Identification Number:
HI 01001 TN 43
Intended Audience:See Transmittal Sheet
Originating Office:Centers for Medicare & Medicaid Services (CMS)
Title:Supplementary Medical Insurance
Type:POMS Transmittals
Program:Medicare,Medicaid
Link To Reference:
 

PROGRAM OPERATIONS MANUAL SYSTEM
Part HI – Health Insurance
Chapter 010 – Premium Collections
Subchapter 01 – Supplementary Medical Insurance
Transmittal No. 43, 10/15/2021

Audience

PSC: BA, CA, CS, DS, ICDS, IES, ILPDS, IPDS, ISRA, PETE, RECONR, SCPS, TSA, TST;
OCO-OEIO: BET, BIES, CAQCR, CCRE, CR, EIE, ERE, PETL, RECONR;
OCO-ODO: BET, BTE, CCE, CR, CST, CTE, CTE TE, DEC, DES, 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

This is a Full Transmittal and we are changing policy and procedures for the following POMS sections below:

Summary of Changes

HI 01001.041 Collection from Beneficiaries When the Amount of the Benefit Payment is Less than the Amount of the Premium

 

HI 01001.065 Premium Payment Information Furnished Enrollee at the Time of Enrollment

 

HI 01001.075 Information Regarding Monthly Payments

 

HI 01001.090 Receipt of Premiums in the Field Office (FO)

 

HI 01001.041 Collection from Beneficiaries When the Amount of the Benefit Payment is Less than the Amount of the Premium

A. Process - General

When a beneficiary entitled to Supplementary Medical Insurance (SMI) receives a monthly Social Security check, the premium is deducted from the check for each month of coverage. In some instances, the amount of the monthly benefit may be lower than the amount of the monthly premium. Thus, even after offsetting the monthly benefit for premium collection purposes, a premium liability amount remains. In this situation, the Program Service Center (PSC) will bill the beneficiary directly for the remaining liability amount. This billing is done once a year. (See SM 00850.475.)

B. Procedures - Collection

When the SMI premium exceeds the amount of the benefit, the PSC must process these cases (See SM 00850.475) and take the following actions:

  1. 1. 

    Apply the monthly benefit (before rounding down) towards the premium owed by placing benefits in suspense (LAF S9). An estimate is made of the monthly benefit due for the balance of the year; the amount of the SMI premiums owed for the balance of the year will be known at this time so that the entire premium liability can be calculated. The amount of premiums collectible by direct remittance is the difference between the benefits payable and the premium liability

  2. 2. 

    Send a letter to the beneficiary explaining the reason why his/her benefits are suspended, an explanation of the estimated amount of benefits and premiums due for the year, and request the balance of premiums by direct remittance. Prepare a Medicare Premium Bill (CMS-500). Enclose the letter with the CMS-500 and a return envelope addressed to the Medicare Premium Collection Center (MPCC) and send to the beneficiary. The MPCC address is:

    Medicare Premium
    Collection Center
    P.O. Box 790355
    St. Louis, MO 63179-0355
  3. 3. 

    Diary the case for the end of the year. No action is taken to terminate SMI or to follow up on the premium bill during this time. When the diary matures, the claim folder is examined. The actual benefits due for the year are then known (an increase may have occurred during the year).

    (NOTE: The Direct Billing System (DBS) will accrue and maintain the premium liability but the system will not automatically bill the beneficiary.)

    1. a. 

      If the premium bill sent out the previous year has been paid in full, any balance of monthly benefits payable due to an increase in benefit rates will be added to the benefits estimated to be due for the new year. The beneficiary will again be billed for the balance of the new year's premiums with an explanation sent of how the amount was calculated. Diary the case again for the end of the new year.

    2. b. 

      If the premium bill for the previous year has not been paid in full, the amount of any benefit increase due will be used to reduce the premium arrearage owed. In any case, if the premium arrearage is less than the equivalent of 3 months premiums at the rate in effect when the record is examined, the action steps 1., 2., and 3. will be repeated. In addition, an explanation will be given if there was an increased benefit amount used to offset, in part or in full the prior year's premium arrearage. That amount must be included in the new bill and the notice will tell the beneficiary that the arrearage is still due along with the new year's premiums.

    3. c. 

      If the premium remittance was not paid in full and the amount owed for the prior months (after recalculation of the exact amount of benefits with any benefits owed applied toward the arrearage) equals or exceeds 3 months premiums at the rate in effect when the record is examined, a bill is sent. A letter is included with the bill warning that if the remittance due for the prior year is not received by the end of the third month after the month of the notice, SMI entitlement will end at that point.

C. Procedure - Termination of coverage for nonpayment of premiums

As indicated in HI 01001.041B.3.c., coverage is subject to termination if the equivalent of 3 months premiums is owed at the time the record is examined. In cases where the monthly benefit amount is close to the amount of the premium, the premium arrearage may accumulate for months before the amount owed equals 3 months premiums. For example, if the premium amount billed for a year (the difference between the benefit due and total amount of the premiums) were $10.00, it would be over a year before the individual would owe the equivalent of 3 months premiums. If coverage must be terminated because the arrearage is excessive, future monthly benefit checks will be used to recover the amount of the premium owed through the last month of coverage.

D. Procedure - Monthly benefit is increased to an amount permitting full deduction of SMI premiums

If there is an increase in monthly benefits so that the full amount of the premiums can be deducted from the benefit check, and the remaining benefit payable is $1.00 or more, the beneficiary will be sent a notice to this effect. Premium deduction will begin at the earliest possible month. Premiums paid in advance will be refunded in the beneficiary’s monthly benefit check. (See HI 01001.315B.)

HI 01001.065 Premium Payment Information Furnished to Beneficiary at the Time of Enrollment

A. PROCEDURE - GENERAL

 

Beneficiaries are not asked to pay premiums at the time of enrollment. Instead he/she will be informed, in accordance with the rules in HI 01001.025, that his/her initial premium payment should be made upon receipt of a Medicare Premium Bill (CMS-500) from the Centers for Medicare & Medicaid Services (CMS). It should be pointed out that his/her award notice is not a bill. The beneficiary should receive the first CMS-500 within 30 days after receipt of the award notice. However, if a payment is offered at the time of enrollment, the payment may be accepted. The beneficiary need not pay the premiums. If he/she is unable to pay for some reason, a friend or relative may make the premium payment on his/her behalf (see HI 00805.105 and HI 01001.225). In other cases, the premiums may be paid on a group basis by a lodge, union, employer, or other organization (see HI 01001.230 - HI 01001.270). Refer to HI 00815.088 for payment of premiums by the State under a buy-in arrangement.

B. PROCEDURE - BENEFICIARY INSISTS ON PAYING PREMIUMS IN THE FIELD OFFICE

If the beneficiary insists on making a premium payment at the time of enrollment, payment of premiums in the FO should be discouraged for the reasons given in HI.01001.025.

 

However, if the beneficiary insists on making a premium payment at the time of enrollment, follow instructions in HI 01001.090 Receipt of Premiums in the Field Office (FO).

NOTE:When a beneficiary pays in advance:

  • A CMS-500 will not be sent until their premium liability is $10.00 or more if they are billed directly by CMS for their premiums.

  • When a beneficiary wishes to make an advance premium payment for a quarter, they should make sure the remittance is for the correct amount and return the payment coupon from the CMS-500 with the payment.

  • If the beneficiary doesn’t have their CMS-500 payment coupon, a manual CMS-500 coupon should be created by the FO and sent to the MPCC, to the address below.

NOTE:The Medicare Number must be clearly show on the check/money order. The letters B, I, L, O, S, and Z aren’t used in Medicare Numbers because they are similar to certain numerals.

  • Avoid sending additional items or correspondence other than the payment and CMS-500 coupon

  • Forward all payments to the Medicare Premium Collection Center by close of business the same day to reduce delays as much as possible. The address for MPCC is:

    Medicare Premium Collection Center
    P.O. Box 790355
    St. Louis, MO 63179-0355
  • Please explain to the beneficiary if they choose to pay for two to four quarters at a time, their payment will be applied to their premiums based on the hierarchy of the Medicare premium billing system and not necessarily according to any written documentation sent with their payment.

  • For questions regarding their payment or how it is applied, once it is received, direct them to 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-800-486-2048.

C. PROCEDURE - PAYMENT IN RESPONSE TO A BILL

Billing notices are prepared according to premium information carried in the Direct Billing System (DBS). Premium payments are due by the 25th of the month the bill is mailed.

If beneficiary has made an advance premium payment for a quarter, a subsequent billing notice for future billing will not occur until his/her premium liability is $10.00 or more. However, if the beneficiary submits a payment shortly before the billing selection date, it is likely he/she will receive a billing notice, as the payment is still in the processing stages.

Example: Mrs. Martin, an "M" beneficiary, is on a quarterly "A" billing cycle. She is billed in January. She paid her premiums in February for 8 months (February through September). She should not receive a bill in April. However, her next bill should be sent in July for premiums due for 1 month, October. The due date of all billing notices is the 25th of the month.

Explain to the beneficiary the importance of prompt payment of Supplementary Medical Insurance (SMI) premiums; i.e., payment should be made upon receipt of the bill; and failure to pay premiums timely may result in termination of SMI coverage. Tell the beneficiary when coverage is expected to start and that they may receive the billing notice within 30 days after receipt of the SMI award notification. If the notice or other advice is not received within 60 days after the beginning of SMI coverage, the beneficiary should contact the field office regarding his/her SMI premium billing. Inform the beneficiary about the rules in HI 01001.025 concerning payment by remittance since those rules apply regardless of whether the premium is being paid by the enrollee or by someone on his/her behalf.

Information regarding the grace period should not be provided to the enrollee unless specifically requested. Otherwise, the enrollee may be inclined to put off making the payment until later or may even forget making the payment, causing termination of his/her coverage and loss to the trust fund. In this event, the enrollee loses the real advantage of the long grace period. For example, if an emergency arises which prevents him/her from making payments when due, the enrollee has an extra 2 months, if necessary, in which to catch up.

 

HI 01001.075 Information Regarding Monthly Payments

 

A. Monthly Premium Billing

Monthly premium billing should not be encouraged where it is not warranted. However, if the beneficiary asks about it or the field office (FO) has reason to believe that the beneficiary would have difficulty paying the quarterly premium in a single payment, the FO should very carefully explain the monthly arrangement to the beneficiary. Any beneficiary who makes it clear that he/she prefers to pay premiums monthly or would have difficulty in making a quarterly payment, may be placed on a monthly basis.

It costs both the Government and the beneficiary considerably more to collect premiums monthly. (The cost to the beneficiary is in postage and in paying for checks or money orders.) When changing from quarterly billing to monthly billing, the beneficiary should understand that he/she is still obligated to pay all outstanding premiums.

By making one quarterly payment promptly, the beneficiary can feel secure knowing that he/she met all of his/her responsibilities for the quarter.

See HI 01001.070 to arrange for monthly billing when coverage begins.

B. Procedure-when a beneficiary has already made premium payments

When the request for monthly billing is from a beneficiary who has already made premium payments:

  • Prepare a Modernized Development Worksheet (MDW) and send it to the appropriate program service center (see HI 01005.802).

  • Note"Monthly Billing"

Inform the beneficiary that he/she should pay as soon as he/she is billed. There is limited time available to protect the beneficiary if he/she is late with one payment.

C. Procedure-premium payment in the Field Office

 

Payment of premiums in the FO should be discouraged for the reasons given in HI 01001.025.

However, if a beneficiary insists on paying their premiums in the FO, follow instructions in HI 01001.090 Receipt of Premiums in the Field Office (FO).

HI 01001.090 Receipt of Premiums in the Field Office (FO)

If the beneficiary wishes to make premium payments in the FO, the following procedures apply: (See GN 02403.000 for general processing of receipts.)

A. Procedure - initial premium payment in connection with current enrollment

If a beneficiary wants to make a payment before the Supplementary Medical Insurance (SMI) award is prepared, follow the procedure in the next section, Section B. Follow the procedure in GN 02403.007 for providing a receipt for the premium payment.

B. Procedure - payment other than initial premium payment

Payment of premiums in the FO should be discouraged for the reasons given in HI 01001.025. However, if the beneficiary offers to pay his/her premiums in the FO:

  1. 1. 

    Explain the advantages of paying their future premiums directly to the Medicare Premium Collection Center (MPCC). Payments received in the FO could delay the payment process by at least 5-7 days. Mailing the payment saves the time and expense of visiting the FO. It also helps hold down administrative costs, which affects the cost of premiums each year. Additionally, note that FOs cannot accept credit card payments in the office or over the phone. If a beneficiary received a Medicare Premium Bill (CMS-500), encourage the individual to send their payment with the payment coupon from their CMS-500 as soon as possible in order to avoid possible termination directly to:

Medicare Premium Collection Center
P.O. Box 790355
St. Louis, MO 63179-0355
  1. 2. 

    If the beneficiary insists on paying in the FO and they have their CMS-500 payment coupon, forward their payment and coupon to the Medicare Premium Collection Center at the address below.  Avoid sending additional items or correspondence other than the payment and CMS-500 coupon.  To reduce delays as much as possible, the payment needs to be sent out the same day it’s received from the beneficiary.  NOTE: The Medicare Number must be clearly shown on the check/money order.  The letters B, I, L, O, S, and Z aren’t used in Medicare Numbers because they are similar to certain numerals.

Medicare Premium Collection Center
P.O. Box 790355
ST. Louis, MO 63179-0355
  1. 3. 

    If the beneficiary doesn’t have their CMS-500 payment coupon, a manual CMS-500 coupon should be created by the FO and sent to the MPCC by close of business the same day to reduce delays as much as possible, to the address in Steps 1 and 2 above. Avoid sending additional items or correspondence other than the payment and CMS-500 coupon. NOTE: The Medicare Number must be clearly shown on the check/money order. The letters B, I, L, O, S, and Z aren’t used in Medicare Numbers because they are similar to certain numerals.

  1. 4. 

    Don’t deposit a beneficiary payment intended for Medicare premiums into Social Security’s Trust Fund.

    PLEASE NOTE: Depositing the funds into Social Security’s Trust Fund will initiate the Inter-Governmental Payment and Collection (IPAC) system process and will cause an even more significant delay.

  1. 5. 

    Inform the beneficiary that if they are in direct bill status, the fastest way to make a Medicare premium payment is through their secure Medicare.gov account. If the beneficiary has questions about their Medicare.gov account, direct them to 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-800-486-2048. NOTE: The beneficiary cannot pay through Medicare.gov if they are not in direct bill, such as LAF S9 for Part B, or if the beneficiary has been final terminated for non-payment

NOTE: If a spouse wants to remit SMI premiums for both, instruct the spouse to remit the payments separately, to ensure the payments are processed timely. Each payment should have a CMS-500 payment coupon, and there should only be one payment per person, per envelope, and the same instructions listed above in Steps 1-5 apply.

A separate receipt should be made out for each enrollee. Avoid accepting remittances in cash, however, if the beneficiary insists; follow the procedures in Section C. Procedure – Receipt of Cash.

If a payment is accepted, prepare an automated receipt (see GN 02403.030).

NOTE:The Medicare Number must be clearly shown on the check/money order.

The letters B, I, L, O, S, and Z aren’t used in Medicare Numbers because they are similar to certain numerals

Provide the beneficiary with a copy of the receipt. It is the responsibility of the FO to follow up on the premium payment if it is not shown on the direct billing record within 30 business days. Use the processing or post mark date and the amount of premium payment to verify the entry on the direct billing record, Health Insurance/Supplementary Medical Insurance Query Response (HIQR). Direct follow-up inquiries to DirectBilling@cms.hhs.gov. If no substantive response is received to the first follow-up, follow up again in 15 business days.

If the entry is on the direct billing record, no action is necessary. If the remittance is not reflected on the current HIQR, Medicare Premium Payment Query (MPPQ), develop the case as a premium problem and forward to the email address above. Attach all necessary information, including: a copy of the canceled check (back and front) showing it was endorsed for CMS Premiums Retail by the Federal Reserve Bank in Cleveland, or a copy of the beneficiary’s bank statement or credit card statement showing the payment to CMS, or if the payment was deposited by SSA – the IPAC number as proof the funds were transferred from SSA’s Trust Fund to CMS’s Trust Fund. In order to prevent duplicative remittances, a copy of the RFQD screen alone is no longer enough proof to credit a payment.

C. Procedure - receipt of cash

Cash payments should always be discouraged. However, if the beneficiary insists on a cash payment, convert it daily into a check or money order, and forward it with appropriate CMS-500 payment coupon in accordance with section HI 01001.090to the address below . Do not hold cash overnight. If the beneficiary does not provide the CMS-500 payment coupon, the FO creates a manual CMS-500 payment coupon before mailing the payment. Avoid sending additional items or correspondence other than the payment and CMS-500 payment coupon.

Since payments received in the FO could delay the payment process by at least 5-7 days, the payment needs to be sent out the same day it’s received from the beneficiary to reduce delays as much as possible.

NOTE: The Medicare Number must be clearly shown on the check/money order. The letters B,I,L,OS, and Z aren't used in Medicare Numbers because they are similar to certain numerals.

Medicare Premium Collection Center
P.O. Box 790355
St. Louis, MO 63179-0355

D. Procedure - receipt of Explanation of Medicare Benefits (EOMB) or Medicare Summary Notice with remittance for premium arrearage

All EOMBs that are received in the FO from carriers along with checks made payable to Medicare Insurance for premium arrearages should be forwarded to the Medicare Premium Collection Center for processing. This should be very rare.


HI 01001 TN 43 - Supplementary Medical Insurance - 10/15/2021