PART 408—PREMIUMS FOR SUPPLEMENTARY MEDICAL INSURANCE Authority: 42 U.S.C. 1302 and 1395hh. Source: 52 FR 48115, Dec. 18, 1987, unless otherwise noted. Subpart A—General Provisions § 408.1 Statutory basis. (a) This part implements certain provisions of sections 1837 through 1840 and 1881(d) of the Social Security Act (the Act) and conforms to other regulations that implement section 1843 of the Act. Section 1838(b) requires regulations to establish when an individual's coverage ends because of nonpayment of premiums. It also specifies that those regulations may provide a grace period for payment of overdue premiums without loss of coverage. Section 1839 sets forth the specific procedures for determining the amount of the monthly premium and section 1840 establishes the rules for payment of premiums. Section 1843 provides that a State may enter into a buy-in agreement to secure SMI coverage for certain individuals by enrolling them in the SMI program and paying the premiums on their behalf. Section 1881(d) provides that Medicare payment, for the reasonable charges incurred in connection with a kidney donation, shall be made (without regard to deductible, premium, or coinsurance provisions of title XVIII) as prescribed in regulations. (b) The Federal Claims Collection Act (31 U.S.C. 3711), as implemented by 4 CFR parts 101-105, provides the basic authority for recovery of debts owed the United States government and specifies the conditions for the suspension or termination of collection action. Departmental regulations at 45 CFR part 30, updated by a final rule published on January 5, 1987 (52 FR 260) set forth procedures for the exercise of the Department's authority to collect and dispose of debts and were intended to complement rules applicable to particular programs. CMS rules are set forth at 42 CFR part 401, subpart F. [52 FR 48115, Dec. 18, 1987; 53 FR 4158, Feb. 12, 1988, as amended at 56 FR 48112, Sept. 24, 1991] § 408.2 Scope and purpose. (a) This part sets forth the policies and procedures for determining the amount of monthly supplementary medical insurance (SMI) premiums, for the payment, collection, or refund of premiums, for termination of coverage because of nonpayment of premiums, and for reinstatement of coverage if certain conditions are met. It conforms to subpart C of part 407 of this chapter, which sets forth the requirements for State buy-in agreements. These policies are intended to protect enrollee coverage to the maximum degree compatible with maintaining the integrity of the SMI program. (b) Policies that apply to premiums that certain individuals must pay in order to become entitled to Medicare Part A hospital insurance benefits, are set forth in part 406 of this chapter. [52 FR 48115, Dec. 18, 1987; 53 FR 4159, Feb. 12, 1988] § 408.3 Definitions. As used in this part, unless the context indicates otherwise— Enrollee Taxable year § 408.4 Payment obligations. (a) Month for which payment is due. (2) A premium is due for the month of death, if SMI coverage is still in effect, even though the individual dies on the first day of the month. (b) Overdue premiums. (2) Overdue premiums are collected— (i) By deduction from social security or railroad retirement benefits or Federal civil service annuities; (ii) Directly from the enrollee or the enrollee's estate; or (iii) By offset against any SMI payments payable to the enrollee or the enrollee's estate. (3) Interest is not charged on overdue premiums, except under a State buy-in agreement, as provided in § 408.6(c)(4). (c) Premiums not required for certain kidney donors. (2) A kidney donor who is an enrollee is not relieved of the obligation for premiums. [52 FR 48115, Dec. 18, 1987; 53 FR 4159, Feb. 12, 1988] § 408.6 Methods and priorities for payment. (a) Methods of payment General rules. (i) Payment by a State under a buy-in agreement. (ii) Deduction from monthly railroad retirement of social security cash benefits or Federal civil service annuities. (iii) Direct remittance on an individual basis, by or on behalf of the enrollee. (iv) Direct remittance on a group basis, by an employer, union, lodge or other organization, or by an entity of State or local government. (2) Special situations. (ii) If the monthly railroad retirement benefit or civil service annuity payment is less than the premium, the monthly payment is not withheld and the enrollee is required to pay the total premium by direct remittance. (b) Priorities for payment. (i) SMI premiums may not be deducted from monthly cash benefits or annuities; and (ii) The enrollee may not be required to pay by direct remittance. (2) If an enrollee is not covered under a State buy-in agreement, but is receiving a monthly benefit or an annuity specified in paragraph (a)(1)(ii) of this section— (i) The premiums are deducted from that benefit or annuity; or (ii) If the monthly benefit or payment is less than the monthly premium, the rules of paragraph (a)(2) of this section apply. (3) If an enrollee is neither covered under a State buy-in agreement, nor receiving monthly benefits or annuity payments, the premiums must be paid totally by direct remittance. (c) Payment by a State under a buy-in agreement. (2) The State pays the premiums for each month for which an individual is covered under the agreement. (3) If an individual's coverage under a State buy-in agreement terminates, his coverage continues on an individual enrollment basis. The premiums are then deducted from benefits, as set forth in subpart C of this part, or paid by direct remittance in accordance with subpart D or subpart E of this part. (4) Policy on collection of premiums from buy-in States is set forth in a Federal Register § 408.8 Grace period and termination date. (a) Grace period. (2) For payments required because the monthly benefit is less than the monthly premium, the grace period ends on April 30 of the year following the calendar year which the premiums are due. (b) Extension of grace period: Last day is nonwork day. (c) Termination date. (d) Extension of grace period for good cause. (2) Good cause will be found if the individual establishes, by a credible statement, that failure to pay premiums within the initial grace period was due to conditions over which he or she had no control, or which he or she could not reasonably have been expected to foresee. [52 FR 48115, Dec. 18, 1987, as amended at 56 FR 48112, Sept. 24, 1991] § 408.10 Claim for monthly benefits pending concurrently with request for SMI enrollment. (a) If it is clear that an individual who applies for social security or railroad retirement benefits and for SMI will be entitled to monthly benefits, the application for monthly benefits is processed simultaneously with the request for SMI enrollment. (1) If monthly benefits are paid, the SMI premiums are deducted from those benefits. (2) If monthly benefits are suspended (for instance, because the individual's earnings exceed the maximum allowed by law), the enrollee is billed for direct remittance. (b) If it is clear that an individual will be entitled to SMI, but there is substantial question as to eligibility for monthly benefits, the request for SMI enrollment is processed separately. (1) When SMI enrollment is approved, the enrollee is billed for direct remittance. (2) When the application for monthly benefits is adjudicated, the following rules apply: (i) If monthly benefits are paid, the SMI premiums are deducted from those benefits, with appropriate adjustments for any premiums already paid by direct remittance. (ii) If the application for monthly benefits is approved but the benefits are suspended, the grace period is as set forth in § 408.8(a). (iii) If the application for monthly benefits is denied, the grace period is as set forth in § 408.8(a)(1). [52 FR 48115, Dec. 18, 1987, as amended at 56 FR 48112, Sept. 24, 1991] Subpart B—Amount of Monthly Premiums § 408.20 Monthly premiums. (a) Statutory provisions. (2) The law was amended in 1983 to require that the Secretary promulgate the standard monthly premium in September of that year, and each year thereafter, to be effective for the 12 months beginning with the following January. (3) The standard monthly premium applies to individuals who enroll during their initial enrollment periods. In other situations, that premium may be increased or decreased as specified in this subpart. (4) The law was further amended in 1984 to include a temporary “hold harmless” provision (set forth in paragraph (e) of this section), that was subsequently extended and finally made permanent in 1988. (5) The law was further amended in 2003 to ensure that amounts payable from the Transitional Assistance Account described in § 403.822 of this chapter shall not be taken into account in computing actuarrial rates or premium amounts. (b) Criteria and procedures for the period from July 1976 through December 1983, the period from January 1991 through December 1995, and for periods after December 1998. (i) The actuarial rate for the aged. (ii) The monthly premium promulgated the previous December for the year beginning July 1, increased by a percentage that is the same as the latest cost-of-living increase in old age insurance benefits that occurred before the current promulgation. (Because of the change in the effective dates of the premium amount (under paragraph (a)(2) of this section), there was no increase in the standard monthly premium for the period July 1983 through December 1983.) (2) For periods after December 1998, the Secretary determines the standard monthly premium in the manner specified in paragraph (b)(1) of this section, but promulgates it in September for the following calendar year. (3) The premiums for calendar years 1991 through 1995 are those amounts as specified by section 1839(e)(1)(B) of the Act as follows: (i) In 1991, $29.90; (ii) In 1992, $31.80; (iii) In 1993, $36.60; (iv) In 1994, $41.10; and (v) In 1995, $46.10. (4) In no case shall payment made for transitional assistance costs under part 403, subpart H of this chapter be included in the formula used to calculate actuarial rates or standard monthly premiums. (c) Premiums for calendar years 1984 through 1990 and 1996 through 1998. (1) Is equal to 50 percent of the actuarial rate for enrollees age 65 or over, that is, is calculated on the basis of 25 percent of program costs without regard to any cost-of-living increase in old age insurance benefits; and (2) Is promulgated in the preceding September. (d) Limitation on increase of standard premium: 1987 and 1988. (e) Nonstandard premiums for certain cases Basic rule. (2) Special rules: Calendar years 1987 and 1988. (i) A nonstandard premium may be established if there is a cost-of-living increase in old age or disability benefits but, because the increase in the standard premium is greater than the cost-of-living increase, the beneficiary would receive a lower cash benefit in January than he or she received in December. (ii) A nonstandard premium may not be established if the reduction in the individual's benefit would result, in whole or in part, from any circumstance other than the circumstance described in paragraph (e)(2)(i) of this section. (3) Special rule: Calendar years after 1988. (ii) However, a nonstandard premium is not precluded solely because the cash benefit is further reduced as a result of government pension offset or workers' compensation payment. (iii) Beginning with CY 2007, a nonstandard premium may not be applied to individuals who are required to pay an income-related monthly adjustment amount described in § 408.28 of this part. (4) Amount of nonstandard premium. (i) The premium paid for December. (ii) The standard premium promulgated for January, reduced as necessary to compensate for— (A) The fact that the cost-of-living increase was less than the increase in the standard premium; or (B) The further reduction in benefit because of government pension offset or workers' compensation payments. (5) Effective dates of nonstandard premium. (6) Effect of late enrollment or reenrollment. (f) Part B-ID premiums Premium amount. (2) Premium adjustments. (ii) The Part B-ID benefit premium is not subject to § 408.22. (3) Premium collection. (4) Premium deductions. [56 FR 8839, Mar. 1, 1991, as amended at 59 FR 26959, May 25, 1994; 68 FR 69927, Dec. 15, 2003; 73 FR 36468, June 27, 2008; 87 FR 66509, Nov. 3, 2022] § 408.21 Reduction in Medicare Part B premium as an additional benefit under Medicare + Choice plans. (a) Basis for reduction in Part B premium. (1) 80 percent of the payment reduction is applied to reduce the standard Medicare Part B premiums of its Medicare enrollees. (2) The Medicare Part B premium is reduced monthly and is offered to all Medicare enrollees in a specific plan benefit package. (b) Administrative requirements for the Part B premium reduction. (2) The Medicare Part B premium reduction must be a multiple of 10 cents. (3) The Medicare Part B premium reduction is applied regardless of who pays or collects the Part B premium on behalf of the beneficiary. (4) The Medicare Part B premium can never be less than zero and will never result in a payment to a beneficiary for a specific month. (c) Beneficiary eligibility. (d) Notifications. (1) Transmit this information to the Social Security Administration, Railroad Retirement Board, or the Office of Personnel Management, as appropriate, which will adjust the benefit check amounts as appropriate and notify the beneficiaries of their new benefit amount. (2) Notify states and formal groups and direct billed beneficiaries of their reduced premium amounts in the regular monthly billing process. [68 FR 66723, Nov. 28, 2003] § 408.22 Increased premiums for late enrollment and for reenrollment. For an individual who enrolls after expiration of his or her initial enrollment period or reenrolls after termination of a coverage period, the standard monthly premium determined under § 408.20 is increased by ten percent for each full twelve months in the periods specified in §§ 408.24 and 408.25. § 408.24 Individuals who enrolled or reenrolled before April 1, 1981 or after September 30, 1981. (a) Enrollment. (1) The three months of January through March 1968, if the individual first enrolled before April 1968. (2) Any months before January 1973 during which the individual was precluded from enrolling or reenrolling by the 3-year limitation on enrollment or reenrollment that was in effect before October 30, 1972. (3) Any months in or before a period of coverage under a State buy-in agreement. (4) For an individual under age 65, any month before his or her current continuous period of entitlement to hospital insurance. (5) For an individual age 65 or older, any month before the month he or she attained age 65. (6) For premiums due for months beginning with September 1984 and ending with May 1986, the following: (i) Any months after December 1982 during which the individual was— (A) Age 65 to 69; (B) Entitled to hospital insurance (Medicare Part A); and (C) Covered under a group health plan (GHP) by reason of current employment status. (ii) Any months of SMI coverage for which the individual enrolled during a special enrollment period as provided in § 407.20 of this chapter. (7) For premiums due for months beginning with June 1986, the following: (i) Any months after December 1982 during which the individual was: (A) Age 65 or over; and (B) Covered under a GHP by reason of current employment status. (ii) Any months of SMI coverage for which the individual enrolled during a special enrollment period as provided in § 407.20 of this chapter. (8) For premiums due for months beginning with January 1987, the following: (i) Any months after December 1986 and before October 1998 during which the individual was: (A) A disabled Medicare beneficiary under age 65; (B) Not eligible for Medicare on the basis of end stage renal disease, under § 406.13 of this chapter; and (C) Covered under an LGHP as described in § 407.20 of this chapter. (ii) Any months of SMI coverage for which the individual enrolled during a special enrollment period as provided in § 407.20 of this chapter. (9) For premiums due for months beginning with July 1990, the following: (i) Any months after December 1986 during which the individual met the conditions of paragraphs (a)(8)(i)(A) and (a)(8)(i)(B) of this section, and was covered under a GHP by reason of the current employment status of the individual or the individual's spouse. (ii) Any months of SMI coverage for which the individual enrolled during a special enrollment period as provided in § 407.20 of this chapter. (10) For premiums due for months beginning with January 1, 2007, the following: (i) Any months after December 2006 during which the individual met the conditions under § 407.21(a) of this chapter. (ii) Any months of Part B (SMI) coverage for which the individual enrolled during a special enrollment period as provided in § 407.21(b) of this chapter. (b) Enrollment on or after January 1, 2023. includes excludes (1) The periods of time described in (a)(1) through (10) of this section; and (2) Any months of non-coverage in accordance with an individual's use of an exceptional conditions SEP under § 407.23 of this subchapter provided the individual enrolls within the duration of the SEP. (c) Reenrollment. (1) Includes (i) The number of months elapsed between the close of the individual's initial enrollment period and the close of the enrollment period in which he or she first enrolled; plus (ii) The number of months elapsed between the individual's initial period of coverage and the close of the enrollment period in which he or she reenrolled; plus (iii) The number of months elapsed between each subsequent period of coverage and the close of the enrollment period in which he or she reenrolled. (2) Excludes (i) Any of the periods specified in paragraph (a) of this section; and (ii) Any month before April 1981 during which the individual was precluded from reenrolling by the two-enrollment limitation in effect before that date. (d) Reenrollment on or after January 1, 2023. (1) Includes the number of months specified in paragraphs (c)(1)(i) through (iii) of this section; and (2) Excludes— (i) The number of months specified in paragraphs (c)(2)(i) and (ii) of this section; and (ii) Any months of non-coverage in accordance with an individual's use of an exceptional conditions SEP under § 407.23 of this subchapter provided the individual enrolls within the duration of the SEP. [52 FR 48118, Dec. 18, 1987, as amended at 53 FR 6648, Mar. 2, 1988; 61 FR 40347, Aug. 2, 1996; 73 FR 36468, June 27, 2008; 87 FR 66509, Nov. 3, 2022] § 408.25 Individuals who enrolled or reenrolled between April 1 and September 30, 1981. (a) Basic rules. (b) Exception. § 408.26 Examples. Example 1. Mr. J, who became age 65 and otherwise eligible for enrollment in November 1965, first enrolls in March 1968. The months to be included in determining the amount of the increase in Mr. J's premiums begin with June 1966 (the first month after the close of his initial enrollment period) and extend through December 1967 (the period January through March of 1968 is excluded in determining the total months) for a total of 19 months. Since there is only one full 12-month period in 19 months, Mr. J's premiums will be 10 percent greater than if he had enrolled in his initial enrollment period. Example 2. Mr. V, who enrolled in December 1965, voluntarily terminates his enrollment effective midnight December 31, 1967. He enrolls for a second time in January 1969. The months to be included in determining the amount of the increase in Mr. V's premiums are January 1968 through March 1969, a total of 15 months. Since this totals one full 12-month period. Mr. V's monthly premium, will be increased by 10 percent. Example 3. Ms. N becomes age 65 in July 1965 and first enrolls in December 1967. She pays premiums increased by 10 percent above the regular rate, beginning July 1968, the first month of her SMI coverage. Ms. N fails to pay the premiums for the calendar quarter ending June 30, 1970, and her coverage is terminated on that date, the end of her grace period. Ms. N enrolls for a second time in January 1971. The months to be included in determining the amount of the increase in Ms. N's premiums are June 1966 through December 1967, a total of 19 months, and July 1970 through March 1971, a total of 9 months, for a grand total of 28 months. Since this totals two full 12-month periods, Ms. N's monthly premium will be increased by 20 percent. Example 4. Mr. X attained age 65 in August 1966 and enrolled during his initial enrollment period. His coverage was terminated effective June 30, 1968, for nonpayment of premiums. He reenrolls in March 1973. For purposes of computing any applicable premium increase, he will not be charged any months between March 1971 (the end of the last general enrollment period during which he was eligible to reenroll under the law in effect before October 30, 1972) and January 1973. Therefore, he will be charged 36 months (July 1968-March 1971 plus January 1973-March 1973) and his premiums for his second period of coverage will be increased 30 percent. Example 5. Ms. C, who attained age 65 in August 1973, had two periods of supplementary medical insurance coverage, both of which were terminated because of nonpayment of premiums: August 1973 through April 1975 and July 1977 through August 1978. She reenrolls in July 1981. The months to be included in determining the amount of premium increase are May 1975 through March 1977 (23 months) and April 1981 through July 1981 (4 months) for a total of 27 months. The 31 months from September 1978 through March 1981 may not be counted because Ms. C was prevented from reenrolling by the two-enrollment limitation in effect before April 1, 1981. For Ms. C, the standard monthly premium would be increased by 20 percent. [52 FR 48115, Dec. 18, 1987; 53 FR 4159, Feb. 12, 1988] § 408.27 Rounding the monthly premium. Any monthly premium that is not a multiple of 10 cents is rounded to the nearest multiple of 10 cents, and any odd multiple of 5 cents is rounded to the next higher multiple of 10 cents. [52 FR 48115, Dec. 18, 1987; 53 FR 4159, Feb. 12, 1988] § 408.28 Increased premiums due to the income-related monthly adjustment amount (IRMAA). Beginning January 1, 2007, Medicare beneficiaries must pay an income-related monthly adjustment amount in addition to the Part B (SMI) standard monthly premium, plus any applicable increase for late enrollment or reenrollment, if the beneficiary's modified adjusted gross income exceeds the threshold amounts specified in 20 CFR 418.1115. [73 FR 36469, June 27, 2008] Subpart C—Deduction From Monthly Benefits § 408.40 Deduction from monthly benefits: Basic rules. (a) Deduction from monthly benefits. (2) If the enrollee is entitled to more than one type of monthly benefit, the order of priority for deduction is as follows: (i) Railroad retirement benefits. (ii) Social security benefits. (iii) Civil service annuities. (b) Deduction from initial or reinstated benefits. (c) Ongoing deductions. § 408.42 Deduction from railroad retirement benefits. (a) Responsibility for deductions. (b) Action when benefits are suspended. § 408.43 Deduction from social security benefits. SSA, acting as CMS's agent, deducts the premiums from the monthly social security benefits if the enrollee is not entitled to railroad retirement benefits. (If the benefit is less than the monthly premium, the benefit is withheld and the enrollee is required to pay the balance through direct remittance.) § 408.44 Deduction from civil service annuities. (a) Responsibility for deductions. (b) Deduction of spouse's premiums. (c) Withdrawal of annuitant's consent. (2) The withdrawal notice is effective with the third month after the month in which it is received, or with the month specified in the notice, whichever is later. § 408.45 Deduction from age 72 special payments. (a) Deduction of premiums. (b) Collection of premiums while age 72 special payments are suspended. (c) Grace period. (d) Resumption of age 72 special payments. (2) Subsequent special payments are reduced by the amount of the premium for as long as the enrollee receives special payments. § 408.46 Effect of suspension of social security benefits. (a) Benefit payments to be resumed during the taxable year. (2) The enrollee may, if he or she wishes, pay the premiums during suspension of benefits. (b) Benefit payments not to be resumed during the enrollee's current taxable year. (2) The first billing is for whatever premiums are necessary to place the enrollee in a quarterly cycle. (3) Thereafter, the billing is on a quarterly basis. (Quarters for different enrollees are staggered throughout the year.) (4) The enrollee has the option of paying premiums for more than one quarter at the same time. § 408.47 [Reserved] § 408.50 When premiums are considered paid. (a) Actual deduction. (1) The premium is “paid” even if SSA later finds that the benefit was paid in error; but (2) A finding that a monthly benefit was erroneously withheld does not constitute payment of the premium for that month. Since there was no payment, there was no deduction. The enrollee is billed and continuance of coverage depends on payment of premiums before the end of the grace period or extended grace period. (b) Payment within the grace period. (1) Benefits are resumed during the grace period. (ii) Those payments are sufficient to permit deduction of all overdue premiums. (2) Annual earnings report or other report submitted during the grace period shows a benefit is due. (ii) Those benefits are sufficient to permit deduction of the full amount of the overdue premiums. (3) Premium arrears are paid by direct remittance. [52 FR 48115, Dec. 18, 1987; 53 FR 4159, Feb. 12, 1988; 56 FR 48112, Sept. 24, 1991] § 408.52 Change from direct remittance to deduction. If a direct remittance enrollee becomes entitled to monthly benefits— (a) The SMI premiums are deducted from those benefits; and (b) The enrollee is notified of the deduction and of any adjustment of the initial benefit check that is required to collect overdue premiums or refund premiums paid in advance. § 408.53 Change from partial direct remittance to full deduction. If a benefit that was less than the premium (and therefore required direct remittance of the difference) is increased to an amount equal to, or greater than, the premium— (a) The full premium is paid from the benefit; and (b) Any amounts the enrollee had paid toward premiums not yet due are refunded. Subpart D—Direct Remittance: Individual Payment § 408.60 Direct remittance: Basic rules. (a) Premiums not deducted from monthly benefits under Subpart C of this part or paid by a State buy-in agreement must be paid by direct remittance to CMS or its agents, by or on behalf of the enrollee. (b) Quarterly payment is preferred as more cost-effective, but monthly payment is accepted if the enrollee is unwilling or unable to make quarterly payments or is also paying hospital insurance premiums, which must be paid every month. (c) CMS, directly or through its agents, sends quarterly or monthly premium bills and includes an addressed return envelope with the bill. (d) The individual must— (1) Send a check or money order that is drawn payable to “CMS Medicare Insurance” and show the enrollee's name and claim number as it appears on the Medicare card; and (2) Return the bill with the check or money order in the preaddressed envelope. § 408.62 Initial and subsequent billings. (a) Monthly billing. (2) Subsequent billings are for periods of one month. (b) Quarterly billing. (2) Subsequent billings are for periods of three months. § 408.63 Billing procedures when monthly benefits are less than monthly premiums. If monthly benefits are less than monthly premiums, the following procedures apply: (a) Notice of amount due. (1) Notifies the enrollee of the amount of benefits payable for the rest of the year and the total premiums due for those same months; and (2) Bills the enrollee for the difference. (b) Notice of amount overdue. (1) Notifies the enrollee of any amounts overdue for premiums for the preceding calendar year; and (2) Indicates that if the amount still overdue on April 30 is equal to or greater than the premium for 3 months, SMI coverage will terminate on that date. § 408.65 Payment options. (a) The enrollee is not asked to pay premiums at the time of enrollment but is instructed to pay them upon receipt of a premium bill from CMS or its agents. (b) However, if the enrollee wishes, he or she may pay from one to 12 months or from one to four quarters at the time of enrollment. § 408.68 When premiums are considered paid. (a) Payment by check. (b) Payment within the grace period. (2) A premium payment is considered to have been mailed 7 days before it is received by CMS. § 408.70 Change from quarterly to monthly payments. If an enrollee requests change from quarterly to monthly payment— (a) If the enrollee is paid up under the quarterly cycle, the first monthly bill is for one month. (b) If the enrollee is not paid up under the quarter system, the first bill includes all premiums due. § 408.71 Change from deduction or State payment to direct remittance. (a) Basis for change. (1) The enrollee's entitlement to social security or railroad retirement benefits ends for any reason other than death. (2) The premiums can no longer be deducted from the civil service annuity of the enrollee or the enrollee's spouse. (3) The enrollee no longer qualifies for coverage under a State buy-in agreement, and is not entitled to social security or railroad retirement monthly benefits. (b) Billing. Subpart E—Direct Remittance: Group Payment § 408.80 Basic rules. (a) Sources of group payment. (b) Informal arrangement. (c) Group billing arrangement. (1) The group payer— (i) Uses funds other than the enrollees' to pay all or a substantial part of the premiums; or (ii) Deducts the premiums from periodic payments it makes to the enrollees in the group. (2) The enrollee's rights are protected and enrollees are not required to pay the costs of having their premiums paid on a group basis. § 408.82 Conditions for group billing. CMS agrees to a group billing arrangement only if the following conditions are met: (a) Conditions the group payer must meet. The group payer submits a written request for group billing— (1) Showing that all or part of the payments are made from the payer's funds or from funds due the enrollees and in the payer's possession; and (2) Agreeing not to charge the enrollees for the service of paying the premiums or for the administrative costs such as recordkeeping and postage. (b) Enrollees eligible for group payment. (2) Group payment may not be made for enrollees whose premiums are being deducted from monthly benefits in accordance with Subpart C of this part or being paid by the State under a buy-in agreement. (c) Protection of enrollee's rights. (1) To confidentiality of personal information; (2) To terminate enrollment; (3) To resume individual payment of premiums if he or she wishes; and (4) To receive notice of any action that affects the SMI benefits. (d) Authorization by the enrollee. (2) A group payer that is not an entity of State or local government must submit all enrollee authorizations to CMS. (3) A group payer that is an entity of State or local government may retain the authorizations and certify to CMS that it has on file an authorization for each enrollee included in the group. (4) It is on the basis of the enrollee's authorization that CMS sends the group payer information about each enrollee, as necessary to carry out the group payment function. (e) Size of group. § 408.84 Billing and payment procedures. (a) Initial premium notice. (2) An enrollee who wishes to have the premiums paid on a group basis must give the notice to the group payer, along with written authorization for sending subsequent notices to the group payer and for release of the information required for the group payment process. (b) Monthly billings. (c) Group payers must make their payments within 30 days after billing, to avoid infringing on the 90-day grace period during which the premiums may be paid by the enrollee if he or she is dropped from the group. (d) Effect of group payment. § 408.86 Responsibilities under group billing arrangement. (a) Enrollee responsibilities. (2) The enrollee must promptly notify both SSA and the group payer of any change of address. (b) Group payer's responsibilities. (1) Make premium payments promptly upon receipt of notices; (2) Promptly notify both CMS and the enrollee when it drops an enrollee from the group; (3) Make payments in a way that facilitates efficient and economical processing; and (4) Maintain the confidentiality of the personal information obtained from CMS for the group payment process. (c) CMS responsibilities. (1) Sends the bill to the group payer upon authorization from the enrollee; (2) Notifies both the payer and the enrollee if the payer fails to make timely payments; and (3) Refunds excess premiums in accordance with § 408.88. § 408.88 Refund of group payments. (a) Basis for refund. (1) The premium was for a month after the month in which the enrollee's SMI coverage terminated or the enrollee died. (2) The premium was for a month after the month in which the group payer gave notice (before the 26th day of that month) that the enrollee was no longer eligible for group payment and was being dropped from the group. (b) Example. (c) To whom refund is made. (2) However, if CMS has information that clearly shows those premiums were paid from the enrollee's funds, it sends the refund to the enrollee. § 408.90 Termination of group billing arrangement. (a) A group billing arrangement may be terminated either by the group payer or by CMS upon 30 days' notice. (b) CMS may terminate the arrangement if it finds that the group payer is not acting in the best interest of the enrollees or that, for any other reason, the arrangement has proved inconvenient for CMS. § 408.92 Change from group payment to deduction or individual payment. (a) Enrollee excluded from group payment arrangement because of entitlement to monthly benefits. (2) In order to maintain confidentiality, CMS does not explain to the group payer the reason for excluding the enrollee from the group payment arrangement. (3) The enrollee's premiums are thereafter deducted from the monthly benefits, in accordance with subpart C of this part. (b) Enrollee no longer eligible for the group. (2) CMS or its agents resume sending individual bills to the enrollee, for direct remittance subject to the grace period and termination dates specified in § 408.8. Subpart F—Termination and Reinstatement of Coverage § 408.100 Termination of coverage for nonpayment of premiums. (a) Effective date of termination. (b) Notice of termination. (2) CMS notifies any intermediary or carrier that had previously been informed that the enrollee had met the SMI deductible for the year in which the termination is effective. § 408.102 Reconsideration of termination. (a) Basic rules. (1) The enrollee appeals the termination by the end of the month following the month in which SSA sent the notice of termination. (2) The enrollee alleges and it is found that the enrollee did not receive timely and adequate notice that the premiums were overdue. (3) The enrollee pays, within 30 days after SSA's subsequent request for payment, all premiums due through the month in which he or she appealed the termination. (b) Basis for reinstating coverage. (1) The enrollee acted diligently to pay the premiums or to request relief upon receiving a premium notice very late in the grace period or shortly after its end, and the delayed notice was not the enrollee's fault. (For example, if the billing notice was misaddressed or lost in the mail, it would not be the enrollee's fault; if the enrollee had moved and not notified SSA of the new address, he or she would be responsible for the delay.) (2) On the basis of information given by SSA, the enrollee could reasonably have believed that the premiums were being paid by deduction from benefits or by some other means. (An example would be a notice indicating that premiums would be paid by a State Medicaid agency or a group payer or would be deducted from the spouse's civil service annuity.) (c) No basis for reinstating coverage. (1) Received timely and adequate notice but failed to pay within the grace period, for example because of insufficient income or resources; or (2) Appealed the termination more than one month after the month in which SSA sent the termination notice. § 408.104 Reinstatement procedures. (a) Request for payment. (b) Reinstatement of coverage. Subpart G—Collection of Unpaid Premiums; Refund of Excess Premiums After the Death of the Enrollee § 408.110 Collection of unpaid premiums. (a) Basis and scope Basis. (2) Scope. (b) Collection of unpaid premiums. (1) By billing enrollees who pay the premiums directly to CMS or to a designated agent in accordance with § 408.60. (2) By deduction from any benefits payable to the enrollee or the estate of a deceased enrollee under Title II or XVIII of the Social Security Act, the Railroad Retirement Act or any act administered by the Office of Personnel Management in accordance with § 408.4(b) and Subpart C of this part (Deduction from Monthly Benefits); or (3) By billing the estate of a deceased enrollee. (c) Termination of collection action. (1) The individual is not entitled to benefits under the Acts listed in paragraph (b)(2) of this section, is not currently enrolled for SMI or premium hospital insurance, and demonstrates, to CMS's satisfaction, that he or she is unable to pay the debt within a reasonable time. (2) The individual has been dead more than 27 months (the maximum time allowed for claiming SMI benefits), and the legal representative of his or her estate demonstrates, to CMS's satisfaction, that the estate is unable to pay the debt within a reasonable time. (d) Renewal of collection efforts. (1) The individual enrolls again for premium hospital insurance or SMI. (Payment of overdue premiums is not a prerequisite for reenrollment.) (2) The individual becomes entitled or reentitled to social security or railroad retirement benefits or a Federal civil service annuity. § 408.112 Refund of excess premiums after the enrollee dies. If CMS has received premiums for months after the enrollee's death, CMS refunds those premiums as follows: (a) To the person or persons who paid the premiums or, if the premiums were paid by the enrollee, to the representative of the enrollee's estate, if any. (b) If refund cannot be made under paragraph (a) of this section, CMS refunds the premiums to the enrollee's survivors in the following order of priority: (1) The surviving spouse, if he or she was either living in the same household with the deceased at the time of death, or was, for the month of death, entitled to monthly social security or railroad retirement benefits on the basis of the same earnings record as the deceased beneficiary; (2) The child or children who were, for the month of death, entitled to monthly social security or railroad retirement benefits on the basis of the same earnings record as the deceased (and, if there is more than one child, in equal parts to each child); (3) The parent or parents who were, for the month of death, entitled to monthly social security or railroad retirement benefits on the basis of the same earnings record as the deceased (and, if there is more than one parent, in equal parts to each parent); (4) The surviving spouse who was not living in the same household with the deceased at the time of death and was not, for the month of death, entitled to monthly social security or railroad retirement benefits on the basis of the same earnings record as the deceased beneficiary; (5) The child or children who were not entitled to monthly social security or railroad retirement benefits on the basis of the same earnings record as the deceased (and, if there is more than one child, in equal parts to each child); (6) The parent or parents who were not entitled to monthly social security or railroad retirement benefits on the basis of the same earnings record as the deceased (and, if there is more than one parent, in equal parts to each parent). If none of the listed relatives survives, no refund can be made. Subpart H—Supplementary Medical Insurance Premium Surcharge Agreements Source: 67 FR 60996, Sept. 27, 2002, unless otherwise noted. § 408.200 Statutory basis. This subpart implements provisions of section 1839(e) of the Social Security Act that allow State or local government agencies to enter into an agreement with the Secretary to pay, on a quarterly or other periodic basis, a lump sum for the total of the SMI premium late enrollment surcharge amounts due for a group of eligible enrollees. § 408.201 Definitions. For purposes of this subpart, the following definitions apply: SMI premium surcharge SMI premium surcharge agreement § 408.202 Conditions for participation. (a) A State or local government agency may apply to CMS to enter into an SMI premium surcharge agreement if the following conditions are met: (1) Each individual designated for coverage under the premium surcharge agreement must be enrolled in Medicare Part B at the time the individual is added to the premium surcharge account. (2) Each enrollee designated for coverage under the agreement must, at the time the individual is added to the premium surcharge account, be responsible for paying the base premium and surcharge through direct remittance or benefit withholding from Social Security or Railroad Retirement benefits or a Civil Service annuity. (3) Each enrollee designated for coverage under the agreement must, at the time the individual is added to the premium surcharge account, not have premiums paid by a State Welfare Agency under a State buy-in agreement as described in § 407.40 of this chapter or under a group billing arrangement as described in § 408.80. (b) The State or local government agency must secure from each enrollee a signed, written statement authorizing CMS to send billing notices directly to the State or local government agency, and to release to the State or local government agency information required under the SMI premium surcharge agreement. (c) The authorization statement for each enrollee must be retained in the State or local government agency files for as long as the enrollee is covered by the agreement. These authorization statements need not be forwarded to CMS. (d) The State or local government agency must certify to CMS, in writing, that an authorization statement is on file for each enrollee covered under the SMI premium surcharge agreement. Only one certification is necessary for the entire group of covered enrollees. (e) A State or local government agency must establish an automated data exchange with CMS using the Third Party Premium Collection System, in order to transmit electronically an input file that will be used to add or remove enrollees from the billing system. § 408.205 Application procedures. (a) A State or local government agency must contact its CMS regional office (RO) to request application materials. (b) If interested in entering into an agreement, the State or local government agency must return to the RO two copies of the completed application materials. (c) CMS reviews the application materials, and, when they are approved, notifies the State or local government agency, and the RO. § 408.207 Billing and payment procedures. (a) Adding and removing enrollees. (1) Input files must be transmitted at least once each calendar month, but may be transmitted as often as once a day. (2) CMS will not add or remove enrollees retroactively, except for removals upon the death of an enrollee. (3) The State or local government agency must pay the SMI premium surcharge for each eligible enrollee who is included in the agreement for the time period beginning with the month the enrollee is added and continuing through the month the State or local government agency informs CMS that the enrollee is to be removed, the month the enrollee's Part B coverage terminates, or the month of the enrollee's death, whichever comes first. (b) Payment and grace period. (1) Payment to CMS must be received by CMS by the first day of each month. (2) There is a 10-day grace period for receipt of payment. (3) Payment must be made to CMS via electronic funds transfer. (c) Late payment penalties. (1) Interest will be assessed at the SMI trust fund rate as computed for new investments in accordance with section 1841(c) of the Act. (2) Interest will be waived if the full payment is received by the 10th day of the month in which it is due. (3) Interest will be calculated and assessed in 30-day increments. (4) Interest will be assessed on the balance of the amount billed that remains unpaid at the expiration of the grace period and unpaid balances from prior periods. (5) Interest will continue to accrue on unpaid amounts until the balance is paid in full. (d) Disagreement over billing amounts or interest. (1) The State or local government agency must provide evidence suitable to CMS to substantiate its claim. (2) The State or local government agency must continue to make full payment while CMS evaluates the evidence provided. (3) Credit for payment amounts or interest that CMS determines to be due to the State or local government agency will be reflected as an adjustment in subsequent bills, effective on the date the corrected amount would have been due. § 408.210 Termination of SMI premium surcharge agreement. (a) Termination by the State or local government agency. (1) The State or local government agency must notify CMS, in writing, at least 30 days before the effective date of the termination. (2) The State or local government agency must pay any unpaid premium surcharge amounts and interest due within 30 days after the effective date of the termination. (3) Interest will continue to accrue until all amounts due are paid in full. (b) Termination by CMS. (1) If a State or local government agency's payments are delinquent 30 days or more, CMS may terminate the agreement with 30 days advance notice. (2) If the State or local government agency fails to comply with the terms of the agreement or procedures promulgated by CMS, CMS may terminate the agreement with 30 days advance notice. (3) If CMS finds that the State or local government agency is not acting in the best interest of the enrollees, or CMS, or for any reason other than those in paragraphs (b)(1) and (b)(2) of this section, CMS may terminate the agreement at any time. (4) The State or local government agency must pay all outstanding premium surcharge and any interest amounts due within 30 days after the effective date of the termination. (5) Interest will continue to accrue until all amounts due are paid in full. (6) After the agreement is terminated, CMS will resume collection of the premium surcharge from the enrollees covered under the terminated agreement. (7) If an agreement is terminated by CMS, the State or local government agency must wait 3 years from the effective date of the termination before it can request to enter into another SMI premium surcharge agreement.