TN 29 (08-99)

A. Background

Under Section 4453 of P.L. 105-33, former State and local government employees who are age 65 or older, entitled to Premium-HI and who meet other requirements are eligible to have their Hospital Insurance (HI) premium reduced to zero. This provision also applies to spouses, divorced spouses and widows(ers) of former State or local government employees.

B. Policy — Eligibility requirements

1. All aged HI enrollees:

• must be currently entitled to and have been entitled to premium-HI for all months in the previous 7-year period (84 months); and

• have not had the HI premium subsidized (in whole or in part) by a State (including payment under a Medicaid State buy-in agreement), a political subdivision of a State, or an agency or instrumentality of one or more States or political subdivisions, for any month in the previous 7-year period.

2. Additional requirements for State or local government employees:

• must have received cash payments in the last month of the 7-year period under a qualified State or local government retirement system based on his/her own earnings record; and

• must be in a retirement system which does not adjust cash retirement benefits due to eligibility for a reduction in the HI premium; and

• would have 40 quarters of coverage (QCs) under title II if State and local government employment were considered Medicare qualified government employment (MQGE), or would have 40 QCs based on a combination of State and local government employment considered to be MQGE and non-government employment (i.e., MQGE and regular SSQCs).

3. Requirements for Spouses, Divorced Spouses and Widows(ers)

In addition to HI 00801.135B.1., the spouse, divorced spouse or widow(er) must also meet the following requirements:

• has been married for at least 1-year to an individual who meets the requirements in HI 00801.135B.2.; or

• was married for at least 1-year to a deceased individual who met the requirements in HI 00801.135B.2. at the time of death; or

• is divorced, after at least 10 years of marriage, from an individual who met the requirements in HI 00801.135B.2. at the time of the divorce.

4. Alternate requirement for Spouses, Divorced Spouses and Widows(ers)

When the spouse, divorced spouse or widow(er) is (or was) married to an individual who is (or was) receiving cash benefits under a qualified State or local government retirement system, but the individual does not meet the 40 QC requirement, the spouse, divorced spouse or widow(er) meets this requirement if he/she has 40 QCs based on his/her own E/R (using the same criteria given in the third bullet in HI 00801.135B.2.).

C. Definition — Qualified State or local government retirement system

For the purposes of this provision, a “qualified State or local government retirement system” is a retirement system that:

• is established or maintained by a State or political subdivision of a State, or an agency or instrumentality of one or more States or political subdivisions; and

• covers positions of some or all of its employees; and

• does not adjust cash retirement benefits based on eligibility for premium reduction.

D. Policy — Quarters of Coverage

State and local government employees who were hired prior to April 1986, and who were not covered under a voluntary Social Security agreement under section 218 of the Act, did not have FICA taxes withheld from their earnings. Thus, State and local government earnings could not be used to insure them for title II benefits or for premium-free Part A.

Under section 4453 of P.L. 105-33, an individual who performed service in State or local government employment may receive credit for wages for premium-HI reduction purposes if the State or local government employment were to be considered as MQGE. (See HI 00801.400 and RS 01401.010.)

E. Policy — Effective date of HI premium reduction

The HI premium will be reduced to zero effective with the first month after December 1997, in which the HI enrollee meets all of the eligibility requirements.

Months prior to January 1998, may be used to satisfy the 84-month premium-HI entitlement requirement.

F. Process — Selection of potentially eligible enrollees

Quarterly selections will be done for enrollees who have been entitled to Premium-HI for at least 81 months. These beneficiaries will be notified by letter about the potential reduction of their HI premium (see Exhibit A). The letter explains the eligibility requirements and advises enrollees to contact Social Security if they believe they qualify for free HI. The letter also advises them that the HI premium must be paid until they are notified in writing that the HI coverage is free.

G. Process — Form CMS-R285 - Request for retirement benefit information

The pension plan or former employer is required to provide the basic pension information needed to determine eligibility for the HI premium reduction to zero. The form CMS-R285 (see Exhibit B) is a locally reproducible form which will be used to solicit this information.

H. Inquiries — FOs, PSCs/SPIKEs, TSCs

1. If an individual contacts SSA after receiving a letter, send or give him or her form CMS-R285 with a courtesy return envelope addressed to the servicing field office. Advise the individual that the form should be completed by the pension plan or former employer and returned to the servicing field office.

2. If an individual who did not receive a letter contacts SSA about this provision, check the MBR and calculate the number of months he/she has been paying HI premiums. If the individual has paid HI premiums for the past 81 months or more, send or give him/her form CMS-R285 with a courtesy return envelope addressed to the servicing field office. Advise the individual that the form should be completed by the pension plan or former employer and returned to the servicing field office.

   If the individual has paid HI premiums for less than 81 months, inform him or her that a letter will be sent shortly before the 7-year Premium-HI entitlement requirement is met.

3. If an enrollee asks about premiums previously paid, explain that a refund will be made for any month (beginning January 1998, or later) that he or she should have had the premium reduced to zero. Also tell the beneficiary that when the HI premium is reduced to zero, he/she will be billed for Part B premiums every 3 months instead of monthly.

IMPORTANT NOTE: Individuals should be advised to continue to pay their HI premiums until they are notified by SSA that the premium has been reduced to zero.

I. Procedure — Verifying eligibility for reduction

Field offices will use the information from the pension plan or former employer to determine if enrollees meet the necessary requirements to have their HI premium reduced to zero. If necessary, use direct contact with the pension plan or former employer to clarify information on the CMS-R285. Record the information received from the pension plan or former employer on a form SSA-5002 (Report of Contact).

1. NH

• Verify that the NH would have at least 40 QCs if his/her State and local government employment were considered MQGE, or he/she would have 40 QCs considered to be MQGE based on a combination of State and local government employment and non-government employment (i.e., MQGE and regular SSQCs); and

• he/she is currently entitled to and has been entitled to Premium-HI for all months in the previous 7-year (84 month) period; and

• the State or local government entity has not subsidized all or part of the HI premium (including State buy-in) for any month during the prior 7 year period; and

• he/she received cash payments in the last month of the 7 year period under a qualified State or local government retirement system based on his/her own E/R; and

• the retirement system does not adjust cash retirement benefits due to eligibility for a reduction in the HI premium.

2. Spouse

• Verify that the spouse is currently entitled to and has been entitled to Premium-HI for all months in the previous 7 year (84 month) period; and

• the State or local government entity has not subsidized all or part of the HI premium (including State buy-in) for any month during the prior 7 year period; and

• proof of marriage; and

• the NH has at least 40 QCs (as determined in HI 00801.135B.2.) or the spouse has 40 QCs on his/her own E/R (as determined in HI 00801.135B.4.).

3. Widow(er)

• Verify that the widow(er) has been entitled to premium-HI for all months in the previous 7-year (84 months) period; and

• the State or local government entity has not subsidized all or part of the HI premium (including State buy-in) for any month during the prior 7-year period; and

• proof of marriage; and

• proof of death for the NH; and

• the NH had at least 40 QCs (as determined in HI 00801.135B.2.) or the widow(er) has 40 QCs on his/her own E/R (as determined in HI 00801.135B.4.).

4. Divorced Spouse

• Verify that the divorced spouse has been entitled to premium-HI for all months in the previous 7-year period (84 months); and

• the State or local government entity has not subsidized all or part of the HI premium (including State buy-in) for any month during the prior 7-year period; and

• proof of marriage and divorce; and

• proof of death for the NH (if the premium-HI enrollee is a surviving divorced spouse); and

• the NH had at least 40 QCs (as determined in HI 00801.135B.2.) at the time the divorce occurred or the divorced spouse has 40 QCs on his/her own E/R (as determined in HI 00801.135B.4.).

J. Procedure — Field Office action after verifying eligibility

1. Beneficiary meets all eligibility requirements—Forward the documentation to the appropriate PSC under cover of an SSA-3601. Annotate the SSA-3601 in red: “HI Premium Reduced to Zero Case”.

2. Beneficiary does not meet eligibility requirements — Issue a denial notice (see Exhibit C) and annotate the MBR Special Message field with the denial reason.

K. Procedure — PSCs

PSCs will take the following action when a HI premium reduction to zero determination is received.

Note: If a form CMS-R285 is inadvertently sent to a PSC without a FO determination, the PSC should take the necessary action to award or deny free HI. If necessary, use direct contact with the pension plan or former employer to clarify information on the form CMS-R285. Record the information received from the pension plan or former employer on a form SSA-5002 (Report of Contact).

1. BIC M

Process an entitlement conversion action (M-to-T) in accordance with procedures in SM 00850.755 and send the appropriate notice (see Exhibit D).

After the entitlement conversion action is processed, input a CMS-1592 (RIC 5) to change the Part B billing cycle from monthly to quarterly premium billing.

The MACADE conversion action will change the HI-PDA to zero on the Direct Billing record. Any HI plus amount (overage) or minus amount (arrearage) must be manually resolved:

• HI-PDA PLUS AMOUNT:

Refund the excess HI-PDA using an AA entry on an OCOA-. Prepare an SSA-666 to adjust trust funds.

• HI-PDA MINUS AMOUNT:

Enclose a premium bill for the balance due with the notice. After the MACADE action processes, prepare a CMS-1592 (RIC D) to record the minus HI-PDA amount to the Direct Billing record.

2. Totalized Beneficiary (BIC is other than M)

• Obtain the HI-PDA from the Direct Billing record

• Summarize one line of history in the RID 5

• Code the following RID 6 entries:
  HI-TERM date equal to the START date for premium-free HI
  HI NON COVER RSN - Q

• Establish an occurrence of premium-free HI by coding:
  HI START date (the first month of premium-free HI)
  HI-BASIS code - A
  HI TYPE - F

The MACADE action will change the HI-PDA to zero on the Direct Billing record. Any HI plus amount (overage) or minus amount (arrearage) must be manually resolved:

HI-PDA PLUS AMOUNT:

• Summarize the HI-PDA amount with an AA entry. Prepare an SSA-666 to adjust trust funds.

HI-PDA MINUS AMOUNT:

• Beneficiary’s LAF= C — summarize the HI-PDA with an SU entry. Prepare an SSA-666 to adjust trust funds.

• Beneficiary’s LAF= S or D — enclose a premium bill for the balance due with the notice. Prepare a CMS-1592 (RIC D) to record the minus HI-PDA to the Direct Billing record after the MACADE action processes.

If the LAF is other than C, prepare a CMS-1592 (RIC 5) to change the Part B billing cycle from monthly to quarterly premium billing.

L. Exhibits

EXHIBIT A — NOTICE OF POTENTIAL ELIGIBILITY

Dear Medicare Beneficiary:

If you are a former State, city, county or local government employee; or the spouse, divorced spouse or widow/widower of a former State, city, county or local government employee, please read the information below. All others should disregard this notice.

You may qualify for free Medicare Part A (Hospital Insurance) if:

If you believe you qualify for free Part A, contact your local Social Security office. If you visit an office, please take this letter with you. If you need the address of the nearest Social Security office or you have questions about this letter, you may call Social Security at 1-800-772-1213 for assistance.

NOTE: You must continue to pay your Part A premiums until you are notified in writing that your Part A coverage is free. This message does not apply to Part B (Medical Insurance).

EXHIBIT B - CMS-R285, REQUEST FOR EMPLOYMENT INFORMATION

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EXHIBIT C — DENIAL NOTICE

You asked us to determine if you qualify for premium-free Part A (Hospital Insurance) based on a new Medicare law. You do not qualify for premium-free Part A because of the reason(s) checked below:

If You Have Any Questions

If you have any questions about this letter, please call Social Security toll-free at 1-800-772-1213. You may write or visit Social Security at the address shown above. Please have this letter with you if you call or visit an office. It will help us answer your questions.

EXHIBIT D — AWARD NOTICE

A new provision was added to the Medicare law that allows certain Medicare beneficiaries who are entitled to premium Part A (Hospital Insurance) to qualify for premium-free Part A. This law is effective for premiums payable January 1998 and later.

You qualify for premium-free Medicare Part A beginning            .

We will send you a refund of any Part A premiums you paid beginning             .

You will now be billed for Medicare Part B premiums only. You will be billed quarterly instead of monthly.

If You Have Questions

If you have any questions about this letter, please call Social Security at 1-800-772-1213. You may also write or visit us at the address shown above. Please have this letter with you if you call or visit an office. It will help us answer your questions.