HI 01001.355 Extension of Grace Period for Good Cause
Section 1838(b) of the Act provides that an individual's SMI coverage will terminate for nonpayment of premiums. It also gives SSA authority to grant an extension of the grace period for an additional 90 days (the total not to exceed 180 days) during which an enrollee may retain SMI entitlement by paying all past-due premiums if there was a good cause for his failure to pay the premiums within the initial 90-day grace period.
B. Policies Affecting Good Cause Determinations
1. AVOIDANCE OF UNNECESSARY DETERMINATIONS
Good cause determinations are expensive in relation to the premiums typically involved. The “good cause” policies are designed to minimize the frequency and expense of good cause determinations. However, to apprise the enrollee of his rights, the termination notice explains the conditions under which coverage may be reinstated.
2. PREMIUM PAYMENT REQUIREMENT
Before a good cause determination is made, the enrollee is required to pay all premiums over due at the end of the extended grace period, except as provided in these instructions. A beneficiary in suspense status is required to pay premiums only for the months of the past year since premiums for the current year are not due until February 3rd the next year. Otherwise, the beneficiary would receive several months of coverage for which neither premiums are paid, nor Federal funds received. (This premium payment requirement will be considered met if the premiums can be deducted from benefits expected to be payable for months before the expiration of the extended grace period.)
The requirement that the enrollee pay all premiums overdue at the end of the extended grace period insures that his coverage will not be in immediate danger of again being terminated, which might require another good cause determination.
3. PREMIUM PAYMENTS PROCESSED SHORTLY AFTER GRACE PERIOD
As explained in HI 01001.290, termination notices are not sent until about 30 days after the end of the grace period as some premium payments received late in the grace period cannot be processed until after the end of the grace period. In processing premium payments received immediately after the grace period up to the day selections are made for the following months' premium billing, it is not necessary to check the date the premium was mailed: it will be presumed that either the premium was mailed timely or there was good cause for the few days' delay. Thus, receipt of all premiums due during this period reverses the termination.
Similarly, a beneficiary in suspense will not have SMI terminated for nonpayment of premiums if his benefits are resumed in the first month following the end of his initial grace period. If, however, his monthly benefits are resumed in the last two months of the extended period, the termination is not automatically cancelled. In this situation, he must request reinstatement and establish good cause for his failure to pay premiums timely.
There may be cases in which an enrollee's coverage is terminated for nonpayment of premiums and subsequently SSA/HCFA is notified that a group payer has arranged to pay his premiums (including those for months prior to the termination). Experience has shown that delay in adding an enrollee's name to the group account is invariably due to causes over which he has no control. Therefore, in such situations, good cause will be deemed to exist and the enrollee's coverage reinstated upon payment by the group payer of all premiums due.