Identification Number:
HI 00805 TN 47
Intended Audience:See Transmittal Sheet
Originating Office:Centers for Medicare & Medicaid Services (CMS)
Title:Supplementary Medical Insurance Entitlement
Type:POMS Transmittals
Program:Medicare,Medicaid
Link To Reference:
 

PROGRAM OPERATIONS MANUAL SYSTEM
Part HI – Health Insurance
Chapter 008 – Requirement for Entitlement and Termination
Subchapter 05 – Supplementary Medical Insurance Entitlement
Transmittal No. 47, 05/09/2022

Audience

PSC: BET, BTE, CR, CST, CTE, DEC, EHI, LCC, PAS, PCS, PETL, RECONR;
OCO-OEIO: BET, BIES, CCRE, CR, CTE, EIE, ERE, FCR, PETL, RECONE, RECONR;
OCO-ODO: BET, BTE, CR, CST, CTE, CTE TE, DEC, PAS, PETE, PETL;
FO/TSC: CS, CS TII, CSR, CTE, DRT, FR, OA, OS, RR, TA, TSC-CSR;

Originating Component

CMS

Effective Date

Upon Receipt

Background

 

Summary of Changes

HI 00805.281 Examples of the Elimination or Rollback of Premium Surcharges for Individuals With GHP/LGHP Coverage

 

HI 00805.315 GEP Enrollment For Disabled Beneficiaries Who Do Not Enroll During The D-SEP

 

HI 00805.281 Examples of the Elimination or Rollback of Premium Surcharges for Individuals With GHP/LGHP Coverage

A. Examples -- Elimination or rollback of premium surcharge

1. Premium surcharge rollback (SEP and GEP overlap)

Rose, a social security beneficiary since age 62, was automatically enrolled in HI when she attained age 65 in 12/2020. She refused SMI because she was covered under her husband"s GHP based on his current employment status.

Rose enrolls in 1/2023 during the GEP. She elects SMI coverage effective 2/2023, although she could be entitled earlier under the SEP provisions. There is no premium surcharge assessed for late enrollment because she submits evidence that she has been covered under the GHP all months from age 65 on.

2. Premium surcharge rollback (GEP enrollment)

Norma filed an application for HI when she attained age 65 in 8/2020. She refused SMI because she was working and covered under a GHP. Norma retired on 7/17/2023 but did not enroll in SMI until 3/2024 during the GEP, with an effective date 04/2024. Although she cannot have an SEP, the months she was covered under the GHP based on current employment status (12/2020 – 7/2023) can be excluded from the premium surcharge calculation.

3. Disabled individual with LGHP coverage

Ken Taylor has been entitled to HI as a disabled beneficiary since 5/84. He refused SMI because he was covered under his working wife's LGHP. Mrs. Taylor retired on 8/10/99. Since Ken did not enroll in SMI under the SEP provisions prior to his wife's retirement, he can enroll during the 8-month period beginning 9/99 (the month following the last month of LGHP coverage based on current employment status.)

In 12/99, he inquires about enrolling in SMI. Since he was enrolled in an LGHP when he was first eligible for SMI, he meets the requirements for an SEP and is entitled to SMI effective 1/00.

Ken has to pay a premium surcharge because only the months from 1/87 through 8/99 are excludable from the surcharge. The computation of the surcharge includes the months from 9/84 (the first month after the end of the IEP) through 12/86 and 9/99 through 12/99 (a total of 32 months), resulting in a 20 percent surcharge.

NOTE: When Ken becomes entitled to Medicare at age 65, the surcharge will be eliminated since he will have a new IEP based on attainment of age 65 (see HI 01001.010A.3.a. and HI 00805.085).

4. Disabled individual with GHP coverage prior to July 1990

Sally Stewart, a disabled beneficiary, refused SMI when she first became eligible in 5/85 because she was covered under her husband's GHP. Mr. Stewart retired in 11/88. The law did not permit either an SEP or premium surcharge rollback based on GHP coverage for the disabled in 1988. Therefore Sally could not enroll in SMI until the 1989 GEP. She was assessed a premium surcharge of 30 percent, based on the 43 countable months from 9/85 (the first month after the end of the IEP) through 3/89.

Effective 7/90, the law was amended to allow an SEP and premium surcharge rollback for the disabled beneficiary covered under a GHP based on his/her own or a spouse's current employment status. Sally inquired about the new law in 1/91 and her premium was recalculated to exclude the months of 1/87 through 11/88 from the premium surcharge calculation. This resulted in a reduction in the premium surcharge from 30 percent to 10 percent as of 7/90 and Sally was refunded the excess premiums previously withheld.

5. Disabled adult child covered under a LGHP

Warren Edwards, born 3/12/45, has been entitled to Medicare as a disabled adult child on the record of his deceased mother since 3/75. He was enrolled in SMI from 3/75 through 12/80 when his enrollment was voluntarily terminated.

Warren was covered under his father's LGHP from 11/80 until 8/21/99, when his father retired. His father had his own business with 185 employees. Since Warren was enrolled in SMI when first eligible and terminated SMI while covered under an LGHP (as the family member of a self-employed individual who had more than 100 employees), he is eligible to enroll under the SEP provisions. He enrolled in 10/99 and is entitled to SMI beginning 11/99.

Warren's premium surcharge is established at 60 percent, counting the months of 1/81 through 12/86, and 9/99 through 10/99 (a total of 74 months).

6. Decrease in employees - Disability

Robert Brown, a disabled adult child, was covered under his working mother's LGHP when he became entitled to HI (and refused SMI) effective 1/86.

In 1998, the workforce dropped to less than 100 employees throughout most of the year. Therefore, the plan is no longer considered an LGHP effective 1/1/99. Since the plan is no longer an LGHP, Robert's last opportunity to enroll under the SEP provisions began 1/99 (the month following the last month the plan was considered an LGHP) and ended 7 months later. He filed for SMI in May and coverage was effective 6/99.

The premium surcharge calculation excludes the months of 1/87 through 12/98. The months 5/86 through 12/86 (8 months) are included in calculating the surcharge because they occurred after the end of Robert's IEP and prior to 1/87, the effective month of the SEP provision for the disabled. In addition, the months of 1/99 through 5/99 are included in the calculation of the surcharge because they are months during the SEP when he was not covered under a LGHP. This is a total of 13 months and results in a 10 percent surcharge.

B. References

  • See HI 00805.740 and HI 00805.750 for the SEP requirements in effect prior to the 1986 amendments.

  • See HI 00805.751 for information about the 1986 amendments.

  • See HI 00805.752 for information about the SEP requirements for the disabled prior to the 1994 amendments

HI 00805.315 GEP Enrollment For Disabled Beneficiaries Who Do Not Enroll During The D-SEP

A. POLICY – GEP ENROLLMENT

Disabled beneficiaries who did not enroll in SMI during the D-SEP may only enroll during a GEP.

B. POLICY – CALCULATION OF THE PREMIUM SURCHARGE

1. Prior to 1/1/2023

The premium surcharge is calculated by counting the number of months when an individual could have been, but was not, enrolled in SMI after the end of the IEP through the end of the enrollment period in which enrollment occurs. Exclude from the surcharge calculation any months beginning 1/87 (or the end of the IEP, if later) the plan paid primary benefits. The beneficiary must submit the evidence described in HI 00805.300B.2. in order for the premium surcharge to be reduced or eliminated.

2. On or After 1/1/2023

The premium surcharge is calculated by counting the number of months when an individual could have been, but was not, enrolled in SMI after the end of the IEP through the end of the month which enrollment occurs. Exclude from the surcharge calculation any months beginning 1/87 (or the end of the IEP, if later) the plan paid primary benefits. The beneficiary must submit the evidence described in HI 00805.300B.2. in order for the premium surcharge to be reduced or eliminated.

C. PROCEDURE – FO

When a GEP enrollment request is received for a beneficiary who did not enroll during the D-SEP, the FO will:

  • Take Form HCFA-40B.

  • Prepare a Report of Contact stating that the beneficiary did not enroll during the D-SEP and indicating the months to be excluded from the premium surcharge calculation.

  • Annotate “Premium Surcharge Rollback” prominently at the top of the Report of Contact.

  • Attach a copy of the employer letter and carrier certification and forward the enrollment package to the PSC.

D. PROCEDURE – TSC

Send the beneficiary a Form HCFA-40B.

Advise the individual that he/she will need a letter from his/her employer and a copy of the Medicare carrier certification in order to verify the months to be excluded from the premium surcharge calculation. Refer the beneficiary to the employer to secure the required evidence.

Tell the individual to take both letters and the Form HCFA-40B to the local Social Security FO to enroll in SMI. Give the beneficiary the FO address.

E. PROCEDURE – PSC

Process the GEP enrollment via MACADE.

F. EXAMPLE

Carole Simms, employed at United Banking, Inc. since 7/85, has been on long term disability since 1993. She was entitled to Part A effective 3/95, but refused Part B. Carole was notified in 10/98 that effective 1/99, the LGHP would no longer pay primary to Medicare. She received the employer letter indicating the months the plan paid primary and the carrier certification. Carole did not enroll in SMI during the D-SEP which was 1/99 through 7/99.

In February 2000, Carole applies for SMI and inquires about the D-SEP. She is told that her D-SEP ended 7/31/99 and her application must be treated as a GEP enrollment. However, all months the plan paid primary are excludable from the premium surcharge calculation. Carole is assessed a premium surcharge of 10 percent since the months the employer was not primary payer of benefits (January 1999 through March 2000, a total of 15 months) are not excludable from the surcharge calculation.


HI 00805 TN 47 - Supplementary Medical Insurance Entitlement - 5/10/2022