HI 01001.350 Payment Within Grace Period

Overdue premiums are considered paid within the grace period in the following situations:

A. Resumption of Benefits During the Grace Period and Extended Grace Period

The premium arrears will be considered paid timely if benefit payments can be resumed in the first month of the extended grace period or for earlier months on the basis of a notice filed by the beneficiary before the initial grace period ends and all overdue premiums can be collected from such payments.

If a benefit payment sufficient to cover the premium arrearage can be made for any of the next 2 months, the reviewing office will notify the individual in accordance with HI 01001.370 B.3. that his coverage may be reinstated if he submits timely (before the end of the extended grace period or, if later, within one month after the date of the reviewing office notice) a statement showing good cause for his failure to pay the overdue premiums within the regular grace period.


A working beneficiary notified us in 4/73, the last month of his initial grace period, that he would not be working that month. The amount of the benefit for that month was $178 and he owed premiums for all months after 6/ 72. Since the $34.80 he owed for premiums for 1972 could be collected by deduction from his April benefit, his SMI coverage continues. (Note: $63.80 was deducted from his 4/73 benefit check to pay premiums for the months 7/ 72-5/73 inclusive.)

If he waited until 5/73 to notify us that he had done no work in 4/73 and had not otherwise paid the overdue premiums by 4/30/73, the reviewing office shouldnotify him that continuance of his SMI coverage will depend upon a showing of good cause for his failure to report work cessation or otherwise pay premiums before 5/74. Failure to show good cause by 7/31/74 (or within 30 days after the date of the reviewing office letter) will require termination of his SMI effective 4/30/74.

B. Annual Accounting or Other Report Shows a Benefit Is Due

Premiums will be considered paid timely if: (1) a beneficiary submits before the grace period ends a report which clearly shows without additional development (or with additional development which has been completed within the grace period) that a benefit payment, previously withheld, should be made for one or more months in a closed taxable year; and (2) the full amount of the overdue premiums can be collected from this payment.

C. Payment of Premium Arrears by Direct Remittance (Check or Other Remittance)

The simplest method, the one which all enrollees are encouraged to use, is payment of all overdue premiums by direct remittance, e.g., a check. For this reason, where the DO is in a position to give advice on this point, suggest that the enrollee pay the overdue premiums by remittance rather than depend on an annual report for continuance of his SMI.

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HI 01001.350 - Payment Within Grace Period - 03/15/1999
Batch run: 01/27/2009