NEW RULE WILL ALLOW STATE AND LOCAL GOVERNMENTS TO PAY PART B SURCHARGE FOR SOME RETIREES

Many retirees decline enrollment in Medicare Part B or disenroll from Part B because they are covered by an employer-sponsored group health plan. If their employer subsequently terminates the retiree group health plan, these individuals must pay a premium surcharge for late enrollment if they subsequently choose to enroll in Part B. In the mid-1990’s when some state government agencies terminated health plans for state retirees, Congress enacted legislation authorizing a state government to pay voluntarily the premium surcharge for certain affected retirees. Pub. L. 105-33, Sect 144 (1994), amending Section 1839(3) of the Social Security Act. Congress subsequently extended the same authority to local governments. Pub. L. 105-33, Sect. 4582 (1997).

On September 27, 2002, the Centers for Medicare & Medicaid Services (CMS) issued a final rule to implement these provisions. 67 Fed. Reg. 60993 (Sept. 27, 2002). The final rule creates a new Part H to 42 CFR Part 408. It goes into effect March 26, 2003.

The rule allows a state or local government agency to enter into an agreement with CMS to pay on a periodic, lump sum basis the total amount of the Part B premium surcharge for a group of designated eligible Medicare enrollees. Individuals eligible to be covered under the premium surcharge agreement must be enrolled in Part B at the time they are added to the account, and they must be responsible for payment of the Part B premium and surcharge. The premium surcharge agreement cannot include individuals whose Part B premiums are paid by a state buy-in program. In addition, the agency must obtain a signed written statement from each individual authorizing CMS to bill the agency directly for the surcharge, and authorizing the release of required information to the agency. The agency must retain the written statements and need only certify to CMS that the statements are on file.

A government agency that wants to participate in this program must submit an application to the appropriate CMS regional office. Payments must be received by CMS on the first day of each month, with a 10-day grace period. CMS may assess interest for late payments. CMS may also terminate the agreement, with 30 days notice, if payments are delayed 30 days or more, if the agency fails to comply with terms of the agreement, or if CMS finds the agency is not acting in the best interest of the enrollees or CMS, or for any other reason. A state or local agency may terminate the agreement with 30 days advance notice to CMS. The regulation does not provide for notice to the retirees if either CMS or the state or local agency decides to terminate the agreement. Once the agreement is terminated, CMS will collect the surcharge from the retirees.

© Center for Medicare Advocacy, Inc. 04/04/2008