ums at the time he enrolls. He will be informed of his premium payment obligation (see § 405.903) and that his initial premium payment should, in accordance with the rules discussed in § 405.908, be made upon receipt of a premium notice from the Social Security Administration. The premiums need not be paid by the enrollee himself; payment may be made by another person on his behalf. In other cases, the premiums may be paid on a group basis by a lodge, union, employer, or other organization (see §§ 405.940405.949). (See § 405.904 on payment of premiums by the State pursuant to a Federal-State agreement.)

(b) Except for persons making monthly premium payments (see § 405.921), the initial notice of premiums due will cover a period of 3 months or, if greater, the period from the first month of coverage through the end of the third month after the month of billing, subsequent billings will be for periods of 3 months.

(c) The first notice of premiums due for the monthly payer (see § 405.921) will cover 1 month's premium or, if greater, the period from the first month of coverage through the end of the first month after the month of billing; subsequent billings will be for a period of 1 month.

(d) Where the enrollee offers to make a premium payment at the time of enrollment for months beginning with the first month of his coverage period, he is permitted to pay from 1 to 12 months' premiums at that time. Enrollees receiving 3-month notices of premiums may pay premiums for one, two, three, or four 3-month periods at a time. Where an enrollee wishes to pay for two to four 3-month periods at a time, he should make sure his remittance is in the correct amount and return the 3-month premium notice with the payment.

(e) In the case of an individual whose coverage pursuant to a FederalState agreement or whose entitlement to monthly benefits terminates for reasons other than death SO that monthly premiums will not be paid by the State and cannot be collected by deducting the amount thereof from such monthly benefits, the individual shall be notified by the Social Security

Administration, to pay premiums by direct remittance in accordance with the provisions of this section.

§ 405.921 Payment of premium on monthly or 3-month basis.

(a) Payment of premiums on a 3month basis is standard for enrollees (including enrollees whose monthly benefits are subject to complete or indefinite suspension). However, an enrollee who is unwilling or unable to make payments on a 3-month basis for financial reasons will be permitted to make monthly payments.

(b) The due date for the payment of premiums on a 3-month basis is the fifth day of the first month of such 3month period. The grace period (for enrollees not entitled to monthly benefits) ends with the last day of such 3-month period, except as provided in § 405.929. The due date for premiums paid monthly is the fifth day of the month for which the premium is payable and the grace period ends at the end of the second month after such month, except as provided in § 405.929. (See § 405.903(b) regarding payment obligation for the grace period.)

[33 FR 9768, July 6, 1968, as amended at 39 FR 14590, Apr. 25, 1974. Redesignated at 42 FR 52826, Sept. 30, 1977]

§ 405.927 Due date and grace period.

Where an initial notice of premiums due is forwarded under the provisions of § 405.916(a) or § 405.920 (b) or (c).

(a) The initial premium payment is due on the fifth day of the month after the month of billing. The grace period for the initial premium payment ends with the last day of the third month after the month of billing except as provided in § 405.929. (See § 405.903 regarding payment obligation.)

(b) With respect to payment of the premiums for each subsequent billing period payment is due in accordance with the provisions of § 405.921.

[33 FR 9768, July 6, 1968, as amended at 39 FR 14590, Apr. 25, 1974. Redesignated at 42 FR 52826, Sept. 30, 1977]

§ 405.928 Extension where last day of grace period is a nonworkday.

Where the last day of the grace period falls on a nonworkday (Saturday, Sunday, legal holiday, or a day, all or part of which is declared to be a nonworkday for Federal employees by statute or Executive order), the premiums will be considered to have been paid within the grace period if received, or deposited in the U.S. mails, on the first workday thereafter.

§ 405.929 Extension of grace period for good cause.

The grace periods referred to in §§ 405.913, 405.915, 405.916, 405.921(b), and 405.927(a) may, with respect to premiums which become due after July 1972, be further extended for an additional 3 calendar months during which an individual may retain his coverage by paying overdue premiums if such individual shows good cause for his failure to pay the overdue premiums during the periods specified in §§ 405.921, 405.927, or 405.928.

[39 FR 14590, Apr. 25, 1974. Redesignated at 42 FR 52826, Sept. 30, 1977]

§ 405.936 Enrollee changes from 3-month to monthly premium payment basis after coverage begins.

When an enrollee on a 3-month billing basis arranges to pay premiums monthly, his first monthly bill (if he is paid up under the 3-month cycle) will be for 1 month's premium with a due date of the fifth day of the month following the month of notice. However, if he is in arrears when his monthly pay arrangement is approved, he will be billed for all premiums due. The grace period for the payment of the premium owed for a month ends on the last day of the second month after such month, except as provided in § 405.929.

Example. In December 1972, E is billed for premiums for January, February, and March 1973 with a due date of January 5, 1973. E fails to pay any of the premiums and on February 5, 1973, he is notified of his delinquency. On February 20, 1973, E contacts the district office of the Social Security Administration and asks to be put on a monthly premium basis. Early in March 1973, E is billed for premiums for January, February, March, and April 1973. He is ad

vised that all such premiums ($23.20) are now due and should be paid promptly and unless at least $5.80 of this amount (his January premium) is paid by March 31, 1973, his coverage terminates effective with that date.

[39 FR 14590, Apr. 25, 1974. Redesignated at 42 FR 52826, Sept. 30, 1977]

§ 405.940 Group collection; general.

(a) An organization, employer, or other source may pay premiums on behalf of one or many enrollees. The premiums must be paid timely, with the premium notices attached, so that the payment can be identified readily with the appropriate enrollee.

(b) If an organization making premium payments on behalf of a number of enrollees wishes to receive a single notice of premiums due from the Social Security Administration, the Social Security Administration may arrange to send such a premium notice but only if such organization meets the requirements set forth in § 405.941.

(c) A single notice for the payment of premiums due from a group of enrollees will be sent only under conditions which protect the rights of the enrollee and only so long as these conditions are met by the payer organization. However, a single notice for the payment of premiums due from a group of enrollees is not permitted if the enrollees in the group must pay any costs for such premium collection. The single notice arrangement is intended primarily to apply in cases where funds other than the enrollee's are used to pay at least a substantial part of the premiums or where the group payer deducts the premiums from periodic payments it makes to the enrollees in the group.

§ 405.941 Rules governing payment of premiums due from a group of enrollees; single notice arrangement.

The following rules apply to arrangements for a single notice for the payment of premiums due from a group of enrollees:

(a) Origin of request for group payment. An organization may be billed for premiums on behalf of a group of enrollees only if it requests permission and receives approval from the Social Security Administration for such bill

ing. Approval will be granted only if premium payments are made (in whole or in part) from funds of the payer or from funds of the enrollee in the payer's possession. However, the organization may not charge the enrollee for the service of making premium payments or for the administrative costs thereof; i.e., recordkeeping, etc.

(b) Enrollees eligible for group collection. Premiums can be accepted only for persons who are already enrolled for supplementary medical insurance and who are billed for their premiums. This does not include persons entitled to cash monthly benefits under the Social Security, Railroad Retirement, or Civil Service Retirement Acts, if they are actually receiving such benefits, nor does it include persons enrolled under a Federal-State agreement; premiums for such enrollees must be deducted from these benefits, or paid pursuant to the Federal-State agreement.

(c) Size of a group. A group payer may be billed for a group of enrollees who would otherwise be sent individual premium notices if the number is at least 100, or if less, is sufficiently large to permit efficient billing and collection of premiums by the Social Security Administration. Notice of premiums due cannot be sent to a union, employer, or other "payer" who wishes to pay premiums for a smaller group. The payer can, of course, notify enrollees in a smaller group to turn their notices over to such payer as soon as received. The payer for such a smaller group should then promptly mail all the notices accepted in a single package to the nearest Social Security Administration payment center with a check for the correct total amount of the premiums due. Prompt payment is essential, since an enrollee's supplementary medical insurance coverage will terminate if his premium is not paid by the end of the grace period.

(d) Authorization by enrollee. The rights of the enrollee must be protected. His right to enroll or not to enroll, or to terminate once enrolled, his right to pay premiums for himself if he desires, his right to notice of any action affecting his supplementary medical insurance benefits, and his

right to confidentiality, shall not be jeopardized in any way by a group payment arrangement. To assure that these rights are protected to the maximum degree feasible, the group payer may not be billed on behalf of an enrollee without written authorization by such enrollee. Such authorizations will permit the Social Security Administration to send bills and the minimum information necessary for a group payment directly to the group payer. This signed authorization will be retained by the Social Security Administration except where the group payer is an entity of the State or local government. In such case the individual authorizations may be retained by each such State or local entity. However, the State entity must certify to the Social Security Administration that it has such authorizations for each enrollee participating in its group payment arrangement. Where enrollees regularly turn over their billing notices to group payers, no such authorization is necessary.

(e) When payment must be made. Organizations under a group payment arrangement must pay premiums promptly. Group payers must make their payments by the due date for such payments, or at least in the first month for which the premium is payable. The purposes of this policy are: To avoid infringing on the grace period during which premiums may be paid by the enrollee in the event he is dropped from the group arrangement; and to enhance the integrity of the trust fund by collecting all premiums when due.

(f) Finality of payment. Any payment by a group payer is considered a payment by the enrollee. Once paid, premiums will not be refunded, except for (1) premiums paid for a month after the end of the enrollee's supplementary medical insurance coverage (e.g., premiums paid for months after the month of the enrollee's death or termination of enrollment): or (2) premiums paid by a group payer for any months after the month in which the payer has claimed refund and given notice by the 20th day of the month that the enrollee is no longer eligible for group payment. Such excess premiums when paid by a group will be

refunded to the group. Where, however, the Social Security Administration has information clearly showing that the payment was made from an enrollee's funds, the excess premiums will be refunded to the enrollee.

Example. F, the wife of J, a retiree of Corporation X, which pays premiums on behalf of all of its retirees and their dependents, obtains a divorce from J on October 20, 1966, and thus disqualifies herself for further premium payments by the corporation. The corporation gives notice on November 10, 1966, that a refund is due because F has been dropped from the list of persons for whom it has agreed to pay premiums. The premium paid for December 1966 would be refunded to the group payer.

§ 405.942 Payment by groups.

Generally, group payers will be billed and will pay supplementary medical insurance premiums on a calendar quarter or monthly basis. Although billed for premiums for a month or a calendar quarter, a group payer may remit premiums for as many as 12 months in advance. While quarterly billing will be the standard, some organizations will be billed for supplementary medical insurance premiums on a monthly basis because of administrative considerations (i.e., the organization may wish to deduct premiums from monthly payments made by such organizations to the enrollee or may wish to pay premiums on a monthly basis because of a rapid turnover of enrollee personnel).

§ 405.946 Quarterly billing; group payment plan.

(a) Initial premium notice. The initial premium notice in all cases will be sent to the enrollee. An enrollee who wishes to have his premiums paid by a group payer willing to pay them should, by prearrangement, turn his premium notice over to the organization along with his authorization for the Social Security Administration to bill the group for his premiums thereafter, and to release the minimum of information required for a group billing arrangement. The organization, if a nongovernmental entity, forwards all authorizations, premium notices, and payments covering the total premiums shown on such notices to the Social Security Administration.

(b) If the organization is a governmental entity, it may retain the authorizations and forward to the Social Security Administration premium notices, payments, and a certification that it maintains an authorization in its files for each enrollee for whom it makes payment.

§ 405.947 Enrollee dropped from group payment plan.

(a) When an organization gives notice that an enrollee is (or was) no longer eligible for group payment as of a particular date for a reason other than death, the enrollee must pay his premiums by direct remittance. Similarly, the Social Security Administration in some cases will be notifying the group payer that premiums are no longer to be paid for specified persons (e.g., the premiums must be deducted from social security benefits which become payable because a beneficiary is no longer working, or because he has attained age 72, etc.). In such cases, the enrollee's premiums will be deducted from benefits or where appropriate, he will be sent individual premium notices. In order to preserve the confidentiality of communications from enrollees, no explanation will be given by the Social Security Administration of the reason it is deleting the enrollee. from the group payment arrangement.

(b) If the enrollee owes a premium for a month at the time the Social Security Administration is notified that the group payer has dropped him, the enrollee will be sent a premium notice for that month's premium, and his grace period (if he is not entitled to monthly benefits) extends through the end of the second month after the month in which he is billed except as provided in § 405.929.

[33 FR 9768, July 6, 1968, as amended at 39 FR 14590, Apr. 25, 1974. Redesignated at 42 FR 52826, Sept. 30, 1977]

§ 405.948 Responsibilities of parties to group collection arrangements.

(a) Enrollee. While an organization may act on behalf of an enrollee in forwarding supplementary medical insurance premiums, the enrollee still is responsible for making his premium payments. The organization merely

acts as his agent. Any notice sent to the agent is considered as notice to the enrollee (the enrollee will, however, be notified of any delinquency in accordance with paragraph (c) of this section) and the enrollee suffers the consequences in the event of default (nonpayment or incorrectly identified payment) on the part of the payer. The enrollee is obligated to notify promptly both the payer and the Social Security Administration of any change of address.

(b) Group payer. The group payer is obligated to make payments promptly upon receipt of bills; to notify promptly both the enrollee and the Social Security Administration when dropping an enrollee from the group; to report premiums in a manner which facilitates economical processing; to hold in confidence all information obtained from the Social Security Administration in carrying out its function as a group payer.

(c) The Social Security Administration. The Social Security Administration will give premium notice to the payer upon authorization from the enrollee and not less often than it would have had there been no group payer; will notify both the payer and the enrollee of delinquency in the event the payer does not make timely payments; and will make premium refunds available to the group payer in accordance with § 405.941(f).

§ 405.949 Termination of group billing.

The group billing arrangement may be terminated either by the group payer or by the Social Security Administration, upon 30 days notice. The Social Security Administration may terminate the group payment 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 proven inconvenient to the Social Security Administration.

§ 405.956 When an enrollee's premiums are considered paid.

(a) Deduction from benefits; social security beneficiaries and railroad annuitants. In general, a premium will be considered paid if deducted from a monthly benefit even though it may

be determined later that the benefit was paid in error. Conversely, a subsequent determination that the withholding of a benefit for a month was incorrect will not be the basis for a retroactive finding that the premium was paid at the time the benefit was first withheld.

Example 1. C. an enrollee entitled to social security benefits of $100 per month, is paid $97 for each month of 1967 and is credited with premium payments for all such months. A determination is made in 1969 that C's work and earnings in 1967 precluded any monthly benefit payments throughout that year. He would then be found to owe $1,200 in benefit overpayments, but would not be found to owe any premiums for 1967.

Example 2. An enrollee, M, reported work and earnings on the basis of which his monthly social security benefits are withheld throughout 1967. His premiums could not be deducted from benefits payable and he fails to make any premium payments in cash, although he was billed regularly for such payments. He is sent notice in January 1968 informing him of his premium obligation and subsequently is notified that his supplementary medical insurance coverage will terminate on April 30, 1968, unless his premiums are paid by that time. His benefits remain suspended and he fails to make any cash premium payments; consequently, his supplementary medical insurance coverage terminates effective April 30, 1968. In March 1970, he submits an annual report for 1967, showing that he had done no work whatever in December 1967, and is subsequently paid a benefit for the latter month.

Such an annual report, submitted during the 3 months ending April 30, 1968, might have permitted payment of a benefit from which all of M's 1967 premiums could have been deducted so as to permit continuance of his supplementary medical insurance coverage. However, the report was not submitted by the end of the grace period nor did M choose to make timely payment by check or money order which would have assured continuance of his coverage. M's supplementary medical insurance coverage may not be reinstated, but the Social Security Administration will deduct all supplementary medical insurance premiums owed through the month of termination of enrollment.

(b) Payment by direct remittance. Where supplementary medical insurance premium payments are made through the mail, the premium will be considered paid when a letter transmitting the premium payment to the Social Security Administration is deposited in the U.S. mail, as indicated