TN 23 (04-01)

HI 00805.300 Disability SEP for Beneficiaries for Whom Medicare is Now the Primary Payer

A. Policy – Disability SEP

Employers must identify all disabled beneficiaries who:

  • are currently covered under an LGHP, and

  • meet the definition of active individual, but

  • whose coverage is not based on the current employment status of the beneficiary or a family member.

The employer must identify these individuals so that the primary payment status in CMS Health Insurance System can be updated to reflect that Medicare is now the primary payer. The employers must also advise their disabled beneficiaries:

  • that the payment status has changed,

  • the effective date Medicare becomes the primary payer, and

  • a special enrollment period, the Disability SEP, is available to those who wish to enroll in SMI.

NOTE: Employers may contract with a third party to notify their employees and Medicare carriers about the change in primary payment status and to handle the Part B enrollments.

B. Process – Disability SEP (D-SEP)

1. Change in Primary Payer Status

Medicare carriers are responsible for determining changes in primary payment status (i.e., whether Medicare is the primary payer). Employers who wish to have the payment status changed for disabled beneficiaries must submit certain beneficiary data to the carriers. Employers must also advise the carriers of the date the LGHP will no longer pay primary benefits. The LGHP's primary payer responsibility may not terminate earlier than 8/10/93.

Disabled beneficiaries who do not have LGHP coverage based on current employment status will have the payment status changed to reflect Medicare as the primary payer. (Medicare becomes the primary payer the month following the last month the LGHP pays primary benefits.)

The Medicare carrier will provide the employer with a letter certifying that Medicare is now the primary payer and the effective date Medicare becomes the primary payer. A list of the employer's disabled beneficiaries for whom Medicare is now the primary payer will be attached to the letter.

2. Evidence That Medicare Is Primary Payer

The employer will give each disabled beneficiary a notice that includes the following information:

  • the date Medicare becomes the primary payer,

  • the opportunity for immediate enrollment in SMI, and

  • all months the beneficiary was covered under the LGHP.

The beneficiary will also be given a copy of the Medicare carrier letter that certifies that Medicare is the primary payer. (The list of beneficiary names will not be given to the disabled individual.)

The employer will advise the beneficiary to take the employer letter and the carrier certification to Social Security if he/she wishes to enroll in SMI.

C. Policy – D-SEP

Disabled beneficiaries who did not enroll in SMI because Medicare was the secondary payer under the prior law, may enroll during the 7-month (D-SEP). The individual must submit the employer letter and the carrier certification in order to enroll. The individual need not meet the requirements in HI 00805.752 in order to enroll during the D-SEP which begins with the later of:

  • the month in which the employer notifies the beneficiary that Medicare is the primary payer, or

  • the month Medicare becomes the primary payer.

D. Policy – SMI Effective Date

Entitlement to SMI may be established:

  • as of the first day of the month of filing for Part B, or

  • during any month of the 7-month D-SEP, or

  • retroactive to the month Medicare becomes the primary payer provided the beneficiary makes arrangements to pay the past due premiums either in a lump sum or by monthly installments.

NOTE: In no case may SMI entitlement begin prior to 8/93.

E. Policy – Reduction/Elimination of Premium Surcharge

Effective for premiums due 8/93 and later, the calculation of the premium surcharge for late enrollment will exclude:

  • all months during which the LGHP was primary payer beginning with the latest of 1/87, the end of the IEP, or the date LGHP coverage began, and

  • all months of SMI entitlement.

NOTE: Months that the LGHP was not primary payer cannot be excluded from the calculation of the premium surcharge.

F. Examples

1. Current SMI Election

Lamont Stevens is on long-term disability from the General Motors Corporation. He has been entitled to disability benefits since 11/90 and became eligible for Medicare effective 11/92. He refused SMI since he was covered under an LGHP. In 4/99, the employer notified Lamont that the LGHP is no longer primary payer of benefits beginning 5/1/99 and advised him to contact SSA about enrolling in SMI under the D-SEP provisions. The notice stated that Lamont has been covered by the LGHP since 11/90 and a copy of the carrier certification was provided.

Lamont's D-SEP is 5/99 through 11/99. He enrolled in SMI in 8/99 and requested an effective date of 9/99. There is no premium surcharge because he has been covered under the LGHP since he first became eligible for SMI and the only months the LGHP was not primary were 5/99 through 8/99.

2. Retroactive SMI Election

Lynne Robbins, who began working for the Monsanto Company in 3/93, has been on long-term disability since 9/95. She became eligible for Medicare effective 2/98 but refused SMI because she was covered under an LGHP.

In 12/99, Monsanto informed her that they became secondary payer of benefits effective 6/1/99 and advised her to contact SSA about enrolling in SMI under the D-SEP provisions. The notice stated that Lynn had been covered by the LGHP since 3/93. The employer also provided a copy of the carrier certification.

Lynne's D-SEP is 12/99 through 6/00. She enrolled in SMI in 1/00 and requested an entitlement date of 6/99. She also signed an installment agreement to have the past due premiums deducted from her social security disability benefit check at the rate of $20 monthly. There is no premium surcharge since Lynne has been covered under the LGHP since first becoming eligible for SMI.

3. Current SMI Election — Premium Surcharge Involved

Jackie Johnson, employed at University Hospital since 11/89, has been covered under the Hospital's LGHP since she began working. She has not actually worked since 6/96. Jackie was entitled to disability benefits effective 1/95 and was automatically enrolled in SMI beginning 1/97. She requested termination of the coverage effective 9/97.

In 1/00, the employer informed Jackie that they are no longer primary payer of benefits beginning 1/99 and advised her to contact SSA about enrolling in SMI under the D-SEP provisions. The letter stated that she has been covered under the LGHP since 11/89 and a copy of the carrier certification is also provided.

Jackie's D-SEP is 1/00 through 7/00. She enrolls in SMI in February and requests an effective date of 3/00. A 10 percent premium surcharge applies since the months the employer is not primary payer of benefits (1/99 – 2/00) can not be excluded from the surcharge calculation.


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0600805300
HI 00805.300 - Disability SEP for Beneficiaries for Whom Medicare is Now the Primary Payer - 01/05/2007
Batch run: 01/27/2009
Rev:01/05/2007