ig. A representative shall be entitled to resent evidence and allegations as to acts and law in any proceeding affectng the party he represents and to obain information with respect to the laim of such party to the same extent s such party. Notice to any party or ny action, determination, or decision, r request to any party for the producion of evidence, shall be sent to the epresentative of such party.

ubpart I-Premiums for Supplementary Medical Insurance Benefits

AUTHORITY: The provisions of this Subart I issued under secs. 1102, 1838-1840. 843, 1871, 49 Stat. 647, as amended. 79 Stat 05-308: 79 Stat. 312; 79 Stat. 331; 81 Stat 49; 81 Stat. 821; 42 U.S.C. 1302, 1395 et seq SOURCE: The provisions of this Subpart I appear at 33 F.R. 9768, July 6, 1968, unless otherwise noted.

Subpart I of this Part 405 sets forth the Administration's policy and general procedure for collection of premiums for supplementary medical insurance benefits (see Subpart B of this Part 405) These policies are designed to promote the security of the enrollees to the maximum degree feasible compatible with reasonable safeguards for the integrity of the Federal Supplementary Medical Insurance Trust Fund.

§ 405.902 Amount of premiums.

(a) Enrollment in initial enrollment period. Where an individual enrolls during his initial or deemed initial enrollment period (see § 405.212) or under the "good cause" provisions discussed in § 405.224, his monthly premiums under the supplementary medical insurance program will be the standard premium as determined under subparagraph (1) or (2) of this paragraph.

(1) The standard monthly premium under the supplementary medical insurance program is $3 for each month of Coverage (see § 405.220) from July 1966 through March 1968; $4 for each month of coverage from April 1968 through June 1970; $5.30 for each month from July 1970 through June 1971; $5.60 for each month from July 1971 through June 1972; $5.80 for each month from July 1972 through June 1973.

(2) During December 1972, and each December thereafter, the Secretary shall determine and promulgate (setting forth the actuarial assumptions and bases cm

ployed by him) the standard premium which shall be applicable for the 12month period commencing July 1 in the succeeding year. Such standard premium shall be determined as prescribed in section 1839 of the Act, as amended.

(b) Enrollment after initial enrollment period. In the case of an individual who first enrolls after the close of his initial enrollment period (not including an enrollment under the "good cause" provisions discussed in § 405.224) or reenrolls after termination of his supplementary medical insurance coverage (see § 405.214), the monthly premium, as determined under paragraph (a) of this section will be increased by 10 percent for each full 12 months in the following total (no increase is made for a fractional portion of 12 months):

(1) The number of months which elapsed between the close of his initial enrollment period and the close of the general enrollment period in which he first enrolled plus, in the case of an individual who enrolls for the second time, (2) the number of months which elapsed after the end of his initial period of coverage and the close of the general enrollment period (see § 405.213) in which he thereafter enrolled, but excluding from such total:

(i) The 3 months January through March 1968 for any person who enrolled during the first general enrollment period, October 1967 through March 1968;

or

(ii) Any months prior to January 1973 during which he was precluded from enrolling or reenrolling by the 3-year limitation on enrollment or reenrollment which was in effect until the enactment of section 260 of the Social Security Amendments of 1972, Public Law 92-603;

or

(iii) Any months in or before a period of coverage under a Federal-State agreement (see §§ 405.222 (d) and 405.904(d));

or

(iv) In the case of an individual under age 65, any month prior to his current continuous period of entitlement to hospital insurance and in the case of an individual age 65 or older, any month before the month he attained age 65 (see § 405.214(d)).

Example 1. 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 J's premiums begin with June 1966 (the first month after the

close of his initial enrollment period (see § 405.212)) 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 full12-month period in 19 months, J's premiums will be 10 percent greater than if he had enrolled in his initial enrollment period.

Example 2. 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 V's premiums are January 1968 through March 1969, a total of 15 months. Since this totals one full 12month period, V's monthly premium, as detern.ined under paragraph (a) of this section will be increased by 10 percent.

Example 3. 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 coverage under Subpart B. N falls 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. N enrolls for a second time in January 1971. The months to be included in determining the amount of the increase in 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, N's monthly premium as determined under paragraph (a) of this section will be increased by 20 percent.

Example 4. 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 after March 1971 (the end of the last general enrollment period during which he was eligible to reenroll under the law in effect prior to October 30, 1972) through December 1972. 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.

(c) Rounding the monthly premium. Any monthly premium which is not a multiple of 10 cents will be rounded to the nearest multiple of 10 cents, and any odd multiple of 5 cents will be rounded to the next higher multiple of 10 cents. [33 FR 9768, July 6, 1968. as amended a 39 FR 3933, Jan. 31, 1974; 40 FR 18166, Apr. 25, 1975]

§ 405.903

Months for which premiums are due; payment obligation.

(a) Months for which premiums are due. A premium is due for each month of supplementary medical insurance coverage, beginning with the first month of coverage and continuing through the month of death, or, if earlier, the month in which coverage terminates, including each month of the grace period, if applicable. A premium is due for the month of death, if supplementary medical insurance coverage was not previously ended, even though the enrollee dies on the first day of the month.

(b) Payment obligation. Where overdue premiums have not been paid by the last day of the applicable grace period (as provided in this subpart), coverage will terminate as of that day, and notice of termination (with information regarding the enrollee's rights of appeal) will be sent promptly to the enrollee and also to any intermediary who had been advised that the enrollee had met his $50 deductible (see § 405.245) for the year in which the termination occurs. The premiums owed (including premiums for each month of the grace period, if applicable), will be collected by deduction trom subsequent monthly benefits (see

405.904) payable to the enrollee. Such arrears constitute an obligation enforceable against the enrollee or his estate and will be collected directly from the enrollee or his estate. Premium arrears may also be offset against any supplementary medical insurance payments due an enrollee as reimbursement for medical or other expenses (including such payments due under section 1870(e) after the death of an enrollee on the basis of a paid bill for covered services furnished to him). $405.904 Payment of premiums; gen. eral.

The two basic methods by which premiums for supplementary medical insurance will be collected are deduction from monthly benefits payable under title I of the Social Security Act, the Railroad Retirement Act, or an act administered by the Civil Service Commission providing retirement or survivorship protection, and payment by direct remittance in response to a premium notice:

(a) Individual entitled to monthly social security or railroad retirement benefits. Where an enrollee is receiving

social security or railroad retirement benefits, his supplementary medical insurance premiums except as indicated in paragraph (d) of this section, will be deducted from such benefits (see $405.911).

(b) Individual entitled to civil service annuity only. If an enrollee is not entitled to social security or railroad retirement benefits and is receiving a civil service annuity, his premium must be deducted from his annuity. Where such annuitant's spouse is also enrolled for supplementary medical insurance and is not entitled to a civil service annuity or any benefits (under either the Social Security Act or the Railroad Retirement Act) and the annuitant consents, the spouse's supplementary medical insurance premiums will be withheld from such annuitant's monthly annuity. The annuitant may withdraw his consent by giving notice of withdrawal. Such withdrawal will be effective with the third month after the month in which such notice is received or with the month specified on the notice, whichever is later.

(c) Individual entitled to both social security and railroad retirement monthly benefits. Except as provided in paragraph (d) of this section, the premiums of an enrollee entitled for a month to an annuity or pension under the Railroad Retirement Act of 1937, whether or not he is also entitled for such month to a monthly insurance benefit under title II of the Social Security Act, will be collected by the Railroad Retirement Board by deductions from his annuity payments or, if such payments have been suspended, by billing by, and direct remittance to, the Railroad Retirement Board in accordance with the same rules (set out in §§ 405.908-405.915) that would be applied by the Social Security Administration for individuals entitled to monthly benefits under title II of the Act but not entitled under the Railroad Retirement Act.

(d) Individual enrolled pursuant to a Federal-State agreement. Notwithstanding the provisions of paragraphs (a), (b), and (c) of this section, where an individual is enrolled pursuant to a Federal-State agreement (see § 405.217), his premiums are paid by the State which has thus enrolled him. If an enrollee's coverage under the Federal-State agreement is terminated (see § 405.223), such

enrollee's premiums will be collected by deduction from social security, railroad, or civil service retirement benefits, as appropriate, or by direct remittance.

(e) Individual not entitled to monthly benefits or enrolled pursuant to a Federal-State agreement. Premiums not deducted from social security, railroad retirement, or civil service benefits, and not paid under a Federal-State agreement will be paid by direct remittance These premiums will be billed for on a quarterly or monthly basis.

133 FR 9768, July 6, 1968, as amended at 39 FR 14589, Apr. 25, 1974]

§ 405.908 Payment by direct remittance; rules governing payment.

Except for the provisions

of

§ 405.904(d), enrollees not in receipt of, or not entitled to, monthly benefits from which premiums can be deducted are required to pay premiums by direct remittance. The following rules govern payment by direct remittance:

(a) Payment should be made by mail. (b) The enrollee should remit payment in the form of a check or money order made payable to "Social Security Medical Insurance." Stamps will not be accepted.

(c) The name and claim number of s person whose premiums are being paid should be shown on the check or money order. Payment may be mailed in the preaddressed envelope which will be furnished with the premium notice, and the premium notice should be returned with the premium payment in the same envelope.

§ 405.911 Collection from enrollees in monthly benefit payment status.

(a) The purpose of collection by deduction from monthly benefits is to keep premium collection costs to a minimum. Where the enrollee is receiving monthly benefits (see §§ 405.904(a)–(c), 1 month's premium will be deducted from each month's benefit and the premium for any given month will be deducted from the benefit paid for the previous month. The enrollee does not have the choice of paying his premiums by direct remittance to avoid the deduction.

(b) When an enrollee receives a monthly benefit check after an initial award or after a period of suspension, the amount of the check will, when administratively feasible, be reduced or increased as appropriate because of unpaid

90-067 0—77- -36

premiums or premiums paid in advance by direct remittance. Thereafter, 8 single month's premium deduction will ordinarily bc made from the benefit for each subsequent month.

(c) Premiums due or overdue will, when administratively feasible, be deducted from any monthly benefit before payment is made. For discussion of provisions relating to persons entitled to an age-72 special payment, see § 405.916. [33 FR 9768, July 6, 1968, as amended at 39 FR 14589, Apr. 25, 1974]

§ 405.912 Collection of premiums while monthly benefits are suspended.

(a) Benefit payments being resumed during current year. When an enrollee's monthly cash benefit payments (other than age-72 special payments (see § 405.916)) being suspended are scheduled to be resumed within his current taxable year (see subtitle A of the Internal Revenue Code of 1954 for definition of a taxable year), such enrollee will not be billed for premiums. However, the enrollee's obligation for premium payments continues during the period for which monthly cash benefits are suspended (see § 405.911).

(b) Collection of premiums where monthly benefit payments will not be resumed during the current taxable year. Where an enrollee's monthly title II benefit payments (other than age-72 special payments (see § 405 916)) are being suspended for an indefinite period or for a definite period which will not permit collection of all premiums due from monthly benefits payable in the current taxable year, the enrollee should pay his premiums by direct remittance when he is billed. The first billing will be for whatever premiums are necessary to place him in a quarterly cycle. Thereafter, assuming such premiums are prompaly paid, the enrollee will be billed on a quarterly basis for 3 months' premiums (see § 405.913). If the enrollee, however, wishes to pay premiums for more than 1 quarter at a time, he may do so.

[33 FR 9768, July 6, 1968, as amended at 40 FR 11865, Mar. 14, 1975]

suspended, the enrollee may during that year pay such portion of the monthly premiums for such period as he desires. However, this privilege does not extend indefinitely; each enrollee whose premiums for months in a taxable year are in arrears, will be notified at the end of such year that premiums for such taxable year are due and must be paid Failure thereafter to pay such premiums due by the end of the grace period will terminate his supplementary medical insurance coverage. (For special instructions concerning persons entitled to an age-72 special payment, see § 405.916.)

(b) Enrollee reports his earnings on a calendar year basis. Where an enrollee files his income tax return on a calendar year basis and owes premiums for one or more months in a closed calendar year, the due date for all such overdue premiums is the 5th day of February after the end of that year. Such person's grace period ends on the last day of the second month after the month in which the due date occurs (except as provided in § 405.929), and his coverage will terminate on the same day, if the premiums for the past calendar year are not paid on or before that day. Accordingly, a person owing for premiums during the calendar year will be given notice in December of such year (the second month before the due date) to pay his premium arrears for such year. Those enrollees who have not paid their premium arrears for the closed taxable year will be notified further to pay all such arrears by April 30 and failing such payment, their supplementary medical insurance coverage will be terminated on April 30.

(c) Enrollee reports his earnings on a fiscal year basis. Where an enrollee files his income tax return on a fiscal year basis and owes premiums for one or more months in a closed fiscal year, he will be treated in accordance with paragraph (b) of this section, except that the due date for all such overdue premiums is the fifth day of the second month after the close of his fiscal year. A person owing premiums for months in a fiscal year will be given notice of such premium arrears at the end of such year. Such person's grace period ends on the last day of the second month after the month in which the due date occurs (except as provided in § 405.929), and his coverage will terminate on the same day if the premiums for the past fiscal year are not paid on or before that day.

EXAMPLE: H became enrolled for supplementary medical insurance effective July 1972. He was entitled to monthly benefits, but reported work and earnings which precluded payment of such monthly benefits. Although billed, he paid no premium by direct remittance. H reports his earnings on a fiscal year basis that ends on May 31. Early in May 1973, H is notified of his unpaid premiums ($63.80) for the fiscal year ending May 31, 1973. and advised that those premiums are overdue and should be paid on or before July 5, 1973. However, without good cause he fails to pay by September 30, 1973, despite such notice and further delinquency notices sent in September rcminding him of his unpaid premium obligation and advising him of the end of the grace period for payment and of the consequences in the event he fails to pay by September 30. H's supplementary medical insurance coverage is terminated effective midnight September 30, 1973, and he owes $88.50 (for the 15 months July 1972-September 1973 inclusive) which will be recovered from monthly benefits payable to him.

(d) Enrollment adjudicated after the end of year in which enrollee's supplementary medical insurance begins. There may be cases where an enrollee's coverage begins in one taxable year, but his supplementary medical insurance entitlement is not adjudicated until after the end of such year. Where premiums for months in the closed taxable year cannot be collected from benefits payable for any reason (e.g., because of a suspension event) the enrollee will be billed for all such premiums immediately after adjudication of his enrollment. The due date for premiums for the closed taxable year is the fifth day of the month following the month of notice. In such a case, the enrollee's grace period (during which all such premium arrears must be paid if coverage is to continue) will end with the second month after the month in which the due date occurs, except as pro vided in § 405.929.

[33 FR 9768, July 6, 1968, as amended at 39 FR 14589, Apr. 25, 1974]

$ 405.914 Payment within the grace period.

Overdue premiums will be considered paid within the grace period in the following situations:

(a) Resumption of benefits during the grace period. The premium arrears will be considered paid timely if:

(1) Monthly cash benefit payments are payable for the last month in the grace period or earlier months on the basis of a notice filed by the enrollee before the grace period ends; and

(2) All overdue premiums can be collected from such payments.

Example. B, an enrollee whose monthly social security benefits had been suspended, notified the Administration in April 1967, that he will be doing no work of any kind in that month. The amount of the beneft for that month is $78, and he owes premiums for all months after June 1966. Since the $18 he owes for premiums for 1966 can be collected by deduction from his April beneat, his supplementary medical insurance coverage will be continued. (833 will be deducted from his monthly benefit check for April 1967 to pay premiums for July 1966 through May 1967.)

IB had waited until May 1967 to notify the Administration that he had stopped work as of March 31, 1967, and had not otherwise paid the overdue premiums by April 30, 1967, his supplementary medical insurance coverage would terminate with the latter date and could not be reinstated upon receipt of such notice. He could obtain supplementary medical insurance coverage thereafter by enrolling in a general enrollment period which begins within 3 years after the effective date of the termination of his prior enrollment.

(b) Annual accounting or other report shows a benefit is due. Premiums are to be considered paid timely if:

(1) An enrollee submits a report before the grace period ends which clearly shows that a monthly cash benefit payment, previously withheld, should be made for 1 or more months in a closed taxable year; and

(2) The full amount of the overdue premiums can be collected from the benefit.

(c) Payment of premium arrears by direct remittance. Premiums are considered paid timely if the enrollee makes a direct remittance of all overdue premiums before the grace period ends (see § 405.908).

§ 405.915

Possible entitlement to social security or railroad retirement bene fits.

(a) In those cases where it is clear that the enrollee is entitled to monthly benefits as well as supplementary medical in. surance, the supplementary medical insurance enrollment will be processed simultaneously with his claim for monthly benefits and his premiums will be deducted from benefits payable. However, if an enrollee's monthly benefits are subject to complete or indefinite suspension of payment, he must make payment upon receipt of a notice of premium due in accordance with the provisions of § 405.912-405.913.