TN 23 (04-01)
HI 00805.290 SEP Requirements for Self Employed Individuals
A. Policy – self-employed individuals
Self-employed individuals include consultants, owners of businesses, directors of corporations and members of the clergy and religious orders who are paid for their services by a religious body or other entity.
B. Policy - requirements
1. Self-employed individuals are treated like employees
All requirements and rights to an SEP and premium surcharge rollback that apply to employees also apply to the self-employed.
2. Spouse is covered under GHP or LGHP
If the self-employed individual has employees whose spouses are eligible for coverage under the GHP or LGHP, then the spouse of the self-employed individual is also eligible for coverage under the GHP or LGHP.
3. Family members are covered under LGHP
If the self-employed individual has employees whose disabled family members are eligible for coverage under the LGHP, then the disabled family members of the self-employed individual are also eligible for coverage under the LGHP.
4. Number of employees for SEP - GHP
Until the end of 1990, the self-employed person seeking an SEP had to be covered by a group health plan under which at least 2 of his or her employees were eligible for coverage. As of 1/91, only 1 employee (in addition to the self-employed person) has to be eligible for coverage under the GHP for SEP and premium surcharge rollback purposes.
Months of GHP coverage beginning with 6/86 for the aged (see HI 00805.290C), or 1/87 for the disabled (see HI 00805.290D.) may, however, be excluded from the calculation of the premium surcharge for late enrollment.
5. Number of employees for SEP - LGHP
The provisions relating to an SEP for the self-employed based on LGHP coverage require that the employer has 100 or more employees (in addition to the self-employed individual). The self-employed individual and his employees may also be under a multi-employer group health plan that is available to employees of at least one employer who has 100 or more employees. (The law does not require that 100 or more individuals be enrolled in the plan, only that the plan cover employees of at least one employer that meets the 100 - employee requirement.)
A disabled beneficiary may be either the self-employed individual (e.g., currently in an extended period of eligibility) or the "family member" of a self-employed individual and covered under the LGHP (if the family members of employees are offered the opportunity for such coverage).
6. Insurance offered by an association, lodge, etc.
The self-employed individual may also be covered under health insurance offered by a professional association, lodge, fraternal organization, etc. For example, an attorney may be under a plan sponsored by the local Bar Association. If there is:
one employee of the association, lodge, or organization, or
one employee of a self-employed member of the association, lodge, or organization, who is eligible for coverage under the same plan as the self-employed individual, that plan is considered a GHP (or LGHP, if there are 100 or more such employees).
Thus, the self-employed individual (and spouse, if the employees" spouses are also eligible under the same GHP/LGHP) has health insurance coverage that meets the definition of GHP/LGHP coverage.
If the association plan for the self- employed members is not available to any employees, that plan is not an GHP or LGHP. The self-employed member is not eligible for an SEP based on the health insurance coverage from such a plan.
C. Procedure - evidence of GHP OR LGHP coverage
Obtain evidence of GHP or LGHP coverage from the GHP or LGHP when the claimant is the employer.
Adapt the Form HCFA-L564, if it is being used for evidence, to obtain such information from the GHP or LGHP, referring to the self-employed individual (or family member or spouse) rather than the "employee." Include the name of the self-employed individual’s company, if needed for the group health plan to identify the firm.
D. Procedure – premium surcharge rollback for the aged
For premium surcharge rollback requests received from an aged individual at any time:
1. Premiums for months after 5/86:
Apply the rules in HI 00805.280A.1, if the self-employed individual was covered by a GHP under which at least 1 employee was eligible to be covered in addition to the self-employed person.
2. Premiums for months prior to 6/86:
Apply the rules in HI 00805.750 if the self-employed individual was covered by a GHP under which 2 or more employees were covered in addition to the self-employed person.
E. Procedure – premium surcharge rollback for the disabled
For premium surcharge rollback requests received from a disabled individual at any time:
Apply the rules in HI 00805.280A.2., for the disabled self-employed individual for months of coverage under a GHP.
Apply the rules in HI 00805.280A.3. for the disabled self-employed individual for months of coverage under an LGHP.