TN 23 (04-01)

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 when she attained age 65 in 12/97. She refused SMI because she was covered under her husband"s GHP based on his current employment status.

Rose enrolls in 1/00 during the GEP. She elects SMI coverage effective 7/00, although she could be entitled earlier under the SEP provisions. There is no premium surcharge assessed for late enrollment because she submits evidence that she has been covered under the GHP all months from age 65 on.

2. Premium surcharge rollback (GEP enrollment)

Norma filed an application for HI when she attained age 65 in 8/95. She refused SMI because she was working and covered under a GHP. Norma retired on 7/17/98 but did not enroll in SMI until 3/00 during the GEP. Although she cannot have an SEP, the months she was covered under the GHP based on current employment status (12/95 – 7/98) can be excluded from the premium surcharge calculation. In this case, a 10% surcharge is applied.

3. Disabled individual with LGHP coverage

Ken Taylor has been entitled to HI as a disabled beneficiary since 5/84. He refused SMI because he was covered under his working wife"s LGHP. Mrs. Taylor retired on 8/10/99. Since Ken did not enroll in SMI under the SEP provisions prior to his wife's retirement, he 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, he inquires about enrolling in SMI. Since he was enrolled in an LGHP when he was first eligible for SMI, he 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 he 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 when she first became eligible in 5/85 because she was covered under her husband'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. She 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 his/her own or a spouse's current employment status. Sally inquired about the new law in 1/91 and her 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 his deceased mother since 3/75. He was enrolled in SMI from 3/75 through 12/80 when his enrollment was voluntarily terminated.

Warren was covered under his father's LGHP from 11/80 until 8/21/99, when his father retired. His father had his own 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), he is eligible to enroll under the SEP provisions. He 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 his worki