TN 10 (02-11)

A. Policy for SMI variable premiums

Effective in 1986, SMI premiums varied in cases where there were increases in an individual's benefit, due the Cost Of Living Adjustment (COLA) not being sufficient to cover the increase in his/her SMI premium.

This provision requires premium amounts be reduced so that benefit amounts due January 3rd i.e., the December benefit, (after considering reductions for the premium and lower dollar rounding), will not be less than the beneficiary's benefit on December 3rd i.e., the November benefit. The provision applies only to individuals who were entitled to benefits for the months of November and December and who actually received corresponding checks in December and January. Once a variable premium is established, it remains in effect for the full calendar year.

NOTE: The provision was not applied in 1986 because there was no premium increase that year.

B. Policy for effect on subsequent monthly benefit computations

The change in the law permitting the variable SMI premium does not affect the computation of the Monthly Benefit Payable (MBP) of the beneficiary. If a change in benefit amount occurs for a month after December (e.g., recomputation, change in family composition), the variable SMI premium is unchanged. The new MBP and MBC are calculated based on the variable SMI premium established for that calendar year.

C. Reference

HI 01001.004, Variable Supplementary Medical Insurance (VSMI) Premium.