TN 52 (02-23)

HI 01001.020 Collection of Premiums

There are four methods by which Supplementary Medical Insurance (SMI) premiums are collected. The list below identifies the collection methods in priority order:

  • payment by a State under a buy-in agreement,

  • deduction from a monthly Railroad Retirement (RR) or Social Security benefit or Federal Civil Service Retirement (CSR) annuity,

  • direct remittances on an individual basis, or on behalf of the enrollee, and

  • direct remittances on a group basis by an employee, union, lodge or other organization, or by an entity of a State or local government.

A. Policy -- Collection under a State buy-in agreement

Where an individual is enrolled in a State Buy-In Agreement, the individual's SMI premiums are paid by the State. (See HI 00801.140.) As soon as an enrollee's coverage under the buy-in agreement is terminated, the enrollee's SMI premiums will be collected in the same manner as those of persons who enrolled individually.

B. Policy -- Collection from benefit check deductions

1. Deductions from Either Railroad Retirement Benefit, Monthly Social Security Benefit, or Federal Civil Service Retirement Annuity

Where an enrollee is receiving Social Security benefits or Railroad Retirement benefits, the SMI premiums must be deducted from such benefits, except as indicated in HI 01001.020A. A beneficiary's premiums, which cannot be deducted in this manner because work or some other event prevents payment of benefits, may be paid by direct remittance during the year. If not so paid, they must be paid, or deducted from benefits, shortly after the end of the year. (However, see HI 01001.105 when the enrollee is entitled to a special age 72 payment.) Most SMI enrollees are in payment status and the premiums are deducted from their benefits. However, if an enrollee's benefits are suspended, the enrollee will be billed quarterly. A disability beneficiary's benefits may be suspended when:

  1. a. 

    An enrollee's disability-based benefit is suspended for a continuing disability investigation (see also HI 00820.035);

  2. b. 

    An individual refuses vocational rehabilitation services; or

  3. c. 

    An individual has their disability insurance benefits reduced because of workers' compensation offset.

However, where benefit payments are withheld to recover an overpayment, premiums owed for current or past months will be deducted before any (full or partial) adjustment is made to recover the overpayment. Payment of the premium obligation is given priority over recovery of the overpayment in order to prevent loss of SMI coverage during a period in which the enrollee is receiving either no income, or only a portion of the enrollee's usual income from benefits or earnings.

If premiums owed cannot be deducted before SMI terminates, the program service center should prepare a letter to notify the enrollee of the termination. The letter should also advise the enrollee of the premium amount they must pay directly. This letter should include a preaddressed remittance envelope. If premiums have been paid for months beyond the last month of SMI coverage, the Direct Billing System will generate a refund during the quarterly refund process.

RR SMI enrollees not entitled to monthly benefits are billed on a quarterly basis. An individual entitled to monthly benefits, which are in suspense, is also billed quarterly.

2. Collection When An Individual Is Entitled to Both Social Security and Railroad Retirement (RR) Monthly Benefits

If an enrollee is entitled to monthly benefits under the Social Security (SS) Act and RR Act, the enrollee's premiums must be deducted from the RR benefit.

3. Collection When An Individual Is Entitled to Civil Service Annuity Only

If an enrollee is not entitled to Social Security or RR benefits, and is receiving a civil service annuity, the enrollee's premiums must be deducted from their annuity.

When the annuitant's spouse is also enrolled for SMI, but is not entitled to a civil service annuity or any benefit under either the SS Act or RR Act, the spouse's SMI premiums can be withheld from the annuitant's monthly annuity with the annuitant's consent (HI 01001.165 and HI 01001.185).

Hospital Insurance (HI) premiums are not deducted from annuity payments. Civil service annuitants with premium HI must pay their premiums by direct remittance, in accordance with HI 01001.020C.

C. Policy -- Collection from direct remittances

Premiums not deducted from a Social Security, Railroad Retirement or Civil Service Retirement benefit, and not paid under a State Buy-In Agreement, will be paid by direct remittance. Bills for these premiums will be issued either quarterly (SMI only) (see HI 01001.045B. for quarterly billing cycles) or monthly (HI only or SMI and HI combined).

Because of the large amount of the HI premium, the billings for these premiums are sent on a monthly (rather than quarterly) basis. However, an individual may pay up to 12 months of HI premiums at a time.

D. Policy -- Collection from group billing arrangement

Upon written authorization by a SMI or Premium-HI enrollee paying premiums by direct remittance, the enrollee's premiums may be paid by a group payer under a group billing arrangement, subject to the conditions in HI 01001.240.

E. Policy – Collection under a SMI premium surcharge buy-in agreement

A SMI enrollee who owes a surcharge (penalty) and is paying their premiums by either direct remittance or deduction from a monthly benefit, can authorize a State or local government to pay the surcharge portion of their monthly premium under a Premium Surcharge Agreement. (See HI 01001.271.) The enrollee is still responsible for paying the basic premium. If the State or local government discontinues paying the surcharge under the Premium Surcharge Agreement, CMS the SMI surcharge will be collected in the same manner as the monthly premium.

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HI 01001.020 - Collection of Premiums - 02/02/2023
Batch run: 02/02/2023