation of the surcharge includes the months from 9/84 (the first month after the end of the IEP) through 12/86 and 9/99 through 12/99 (a total of 32 months), resulting in a 20 percent surcharge.

NOTE: When Ken becomes entitled to Medicare at age 65, the surcharge will be eliminated since Ken will have a new IEP based on attainment of age 65 (see HI 01001.010A.3.a. and HI 00805.085).

4. Disabled individual with GHP coverage prior to July 1990

Sally Stewart, a disabled beneficiary, refused SMI the first month of elgibility in 5/85 because Sally was covered under the spouse's GHP. Mr. Stewart retired in 11/88. The law did not permit either an SEP or premium surcharge rollback based on GHP coverage for the disabled in 1988. Therefore Sally could not enroll in SMI until the 1989 GEP. Sally was assessed a premium surcharge of 30 percent, based on the 43 countable months from 9/85 (the first month after the end of the IEP) through 3/89.

Effective 7/90, the law was amended to allow an SEP and premium surcharge rollback for the disabled beneficiary covered under a GHP based on their spouse's current employment status. Sally inquired about the new law in 1/91 and the premium was recalculated to exclude the months of 1/87 through 11/88 from the premium surcharge calculation. This resulted in a reduction in the premium surcharge from 30 percent to 10 percent as of 7/90 and Sally was refunded the excess premiums previously withheld.

5. Disabled adult child covered under a LGHP

Warren Edwards, born 3/12/45, has been entitled to Medicare as a disabled adult child on the record of deceased parent since 3/75. Warren was enrolled in SMI from 3/75 through 12/80 when the enrollment was voluntarily terminated.

Warren was covered under the parent's LGHP from 11/80 until 8/21/99, when Warren's parent retired. Warren's parent had a business with 185 employees. Since Warren was enrolled in SMI when first eligible and terminated SMI while covered under an LGHP (as the family member of a self-employed individual who had more than 100 employees), Warren is eligible to enroll under the SEP provisions. Warren enrolled in 10/99 and is entitled to SMI beginning 11/99.

Warren's premium surcharge is established at 60 percent, counting the months of 1/81 through 12/86, and 9/99 through 10/99 (a total of 74 months).

6. Decrease in employees - Disability

Robert Brown, a disabled adult child, was covered under working parent's LGHP when became entitled to HI (and refused SMI) effective 1/86.

In 1998, the workforce dropped to less than 100 employees throughout most of the year. Therefore, the plan is no longer considered an LGHP effective 1/1/99. Since the plan is no longer an LGHP, Robert's last opportunity to enroll under the SEP provisions began 1/99 (the month following the last month the plan was considered an LGHP) and ended 7 months later. Robert filed for SMI in May and coverage was effective 6/99.

The premium surcharge calculation excludes the months of 1/87 through 12/98. The months 5/86 through 12/86 (8 months) are included in calculating the surcharge because they occurred after the end of Robert's IEP and prior to 1/87, the effective month of the SEP provision for the disabled. In addition, the months of 1/99 through 5/99 are included in the calculation of the surcharge because months during the SEP when Robert was not covered under a LGHP. This is a total of 13 months and results in a 10 percent surcharge.

B. References

  • HI 00805.740 and HI 00805.750 for the SEP requirements in effect prior to the 1986 amendments.

  • HI 00805.751 for information about the 1986 amendments.

  • HI 00805.752 for information about the SEP requirements for the disabled prior to the 1994 amendments

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HI 00805.281 - Examples of the Elimination or Rollback of Premium Surcharges for Individuals With GHP/LGHP Coverage - 06/10/2024
Batch run: 06/10/2024