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.

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.

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.