TN 27 (11-14)
HI 00805.290 SEP Requirements for Self-employed Beneficiaries
A. Definition of Self-employed beneficiaries
Self-employed beneficiaries include:
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 for special enrollment period (SEP) eligibility based on self-employment
Use the following criteria when determining if a beneficiary is eligible for the SEP based on self-employment.
1. Treat self-employed beneficiaries 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 has coverage under group health plan (GHP) or large group health plan (LGHP)
If the self-employed individual has employees whose spouses are eligible for coverage under the GHP or LGHP, then the aged or disabled spouse of the self-employed individual is also eligible for a SEP based on coverage under the GHP or LGHP. For a definition of GHP, LGHP and spouse for purposes of the SEP, see HI 00805.266.
3. Disabled family members has coverage 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 a SEP based on coverage under the LGHP. For definition of family member for purposes of the SEP, see HI 00805.266.
4. Number of employees for GHP coverage
Until the end of 1990, we considered a self-employed beneficiary to have GHP coverage only if at least two of his or her employees were eligible to enroll in that coverage. As of January 1991, only one employee (in addition to the self-employed beneficiary) has to be eligible for coverage for us to consider the self-employed beneficiary’s coverage as a GHP for SEP and premium surcharge rollback purposes.
We may exclude months of GHP coverage beginning with June 1986 for the aged or January 1987 for the disabled from the calculation of the premium surcharge for late enrollment.
For information on proper completion of the Form CMS-L564 for a self-employed beneficiary, see HI 00805.290C. For processing requests for premium surcharge reduction, see HI 00805.290D and HI 00805.290E.
5. Number of employees for LGHP coverage
A disabled beneficiary requesting the SEP based on their own self-employment, or a family member’s self-employment, must have LGHP coverage. For the coverage to be an LGHP, the company or entity that the self-employed person owns must have 100 or more employees (in addition to the self-employed individual) and be available to employees.
The self-employed beneficiary and his employees may also have a GHP that includes multiple employers. We will consider this multi-employer GHP an LGHP, if at least one of the employers has 100 or more employees. If one of the companies in the multi-employer GHP has 100 or more employees, all the GHP enrollees have LGHP coverage, even if their employer has less than 100 employees.
The law does not require enrollment of 100 or more individuals in the GHP plan. The law only requires that the employer with the GHP plan meets the 100-employee requirement.
A disabled beneficiary may be either the self-employed person (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).
Example of LGHP coverage for a disabled spouse of a self-employed individual
Mr. Smith is self-employed, currently working, and has 25 employees. His company offers GHP coverage through a multi-employer GHP. One of the businesses in the multi-employer GHP has 150 employees.
Mr. Smith’s wife has Medicare based on disability. Because the multi-employer GHP includes a company with at least 100 employees, Mr. Smith’s wife has LGHP coverage.
6. Other types of GHP coverage for self-employed individuals
The self-employed individual may have health insurance through a professional association, lodge, fraternal organization, etc. For example, an attorney may have coverage through a plan sponsored by the local Bar Association. The self-employed individual has GHP coverage (or LGHP coverage, if there are 100 or more employees) if:
the association, lodge, or organization has one employee, or
the self-employed member of the association, lodge, or organization has one employee who is eligible for coverage under the same plan as the self-employed individual.
In addition, if enrolled in the same plan, we consider the spouse of the self-employed individual to have GHP or LGHP coverage.
If the plan is not available to any employees, it is not a GHP or LGHP. The self-employed beneficiary (including spouse or family member) is not eligible for an SEP based on the health insurance coverage from that plan.
C. Procedure for evidence of GHP or LGHP coverage
Obtain evidence of GHP or LGHP coverage from the GHP or LGHP when the claimant is self-employed (i.e., the employer) as outlined in HI 00805.295. The self-employed beneficiary does not complete the evidence portion (Section B) of Form CMS-L564.
Offer the beneficiary the option to have the Form CMS-L564 mailed to them or to visit Medicare.gov to get the form by clicking on the tab “Forms, Help & Resources” and selecting “Get Medicare Forms.” This tab is located on the top of the screen at the far right. (Medicare.gov/forms-help-and-resources/forms/medicare-forms.html). This is where the beneficiary can find the form for completion.
On Form CMS-L564, the self-employed beneficiary completes Section A and the GHP or LGHP completes Section B.
Instruct the self-employed beneficiary (or their spouse or family member) with the association coverage to write:
the self-employed individual’s company name as the “Employer’s Name” in Section A, number 1;
the name of the beneficiary requesting the SEP in Section A, number 4; and
the name of the self-employed individual as the “Employee’s Name” in Section A, number 6.
If the person requesting the SEP is the self-employed individual, he or she will list his or her name in both Section A, numbers 4 and 6.
If the beneficiary wants to have the form mailed to him or her, provide these instructions on the form and a FO return envelope in the mailing.
Explain to the beneficiary that he or she should mail or take the completed form to their local FO for processing.
D. Procedure for premium surcharge rollback for the aged
Aged beneficiaries can request premium surcharge rollback at any time. Use the following criteria for calculation of the premiums for months the beneficiary had GHP coverage based on self-employment.
1. Premiums for months after May 1986
If the self-employed beneficiary (or spouse) had GHP coverage where at least one employee was eligible to be covered in addition to the self-employed person, apply the rules in HI 00805.280A.1.
2. Premiums for months prior to June 1986
If the self-employed beneficiary (or spouse) had GHP coverage where two or more employees were covered in addition to the self-employed person, apply the rules in HI 00805.750.
E. Procedure for premium surcharge rollback for the disabled
Disabled beneficiaries can request premium surcharge rollback at any time.
For the disabled self-employed beneficiary (or family member) for months of coverage under a GHP, apply the rules in HI 00805.280A.2.
For the disabled self-employed beneficiary (or family member) for months of coverage under an LGHP, apply the rules in HI 00805.280A.3.
HI 00805.266 Description of Terms Used in the Special Enrollment Period and Premium Surcharge Rollback Provisions
HI 00805.280 Premium Surcharge Rollback for Individuals With GHP/LGHP Coverage
HI 00805.750 SEP and Premium Surcharge Requirements in Effect for the Aged Prior to August 1986
HI 00805.295 Evidence of GHP or LGHP Coverage Based on Current Employment Status