TN 32 (10-10)
HI 01001.004 The Variable Supplementary Medical Insurance (VSMI) Premium
Section 1839(f) of the Social Security Act
A. VSMI general policy
The Social Security Act protects Title II or Railroad Retirement Board (RRB) benefits from decreasing because of increases in the Medicare Part B premiums from year-to-year. Title II beneficiaries and RRB annuitants are considered for “hold harmless” or variable SMI (VSMI) protection unless they pay an income-related Part B premium. Anyone paying an Income-Related Monthly Adjustment Amount (IRMAA) does not get VSMI protection. For IRMAA information, see HI 01101.000, or
The state Medicaid agency pays the Part B premium on behalf of an individual. (VSMI protects only beneficiaries. State agencies do not get VSMI protection. For information about State buy-in, see HI 00815.000.)
Reduce the premium to an amount that permits the check received in January, after deduction of the premium, to equal the check received in December.
C. Policy for variable premium
1. Premium deducted from check for prior month
The Part B premium for a month is deducted from the benefit paid in that month, even though the benefit is being paid for the previous month, e.g., the benefit paid in December is for November, but the Part B premium for December is deducted from the check for November received in December.
2. Conditions for a variable premium
VSMI applies only if all of the following conditions are met:
The individual is entitled to Social Security benefits for the months of November and December,
Medicare Part B premiums for December and January are deducted from those benefits,
The individual receives a cash benefit for November and December, and
Solely because the increase in the Part B premium is so high compared to the Social Security benefit payable, the Social Security benefit payable would be lower in January than in December.
3. Amount of the variable premium
The variable premium amount is the greater of the following:
The premium paid for December; or
The premium an individual would owe for January, reduced to make the monthly benefit received in January equal to the monthly benefit received in December.
4. Premium in effect for the calendar year
The variable premium in effect for a calendar year can change if conditions in HI 01001.004C.2. are met or no longer met due to a retroactive adjustment.
A beneficiary is in full work suspense for all of the prior year. The beneficiary is not entitled to VSMI in the current year. In March of the current year, we determine that work deductions should only apply for January through September of the prior year. The November and December benefits are now payable. However, we do not make a VSMI determination because the retroactive adjustment is due to work.
5. Premium surcharge for the variable premium
The variable premium is subject to increase for late enrollment as described in HI 01001.010:
The 10 percent per year surcharge is calculated based on the full premium (before a reduction under the variable SMI rule); and
The full surcharge is added to the amount of the variable premium that is established for the beneficiary.
6. State buy-in
VSMI stops when State buy-in begins. The State pays the “regular” (that is, non-variable) premium. The State buy-in period will determine if VSMI is reinstated when the State stops buy-in within the same calendar year. VSMI may or may not be reinstated for the months the individual is responsible for premium payments. We will not reinstate VSMI, if the conditions in HI 01001.004C.2. are not met.
A Beneficiary pays VSMI in January and February; buy-in begins in March and lasts through August. The VSMI amount resumes in September.
A beneficiary pays VSMI in January and February; State retroactively starts buy-in January continuing through June. The VSMI amount will not resume in July. The beneficiary will pay the standard Part B premium because the conditions in HI 01001.004C.2. (in this section) are not met.
D. Variable premium retroactivity
1. Retroactive award of benefits and Medicare
If there is a retroactive Medicare award and a cost-of-living adjustment (COLA) is involved while entitled to Medicare and the standard Part B premium increased, determine if VSMI could apply to any of the Part B premium amounts.
In May 2010, SSA awards DI benefits effective March 2006. Beneficiary elects retroactive Part B premiums to first Medicare entitlement month, March 2008. Because benefits were due in November and December 2008 and 2009, SSA makes a VSMI determination for 2009 and 2010.
In March 2011, SSA awards DI benefits effective January 2010 and Medicare Part B will be effective January 2012. VSMI will not apply in January 2012 because we did not deduct a Part B premium from the November 2011 benefit.
If a retroactive award notice involves Medicare, Title II entitlement for November and December, and equitable relief; then compute the VSMI amount owed and what the current premium amount would be if the beneficiary selected retroactive Part B. The PSC will use the VSMI calculator available at: http://kcapps.kc.ad.ssa.gov/oas/MAMPSCCalculators/Default.aspx to determine these amounts and include them in notice paragraph HIB249 in NL 00720.180.
2. Retroactive adjustment and Medicare
If there is a retroactive adjustment not caused by work that involves November, December, or both, with Medicare Part B involvement in December and January, determine if VSMI could apply to any of the Part B premium amounts.
In June 2011, SSA retroactively entitles a widow to higher RIB benefits effective December 2010. Since the adjustment involves December benefits with Medicare involvement, we make a new VSMI determination. If the December 2010 RIB MBA minus the standard Part B premium is not less than the November 2010 widow payment after deduction of the Part B premium, VSMI does not apply.
SSA makes a VSMI determination in December 2009 for the January 2010 premium for a childhood disability beneficiary (CDB). In September 2010, we take an action to terminate (retroactively) another child’s entitlement effective December 2009 thereby increasing the CDB’s monthly benefit amount (MBA). Since the adjustment is in December, we make a new VSMI determination. If the December 2009 MBA minus the standard Part B premium is not less than the November 2009 payment after deduction of the Part B premium, VSMI does not apply.
The State buys in July 2010. In January 2011, the State retroactively buys out effective November 2010. SSA will make a VSMI determination. Since all conditions in HI 01001.004C.2. (in this section) are met, we will retroactively establish VSMI for 2011.
3. Beneficiary questions past premium determinations
See SM 00712.035 Effects of Retroactive Changes on Variable SMI
E. See details
HI 00815.000, State Enrollment of Eligible Individuals
HI 01001.010, Premium Increase for Late Enrollment
HI 01101.000, Medicare Part B (SMI) Income-Related Monthly Adjustment Amount
SM 00510.320, Variable SMI Premium (VAR SMI) Data Line
SM 00712.000, SMI Premium Determinations
NL 00720.180, HIB Health Insurance Benefits