CHAMPUS provides payment for necessary health care without premium cost. For many years, only persons aged 65 or over who became eligible for premium-free HI lost their CHAMPUS eligibility.

Separate decisions by the Supreme Court and the Department of Defense (DoD), discussed below, caused a number of CHAMPUS beneficiaries to unexpectedly lose their CHAMPUS entitlement with a significant impact on their medical insurance needs and rights.

In two related decisions handed down in March 1977, the Supreme Court declared unconstitutional the “half-support” dependency requirements in the Social Security Act for spouses insurance benefits.

As a result, many men age 65 or over, previously ineligible for HI, qualified for spouses benefits and, therefore, HI. Because of their entitlement to HI, beneficiaries with CHAMPUS rights lost their eligibility for CHAMPUS.

Enforcing the unconstitutional dependency requirements was a Government error that led these men to believe they were ineligible for monthly benefits and HI and eligible for CHAMPUS. They thought it was unnecessary for them to enroll for SMI.

DoD had allowed those entitled to Medicare on the basis of ESRD or disability to retain their CHAMPUS privileges despite HI entitlement. DoD decided in 1977 that it was erroneous to permit anyone to retain CHAMPUS entitlement while entitled to HI, i.e., CHAMPUS beneficiaries, regardless of age, lose CHAMPUS entitlement upon entitlement to HI (except for dependents of active duty members).

The above developments would have left many CHAMPUS beneficiaries with neither CHAMPUS nor SMI coverage. They could not enroll for SMI until the 1978 GEP, and SMI could not begin until July 1, 1978. In addition, many would have had to pay a premium penalty for failure to enroll in SMI when first eligible.

The equitable relief provision allows special actions to undo the harm to an individual"s SMI rights that resulted from fault or error on the part of a Federal government instrumentality. This includes the establishment of different enrollment periods and adjustment of premium penalties. Also, DOD obtained authority to extend CHAMPUS entitlement for such persons until 12/31 /77.

A SMI enrollment period of 10/1/77-1/3/78 was established for the following CHAMPUS beneficiaries:

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  those under age 65 and entitled to HI; and

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  those aged 65 or over and entitled to HI and spouses benefits by reason of the 1977 Supreme Court decisions.

SMI was effective beginning 1/1/78.

If an individual was eligible to enroll in that enrollment period, months prior to 1/78 are not counted in determining whether (and how much) SMI premiums are increased for late filing under HI 01001.001. This rule applies even if the individual enrolls after 12/31/77. However, months after 12/ 31/77 are counted towards a premium increase.