Medicare General Information, Eligibility, 
and Entitlement 
Chapter 2 - Hospital Insurance and Supplementary 
Medical Insurance 
 
Table of Contents 
(Rev. 11764, 12-22-22) 
 
 
Transmittals for Chapter 2 
 
10 - Hospital Insurance Entitlement 
10.1 - Insured Status 
10.2 - Hospital Insurance for the Aged 
10.3 - Hospital Insurance for Disability Beneficiaries 
10.4 - Hospital Insurance for Persons Needing Kidney Transplant or Dialysis  
10.4.1 - Effective Date of Entitlement for Persons on Dialysis 
10.4.2 - Entitlement Based on Transplant 
10.4.3 - Effect on Self-dialysis Training on Entitlement 
10.4.4 - End of Coverage Based on ESRD 
10.4.5 - Reentitlement for Beneficiaries with ESRD 
20 - Hospital Insurance Obtained by Premium Payment 
20.1 - Eligibility Requirements 
20.2 - Premiums for Hospital Insurance 
                        20.2.1 - Premiums Paid by Other Than Enrollee 
                                     20.2.1.1 - Part A Buy-in States 
                         20.2.1.2 - Part A Group Payer States 
20.3 - Beginning of Coverage 
20.3.1 - Initial Enrollment Period (IEP) 
20.3.2 - General Enrollment Period (GEP) 
30 - End of Coverage for Hospital Insurance 
40 - Supplementary Medical Insurance (SMI) 
40.1 - Eligibility for Enrollment 
40.2 - Automatic Enrollment in SMI 
40.3 - Enrollment Periods 
40.3.1 - Enrollment During the Individual's Initial Enrollment Period  40.3.2 - Enrollment During General Enrollment Period 
40.3.3 - Enrollment During the Individual's Special Enrollment Period 
40.4 - Nature and Purpose of State Buy-in 
40.5 - End of Coverage 
40.6 - Termination and Reenrollment 
40.7 - Premiums 
40.7.1 - Amount of Premiums 
40.7.2 - Increase in Base Premium Amount 
40.7.3 - Collection of Premiums 
40.7.4 - Grace Period for Payment 
40.7.5 - Payment After Grace Period Applies 
40.7.6 - Premiums Paid by Other Than the Enrollee 
40.7.6.1 - Informal Arrangement 
40.7.6.2 - Premium Payer 
40.7.6.3 - Formal Group Arrangement 
40.7.6.4 - Premium Surcharge Payment 
40.7.7 - Premiums Under Buy-In 
40.8 - Waiver of Enrollment Period Requirements Due to Administrative Error 
            40.9 - Extended Coverage for Part B Immunosuppressive Drugs (PB-ID) 
           40.9.1 - Part B-ID Eligibility Requirements 
40.9.2 - Other Health Coverage Making an Individual Ineligible for Part                                
B-ID 
           40.9.3 - Effective Date of Entitlement to Part B-ID 
           40.9.4 - Initial Enrollment & Reenrollment in Part B-ID 
           40.9.5 - Procedure for Enrolling in Part B-ID 
           40.9.6 - Termination of Part B-ID 
           40.9.7 - Part B-ID Premiums 
           40.9.8 - Procedure for Termination of Part B-ID 
           40.9.9 - Medicare Savings Programs for Part B-ID Premiums 
50 - Identifying the Patient's Health Insurance Record Using the Medicare Card 
50.1 - Medicare Beneficiary Identifier (Mbi) 
60 - Medicare Part C, Medicare+Choice 
  10 - Hospital Insurance Entitlement 
(Rev. 1, 09-11-02) 
 
Hospital insurance (HI), as well as supplementary medical insurance (SMI), is available 
to three basic groups of "insured individuals"- the aged, the disabled, and those with end 
stage renal disease.  Following is an explanation of how an individual becomes "insured" 
as well as an explanation of the eligibility requirements for each group. 
 
10.1 - Insured Status 
(Rev. 1, 09-11-02) 
 
To be eligible for premium-free HI, an individual must be "insured" based on his or her 
own earnings or those of a spouse, parent, or child.  To be insured, the worker must have 
a specific number of quarters of coverage (QCs); the exact number required is dependent 
upon whether the person is filing for HI on the basis of age, disability, or end stage renal 
disease. QCs are earned through payment of payroll taxes under the Federal Insurance 
Contributions Act (FICA) during the person's working years.  QCs earned by an 
individual who pays the full FICA tax are usable to insure the person for both monthly 
social security benefits and HI. 
 
Federal employees were exempt from payment of FICA taxes prior to January 1983.  
However, beginning in January 1983, Federal employees became subject to the HI 
portion of the FICA tax (those actually employed in January 1983 were also deemed to 
have earned HI quarters of coverage for their Federal service prior to January 1983).  
Also, Government employees who pay only the HI portion of the FICA tax are only 
insured for HI; they are not insured for monthly social security benefits. 
 
State and local Government employees hired after March 31, 1986, are eligible for 
Medicare coverage and must pay the HI portion of the FICA tax.  A State may elect to 
cover employees hired prior to April 1986 for the Medicare portion of the FICA tax by 
requesting an agreement or modification of its existing agreement under section 218 of 
the Social Security Act. 
 
10.2 - Hospital Insurance for the Aged 
(Rev. 1, 09-11-02) 
 
To be eligible for HI on the basis of age, a person must be age 65 or older and either 
eligible for monthly social security or railroad retirement cash benefits, or would be 
eligible for such benefits if the worker's Government QCs were regular social security 
QCs.  An individual who is insured for monthly benefits need not actually file for 
benefits to receive HI benefits.  If such a person continues to work beyond age 65, he or 
she may instead elect to file an application for HI only. 
 
Premium-free HI for the aged begins with the month in which the individual attains age 
65, provided he or she files an application for HI or for cash benefits and HI within 6 
months of the month in which he or she attains age 65.  If the application is filed later  than that, HI entitlement can be retroactive for only 6 months.  An individual attains age 
65 on the day before his or her 65th birthday.  For example, if an individual is born on 
August 1, the attainment date is July 31, and HI begins with July 1.  Entitlement 
generally does not end until death. 
 
10.3 - Hospital Insurance for Disability Beneficiaries 
(Rev. 1, 09-11-02) 
 
A disabled person who is entitled to social security or railroad retirement benefits on the 
basis of disability is automatically entitled to HI after 24 months of entitlement to such 
benefits.  Since there is a 5-month disability benefits waiting period, the person actually 
becomes entitled to HI after being disabled for 29 months. 
 
In addition, disabled persons who are not insured for monthly Social Security disability 
benefits but would be insured for such benefits if Government QCs were treated as social 
security QCs, are deemed to be entitled to disability benefits and automatically entitled to 
HI after being disabled for 29 months. 
 
The months in the Medicare qualifying period need not be consecutive so that months 
from a previous period of disability benefit entitlement generally may be counted in 
determining when the qualifying period requirement is met.  HI entitlement on the basis 
of disability is available not only to the worker, but to the widow, widower, or child of a 
deceased, disabled, or retired worker if any of them become disabled within the meaning 
of the Social Security or Railroad Retirement Acts. 
 
If an individual recovers from a disability, HI entitlement ends with the month after the 
month he or she is notified of the disability termination.  For example, if notification is 
November 15, entitlement ends December 31.  However, if the individual's disability 
benefit entitlement ends only because he or she was working, HI entitlement may 
continue for up to 78 additional months. 
 
10.4 - Hospital Insurance for Persons Needing Kidney Transplant or 
Dialysis 
(Rev. 1, 09-11-02) 
 
Individuals of any age with end stage renal disease (ESRD) who receive dialysis on a 
regular basis or a kidney transplant are eligible for HI (and are deemed enrolled for 
Supplementary Medical Insurance (SMI) unless such coverage is refused) if they file an 
application.  They must also meet certain work requirements for insured status under the 
social security or railroad retirement programs, or be entitled to monthly social security 
benefits or an annuity under the Railroad Retirement Act, or be the spouse or dependent 
child of an insured or entitled person. 
 
10.4.1 - Effective Date of Entitlement for Persons on Dialysis 
(Rev. 1, 09-11-02) 
  Entitlement usually begins after a 3-month waiting period has been served, i.e., with the 
first day of the third month after the month in which a course of regular dialysis begins.  
Entitlement begins before the waiting period has expired if the individual receives a 
transplant or participates in a self-dialysis training program during the waiting period. 
 
10.4.2 - Entitlement Based on Transplant 
(Rev. 1, 09-11-02) 
 
Entitlement begins with the month the individual is admitted as an inpatient to a hospital 
for procedures in preparation for or in anticipation of a kidney transplant, provided the 
transplant surgery takes place within the following 2 months.  If the transplant is delayed 
more than 2 months after the preparatory hospitalization, entitlement begins with the 
second month prior to the month of transplant.  Under the Medicare, Medicaid, and State 
Children's Health Insurance Program (SCHIP) Benefits Improvement and Protection Act 
of 2000, Congress extended immunosuppressive drug benefits to lifetime, as long as the 
beneficiary is entitled to Medicare and was entitled to Medicare when his/her transplant 
took place. 
 
10.4.3 - Effect on Self-dialysis Training on Entitlement 
(Rev. 1, 09-11-02) 
 
Entitlement begins with the first month of the course of dialysis if the individual is 
expected to complete the self-dialysis training program and self-dialyze thereafter. 
 
10.4.4 - End of Coverage Based on ESRD 
(Rev. 1, 09-11-02) 
 
HI coverage based on ESRD ends with the earliest of the following dates: 
 
  The day an individual dies, 
 
  The last day of the 12th month after the month the course of dialysis is 
discontinued, unless the individual receives a kidney transplant during that period 
or begins another course of dialysis, or  
 
  The last day of the 36th month after the month the person receives a kidney 
transplant. 
 
10.4.5 - Reentitlement for Beneficiaries with ESRD 
(Rev. 1, 09-11-02) 
 
If a person whose entitlement based on ESRD has ended begins a new course of regular 
dialysis or has a kidney transplant, reentitlement begins without a waiting period. 
 
20 - Hospital Insurance Obtained by Premium Payment 
(Rev. 1, 09-11-02)   
20.1 - Eligibility Requirements 
(Rev. 1, 09-11-02) 
 
Individuals who want hospital insurance coverage but who are not otherwise eligible (i.e., 
do not qualify under either the regular or deemed insured provisions, in 10.1, 10.2, 
10.3, 10.4 in this chapter) may obtain such coverage by enrolling timely, paying a 
monthly premium, and upon meeting the following three requirements: 
 
  Attaining age 65, 
 
  Enrolling or already having enrolled in the SMI program, 
 
  Being a resident of the U.S., and either: 
 
  A citizen, or  
o
 
  An alien lawfully admitted for permanent residence who has resided 
o
continuously in the U.S. for the 5 years prior to the month of enrollment. 
 
20.2 - Premiums for Hospital Insurance 
(Rev. 1, 09-11-02) 
 
Each year, the Secretary of the Department of Health and Human Services announces the 
amount of the hospital insurance premium payable for each month in the following 
calendar year.  The applicable premium amount is 33/76 (about 43.4 percent) of the 
hospital insurance deductible for that calendar year.  The premium is rounded to the 
nearest $1.  An individual who is not entitled to free Part A and wishes this type of 
coverage must enroll him/herself during the appropriate enrollment period.  A premium is 
due for each month of entitlement under Premium HI. 
 
20.2.1 - Premiums Paid by Other Than the Enrollee  
(Rev. 11764; Issued 12-22-22; Implementation: 01-01-2023; Effective 01-03-23) 
 
The following subsections describe Medicare Part A premiums paid by other than the 
enrollee. 
 
20.2.1.1 - Part A Buy-in States 
(Rev .11764; Issued 12-22-22; Implementation: 01-01-2023; Effective 01-03-23) 
 
States that include the payment of Medicare Part A premiums for Qualifying Medicare 
Beneficiaries (QMBs) in their state buy-in agreements are known as Part A buy-in states. 
Individuals in Part A buy-in states can file for Premium Part A at any time, without 
regard to enrollment periods. Late enrollment penalties do not apply. Please see the 
Manual for State Payment of Medicare Premiums, chapter 1, sections 1.7 and 1.11 for 
additional information about Part A buy-in states.         20.2.1.2 - Part A Group Payer States 
(Rev. 11764; Issued 12-22-22; Implementation: 01-01-2023; Effective 01-03-23) 
 
States that do not include the payment of Medicare Part A premiums for QMBs in their 
state buy-in agreements are known as group payer states. To become entitled to Part A, 
individuals in group payer states can file for premium Part A during their Initial 
Enrollment Period (IEP) or the General Enrollment Period (GEP). Part A premiums and 
any applicable late enrollment penalties are paid under a group payer arrangement. 
Please see the Manual for State Payment of Medicare Premiums, chapter 1, section 1.7 
and 1.11 for additional information about Part A group payer states.  
 
 
20.3 - Beginning of Coverage 
(Rev. 1, 09-11-02) 
 
20.3.1 - Initial Enrollment Period (IEP) 
(Rev. 1, 09-11-02) 
 
Persons may enroll for premium hospital insurance by filing a request during the IEP 
which begins the third month before the month of first eligibility and lasts for 7 months.  
The individual's IEP for premium hospital insurance is in most cases the same 7-month 
period as the IEP for SMI. 
 
The individual may enroll for hospital insurance when he or she enrolls for SMI, or later 
during his or her IEP.  The beginning date of an individual's premium hospital insurance 
coverage period is determined by the rules applicable to SMI coverage based on an SMI 
enrollment during an IEP.  (See chapter 2 40 in this chapter.) 
 
20.3.2 - General Enrollment Period (GEP) 
(Rev. 1, 09-11-02) 
 
Eligible persons who have not enrolled for premium hospital insurance during their IEP, 
or whose premium hospital insurance has been terminated, may enroll during a GEP 
(January 1 - March 31 of each year) if they are enrolling or have enrolled for SMI.  As 
with SMI, an eligible person who enrolls for hospital insurance during a GEP will have 
hospital insurance coverage beginning the following July. 
 
The same restrictions on enrollment and reenrollment apply as in the SMI program. 
Individuals who enroll late may pay a 10 percent premium penalty. 
 
30 - End of Coverage for Hospital Insurance 
(Rev. 1, 09-11-02) 
 
A beneficiary's entitlement under the provision terminates: 
    With the month of the individual's death, 
 
  With the last day of the third month following the premium billing month (for 
nonpayment of premiums), 
 
  With the end of the month following the month in which he or she files a 
voluntary request for termination, 
 
  With the month SMI coverage is terminated, or  
 
  With the month before the month in which he or she becomes entitled to hospital 
insurance under the regular or ESRD provisions.  (See 2, 10.4 of this chapter.) 
 
40 - Supplementary Medical Insurance (SMI) 
(Rev. 1, 09-11-02) 
 
Unlike the HI benefits program, which is largely financed by compulsory taxes on 
employers, employees, and the self-employed, the SMI benefits program is a voluntary 
program financed from premium payments by enrollees, together with contributions from 
funds appropriated by the Federal Government, and certain deductible and cost-sharing 
provisions. 
 
40.1 - Eligibility for Enrollment 
(Rev. 1, 09-11-02) 
 
To obtain SMI coverage, eligible individuals must enroll in the plan during an enrollment 
period open to them and pay the required premiums.  They are eligible to enroll if they 
are entitled to premium-free HI, or are age 65 and resident citizens or resident aliens.  To 
qualify as a resident alien, an individual must have been lawfully admitted for permanent 
residence and have resided continuously in the United States during the 5 years 
immediately preceding the month of enrollment. 
 
40.2 - Automatic Enrollment in SMI 
(Rev. 1, 09-11-02) 
 
Beneficiaries (except those residing in foreign countries or Puerto Rico) are deemed to 
have enrolled in SMI in the month before the month for which they are entitled to HI so 
that HI and SMI coverage start in the same month.  Thus, monthly beneficiaries other 
than disability beneficiaries are deemed to enroll in the month before attainment of age 
65.  Disability beneficiaries are deemed to enroll in the 24th consecutive month of 
entitlement to disability benefits. 
 
Every potential "deemed" enrollee is given a reasonable opportunity (at least 2 months) to 
decline SMI enrollment by filing notice to this effect.  He or she is deemed not to have 
enrolled and does not incur any premium liability.  A refusal of SMI not timely filed is  treated as a request for voluntary termination under existing disenrollment rules once it 
has been established that the individual does not wish to have SMI. 
 
40.3 - Enrollment Periods 
(Rev. 1, 09-11-02) 
 
Enrollment is possible only during specified enrollment periods: 
 
  An individual's initial enrollment period is of 7 months duration.  It begins 3 full 
calendar months before and ends 3 full calendar months after the month in which 
the individual first meets all the requirements for enrollment. 
 
  A general enrollment period occurs each year from January 1 through March 31. 
Coverage is effective the following July 1.  These periods afford enrollment 
opportunities to those who failed to enroll during their initial enrollment periods 
and to those whose enrollment has terminated. 
 
  A special enrollment period (SEP) is available, effective November 1984, for 
individuals age 65 or over who did not enroll in SMI when first eligible (or who 
terminated SMI enrollment because of coverage under a group health plan (GHP) 
based on their own or a spouse's current employment status).  These individuals 
may enroll in SMI anytime while covered under the GHP or during the 8-month 
period immediately following the last month of GHP coverage based on current 
employment status. 
 
  An SEP also became available, effective January 1987, for disabled beneficiaries 
under age 65 who did not enroll in SMI when first eligible (or who terminated 
SMI enrollment because of coverage under a GHP or a large group health plan 
(LGHP) based on their own or a family member's current employment status.  
These individuals may also enroll in SMI anytime while covered under the 
GHP/LGHP or during the 8-month period immediately following the last month 
of GHP/LGHP coverage based on current employment status. 
 
  There is no SEP for individuals who have ESRD.  This includes individuals who 
are dually entitled to Medicare based on ESRD and age or disability. 
 
40.3.1 - Enrollment During the Individual's Initial Enrollment Period 
(Rev. 1, 09-11-02) 
 
Coverage begins on the first day of: 
 
  The month in which the individual first becomes eligible for SMI if enrollment 
takes place during the first 3 months of the initial enrollment period, 
 
  The month following the month of enrollment if enrollment occurs during the 
fourth month of the initial enrollment period,   
  The second month following the month of enrollment if enrollment occurs during 
the fifth month of the initial enrollment period, or  
 
  The third month following the month of enrollment if enrollment occurs during 
the sixth or seventh month of the initial enrollment period. 
 
40.3.2 - Enrollment During General Enrollment Period 
(Rev. 1, 09-11-02) 
 
Coverage begins the following July 1. 
 
40.3.3 - Enrollment During the Individual's Special Enrollment Period 
(Rev. 1, 09-11-02) 
 
If an individual enrolls in SMI or premium HI while still covered under a GHP or LGHP 
or during the first full month when not enrolled in a GHP/LGHP based on current 
employment status, coverage begins either with: 
 
  The first day of the month of SMI or premium HI enrollment, or  
 
  At the individual's option, with the first day of any of the following 3 months. 
 
If the individual enrolls during any of the 7 remaining months of the special enrollment 
period, coverage begins with the first day of the month following the month of 
enrollment. 
 
40.4 - Nature and Purpose of State Buy-in 
(Rev. 11764; Issued 12-22-22; Implementation: 01-01-2023; Effective 01-03-23) 
 
Under the State Buy-in program, states, the District of Columbia, and the U.S. territories 
may enter into buy-in agreements with CMS to enroll certain individuals who are dually 
eligible for Medicare and Medicaid into Medicare Part B and pay the premiums on their 
behalf.  
 
Most states have expanded their buy-in agreements to also include payments of Part A 
premiums for individuals who must pay a premium to enroll in Medicare Part A and who 
are eligible for the Qualified Medicare Beneficiary (QMB) eligibility group. State buy-in 
agreements maximize the number of full-benefit Medicaid recipients enrolled in 
Medicare, which ensures that Medicare pays primary to Medicaid. State buy-in 
agreements also facilitate enrollment in Medicare for low income individuals who are not 
eligible for full-benefit Medicaid coverage by paying Medicare premiums and cost 
sharing. Please see the Manual for State Payment of Medicare Premiums, chapter 1, 
section 1.2 for additional state buy-in information.  
 
  40.5 - End of Coverage 
(Rev. 1, 09-11-02) 
 
An individual may notify CMS in writing, at any time, that he or she no longer wishes to 
participate in the supplementary medical insurance plan.  Termination of coverage takes 
effect at the close of the calendar month following the calendar month in which the 
request for termination was filed. 
 
Enrollment under medical insurance is terminated because of nonpayment of premiums.  
Termination is effective with the end of the grace period provided for payment of 
premiums.  (See chapter 2, 40.7.4 of this manual.) 
 
For individuals under age 65, enrollment is terminated because HI entitlement ended.  
SMI terminates at the same time as HI. 
 
If not terminated sooner, coverage ends with the beneficiary's death. 
 
40.6 - Termination and Reenrollment 
(Rev. 1, 09-11-02) 
 
An individual whose enrollment has terminated may reenroll only in a general enrollment 
period or a special enrollment period if the requirements are met. 
 
40.7  Premiums 
(Rev. 1, 09-11-02) 
 
A premium is due for each month of entitlement under SMI.  The SMI premium covers 
about one-fourth of the cost of the Part B program. 
 
40.7.1 - Amount of Premiums 
(Rev. 1, 09-11-02) 
 
In the third quarter of each calendar year, the Secretary of the Department of Health and 
Human Services announces the base premium for SMI coverage that is payable as of the 
following January 1.  The SMI premium is the same for all enrollees even though the cost 
to the program is greater for ESRD enrollees and the disabled than it is for the aged.  The 
SMI premium is refigured each year and is based on the lower of one-half of SMI 
program costs per aged enrollee or the general percentage by which social security 
benefits were increased during the calendar year in which the announcement occurs.  
(During the 5-year period, January 1984 through December 1988, the formula for 
computing the SMI premium has been modified to provide that the Part B premium 
reflects exactly one-fourth of the cost of the Part B program.  Beginning with the 
premium announced for the period beginning January 1989, however, the method of 
computing the SMI premium reverts back to the pre-January 1984 rules.) 
 
40.7.2 - Increase in Base Premium Amount  (Rev. 1, 09-11-02) 
 
The base premium that is announced by the Secretary is paid by most enrollees.  
However, it is increased for those who enroll late or reenroll after a prior termination of 
entitlement.  The amount of the increase is 10 percent of the base rate for each full 12-
month period during which the individual could have been but was not enrolled in the 
program.  However, months in which an individual has GHP coverage based on current 
employment status are not counted as months in which the individual "could have been, 
but was not enrolled."  This exception does not apply to individuals who are entitled to 
Medicare on the basis of ESRD. 
 
40.7.3 - Collection of Premiums 
(Rev. 1, 09-11-02) 
 
SMI premiums are collected from benefits payable (in order of priority) by the Railroad 
Retirement Board, SSA, or Office of Personnel Management (Civil Service) unless the 
individual is covered under a State buy-in agreement.  If the individual is entitled to such 
benefits but the payments are in suspense, e.g., due to work deductions, he or she is billed 
for the amounts due.  Uninsured beneficiaries are also billed directly for the premiums 
due. 
 
Premium bills are sent every 3 months unless the individual specifically requests a 
monthly bill or is also entitled to Premium - HI (in which case a monthly combined SMI-
Premium-HI bill is sent). 
 
40.7.4 - Grace Period for Payment 
(Rev. 1, 09-11-02) 
 
A grace period has been provided for payment of premiums by those who are billed 
directly.  The period extends for 90 days after the month in which the bill is mailed.  If 
the premiums are not received in that prescribed time, entitlement terminates at the end of 
the grace period.  This 90-day grace period for paying overdue SMI premiums and 
continuing SMI coverage may be extended by CMS for good cause for up to an 
additional 90 days.  Good cause, for example, is found if the enrollee was mentally or 
physically incapable of paying his or her premiums timely, or had some reasonable basis 
to believe that payment had been made, or the failure to pay was due to administrative 
error. 
 
40.7.5 - Payment After Grace Period Applies 
(Rev. 1, 09-11-02) 
 
If an extension to the grace period (additional 90 days; a total not to exceed 180 days) has 
been granted, an enrollee may retain SMI entitlement by paying all past due premiums if 
there was a good cause for his/her failure to pay premiums within the initial grace period. 
 
40.7.6 - Premiums Paid by Other Than the Enrollee  (Rev. 1, 09-11-02) 
 
The following subsections describe premiums paid by other than the enrollee. 
 
40.7.6.1 - Informal Arrangement 
(Rev. 1, 09-11-02) 
 
Enrollees who are being billed directly for Medicare premiums may turn over their 
premium bills to a friend, relative, employer lodge, union or other organization to pay 
premiums on their behalf.  The third party payer forwards the proper amount of payment 
for each enrollee to CMS's Premium Collection Center.  Enrollees participating in this 
type of informal arrangement continue to receive their premium notice (Form CMS-500), 
and remain responsible for assuring that premiums paid on their behalf are paid timely in 
order to avoid termination of Medicare coverage. 
 
40.7.6.2 - Premium Payer 
(Rev. 1, 09-11-02) 
 
Individuals may be designated as the premium payer for an enrollee and receive the 
enrollee's premium bills, if it is judged to be in the enrollee's best interest (e.g., the 
enrollee is competent, but too physically ill or infirm to be able to handle such matters).  
The individual receiving the premium bill must be a relative or friend showing personal 
interest in the welfare of the enrollee. 
 
40.7.6.3 - Formal Group Arrangement 
(Rev. 1, 09-11-02) 
 
Employers, religious orders, lodges, unions or other organizations may enter into a 
formal agreement with CMS in order to receive a single bill and pay a lump sum for the 
premiums due from a group of individuals.  Group payments under a formal group 
agreement may be made only on behalf of individuals who are already enrolled and are 
being billed for direct remittance.  This type of arrangement is referred to as a "Formal 
Group Payer" arrangement.  While included in a formal group payer arrangement, 
enrollees will no longer receive a premium notice (Form CMS-500).  This arrangement is 
available only where the number of enrollees in the group is large enough to make it 
practicable to send one bill to the group payer and where the following conditions are 
also met: 
 
  Enrollees included under the formal group arrangement are directly billed for 
their premium, and are not having his/her premiums deducted from a Social 
Security, Railroad Retirement, or Civil Service benefit, or, are not having 
premiums paid by a State Medicaid agency under a State buy-in agreement; 
 
  The enrollee authorizes the formal group payer to pay premiums on his/her 
behalf; 
    The formal group payer has a minimum of 20 enrollees; and  
 
  The formal group payer agrees to submit premium payments via electronic funds 
transfer. 
 
If the formal group payer agreement is terminated, or if the group payer alerts CMS to 
remove an individual from the group payer arrangement, CMS will resume collection of 
premiums from the individual through the direct billing process. 
 
40.7.6.4 - Premium Surcharge Payment 
(Rev. 1, 09-11-02) 
 
States or local Governments may pay a lump sum for the total amount of the SMI late 
enrollment premium surcharge for a group of individuals.  In order to pay the premium 
surcharge, States or local Governmental entities are required to enter into a formal 
agreement with CMS.  An individual is not billed for the premium surcharge portion of 
his/her SMI premium while under a premium surcharge agreement, however, he/she is 
billed for the base premium amount.  If the enrollee is receiving a Social Security, 
Railroad Retirement, or Civil Service annuity, the agencies responsible for these 
programs will continue to withhold the base premium amount from the annuity.  
Enrollees who are billed directly for premiums will continue to receive a premium bill for 
the base premium amount. 
 
The ultimate responsibility for paying premiums rests with the enrollees. 
 
40.7.7 - Premiums Under Buy-In 
(Rev. 11764; Issued 12-22-22; Implementation: 01-01-2023; Effective 01-03-23) 
 
States pay the Part B premiums for any eligible individual specified in the states buy-in 
agreement. Under buy-in agreements, states can enroll individuals in Part B at any time 
without regard to Medicare enrollment periods or late enrollment penalties. Please see 
the Manual for State Payment of Medicare Premiums, chapter 1, section 1.4 for 
additional information about state payment of premiums under a buy-in agreement. 
 
40.8 - Waiver of Enrollment Period Requirements Due to 
Administrative Error 
(Rev. 1, 09-11-02) 
 
CMS and SSA are authorized to take necessary action to correct an erroneous SMI or 
premium hospital insurance enrollment or nonenrollment which was based upon the 
action, inaction, or error of a Government officer, employee, or agent.  The action may 
include designating special individual enrollment periods and premium adjustments. 
 
For the purpose of this provision, an individual's enrollment or nonenrollment in SMI is 
considered to have been prejudiced and due to the "action, inaction, or error" of an  officer, employee, or agent of the Government, if there is an official record or other 
evidence showing that: 
 
  The individual took reasonable appropriate and timely measures to assert his or 
her rights, and  
 
  Due to administrative fault or other action, which may or may not have been 
erroneous at the time taken, his or her rights have been or are likely to be 
impaired unless relief is given. 
 
This authority applies to all Part B cases which have arisen since the Medicare program 
began on July 1, 1966.  It is applied to cases that come to CMS's or SSA's attention; 
however, MACs should not search their files. 
 
40.9 - Extended Coverage for Part B Immunosuppressive Drugs (PB-ID) 
(Rev. 11646; Issued:10-19-22; Effective:01-01-23; Implementation:01-03-23) 
 
The Consolidated Appropriations Act of 2021 amended section 1836(b) of the Social 
Security Act to add a new form of coverage that provides solely for coverage of 
immunosuppressive drugs beginning January 1, 2023, for eligible individuals whose 
entitlement to Medicare based on End-Stage Renal Disease (ESRD) ends the 36th month 
after the month in which the individuals receive a successful kidney transplant.  
 
This new benefit is referred to as the Part B immunosuppressive drug benefit or Part B-
ID. 
 
Beneficiaries enrolled in Part B-ID will not be covered for any other Medicare benefit or 
for any items or services other than Part B Immunosuppressive Drugs. 
 
40.9.1 - Part B-ID Eligibility Requirements 
(Rev. 11764; Issued 12-22-22; Implementation: 01-01-2023; Effective 01-03-23) 
 
An individual is eligible for Part B-ID if he or she: 
 
1.  Is or was entitled to Medicare Part A based on ESRD that ends 36 months after a 
successful kidney transplant; and 
 
2.  Attests that he or she is not enrolled in other health coverage that would make 
them ineligible for Part B-ID, as outlined in section 40.9.2. Every individual 
enrolling in Part B-ID must: 
i.  Attest that they are not enrolled in other health coverage and do 
not expect to enroll in other coverage which would make them 
ineligible for Part B-ID; and 
ii.  Agree to notify SSA within 60 days of enrolling in other health 
coverage.   
  NOTE: An individual can inform SSA of other health coverage up 
to 6 months in advance  
 
40.9.2 - Other Health Coverage Making an Individual Ineligible for Part 
B-ID 
(Rev . 11764; Issued 12-22-22; Implementation: 01-01-2023; Effective 01-03-23) 
 
An individual who has other certain health coverage is not eligible for Part B-ID. Other 
health coverage includes: 
  Group Health Plans or Individual Health Plans;  
  Enrolled in the patient enrollment system of the Department of Veterans Affairs 
(VA) or otherwise eligible to receive immunosuppressive drugs from the VA; 
  TRICARE for Life; 
  Health Insurance Marketplace qualified health plans; and 
  Medicaid or State Childrens Health Insurance Program (CHIP) coverage that 
includes immunosuppressive drugs.  
 
40.9.3 - Effective Date of Entitlement to Part B-ID 
(Rev. 11646; Issued:10-19-22; Effective:01-01-23; Implementation:01-03-23) 
 
The effective date of an individuals eligibility for the Part B-ID benefit depends on 
when their entitlement to Medicare Part A based on ESRD ends and when they submit 
the attestation described in section 40.9.1 of this chapter.  
 
When an individuals Medicare Part A entitlement based on ESRD ends on or after 
January 1, 2023: 
  If they submit the attestation before the end of the 36th month after the 
month of the kidney transplant (i.e. before their Medicare Part A 
entitlement based on ESRD ends), Part B-ID begins effective at the start of 
the month after their Medicare Part A on the basis of ESRD ends.  
  
  If they submit the attestation after their Medicare Part A entitlement ends, 
Part B-ID begins at the start of the month following the month in which 
the attestation is submitted. 
 
When an individuals Medicare Part A entitlement based on ESRD ends prior to 
January 1, 2023: 
  If they submit the attestation to enroll from October 1, 2022 through 
December 31, 2022, Part B-ID begins effective January 1, 2023.  
  If they submit the attestation to enroll after December 31, 2022, Part B-ID 
begins the following month.  
 
 
  40.9.4 - Initial Enrollment & Reenrollment in Part B-ID 
(Rev. 11764; Issued 12-22-22; Implementation: 01-01-2023; Effective 01-03-23) 
 
There are no enrollment periods associated with Part B-ID. Therefore, eligible 
individuals can enroll at any time without regard to Medicare enrollment periods. The 
earliest date on which they may initially enroll depends on when their Medicare Part A 
entitlement based on ESRD ends, under the following two scenarios:  
 
1.  When an individuals Medicare Part A entitlement based on ESRD ends on or 
after January 1, 2023, they may enroll in Part B-ID any time after their Medicare 
Part A on the basis of ESRD entitlement ends.   
 
2.  When an individuals Medicare Part A entitlement based on ESRD ends prior to 
January 1, 2023, they may enroll in Part B-ID beginning October 1, 2022 and 
their coverage will start the later of January 2023 or the month after they enroll. 
 
Individuals who had previously enrolled in Part B-ID can reenroll at any time if they 
meet the eligibility requirements in section 40.9.1.  
 
NOTE: Late enrollment penalties are not applicable to Part B-ID enrollment. Additional 
information is outlined under subsection 40.9.7 (Part B-ID Premiums). 
 
40.9.5 - Procedure for Enrolling in Part B-ID 
(Rev. 11764; Issued 12-22-22; Implementation: 01-01-2023; Effective 01-03-23) 
Eligible individuals may enroll by: 
  1.  calling SSA at 1-877-465-0355 and providing an oral attestation, or  
2.  completing and filing the Application for Enrollment in Part B-ID. 
Immunosuppressive Drug Coverage Form CMS-10798 and mailing it to the 
following address:  
SOCIAL SECURITY ADMINISTRATION 
OFFICE OF CENTRAL OPERATIONS 
PO Box 32914 
BALTIMORE, MARYLAND 21298 
 
Note: The Office of Central Operations Office of Disability Operations teleservice 
center (ODO TSC) will only be handling the telephonic enrollments and PC 7 will 
process the enrollment for Part B-ID.  
 
40.9.6 - Termination of Part B-ID 
(Rev. 11646; Issued:10-19-22; Effective:01-01-23; Implementation:01-03-23) 
 
1.  Individuals enrolled in other health coverage are required to notify SSA 
and terminate Part B-ID  a.  When a Part B-ID covered individual notifies SSA that they have 
enrolled in other coverage, and if not otherwise specified, Part B-
ID terminates effective with the first day of the month following the 
month SSA receives the notification.   
 
b.  If the individual states that their other health insurance begins in 
the future, the individual may request a termination date up to 6 
months in the future.  
 
Example: If an individual enrolls in employer health coverage 
during an employers open enrollment period in October, for a 
January 1st effective date, the individual can submit their request 
for termination of the Part B-ID benefit in October or November, 
and not lose their Part B-ID benefit prior to the January 1st 
effective date. 
 
c.  When a state ends buy-in for Part B-ID because an individual 
gained full Medicaid eligibility that includes immunosuppressive 
drug coverage, the individual must report this new eligibility to 
SSA and terminate Part B-ID coverage. 
 
If a Part B-ID covered individual fails to notify SSA of their enrollment in 
other health coverage, including employer and Medicaid, Part B-ID will 
terminate effective the first day of the month after the month in which SSA 
discovers the individual has other health coverage.    
 
2.  Voluntary termination request  In general, Part B-ID terminates 
effective with the first day of the month following the month in which we 
receive the request. 
 
There is an exception to this general rule for individuals who had state 
payment of their Part B-ID premium under a Medicare Savings Program 
(as described in section 40.9.9) and who are notified by SSA that their 
state will no longer pay their Medicare Part B-ID premiums. For these 
individuals the following entitlement end dates apply: 
 
a.  If the individual files a voluntary termination request within 30 
days after the date of the notice that state payment of premiums 
will end or has ended, the individual's Part B-ID entitlement ends 
on the last day of the last month for which the state paid the 
premium. 
 
b.  If the individual files the voluntary termination request more than 
30 days but not more than 6 months after state payment of 
Medicare Part B-ID premiums ends, Part B-ID entitlement ends on 
the last day of the month in which the request is filed.   
c.  If the individual files the voluntary termination request later than 
the 6th month after state payment of Medicare Part B-ID premiums 
ends, entitlement ends at the end of the month after the month in 
which request is filed. 
 
We note that individuals who lose eligibility for state payment of Medicare Part B-ID 
premiums through a Medicare Savings Program will continue to be eligible for the Part 
B-ID benefit without interruption with the individual assuming responsibility for paying 
the Part B-ID premiums, unless they voluntarily terminate. The options for financial 
relief from Part B billing in SSAs Program Operations Manual System (POMS), section 
HI.00815.042, also apply for the Part B-ID coverage here. 
 
3.  Death - Entitlement to Part B-ID continues into the month of death, up to 
and including the date of death. 
 
4.  Non-payment of premiums  Part B-ID coverage will terminate for non-
payment of premiums following the same rules, including grace periods, 
used for Medicare Part B for monthly billing in sections 40.5 and 40.7.4 of 
this manual. Note that section 40.5 provides end of coverage information, 
and section 40.7.4 provides grace period payment information.    
 
5.  Individual becomes entitled to Medicare on another basis  In cases 
where a Part B-ID enrollee becomes eligible for Medicare based on age, 
disability, or ESRD, Part B-ID will terminate effective with the last day of 
the month prior to the month in which they become entitled on the other 
basis.  Equitable relief for retroactivity may apply. 
 
40.9.7 - Part B-ID Premiums 
(Rev. 11764; Issued 12-22-22; Implementation: 01-01-2023; Effective 01-03-23) 
 
Part B-ID premiums may be adjusted based on rounding, the income-related monthly 
adjusted amounts (IRMAA), and the hold harmless provision, but will not be increased 
based on late enrollment.  
 
If the individual is directly billed for premiums, billing will be on a monthly basis. 
 
40.9.8 - Procedure for Termination of Part B-ID 
(Rev. 11764; Issued 12-22-22; Implementation: 01-01-2023; Effective 01-03-23) 
 
Individuals enrolled in the Part B-ID benefit can report other coverage and request to 
terminate their enrollment by either: 
1.  calling SSA at 1-877-465-0355 to disenroll over the phone to verbally request 
termination, or   2.  completing and submitting Form CMS-1763, Request for Termination of Premium 
Hospital and/or Supplementary Medical Insurance, and mailing it to: 
 SOCIAL SECURITY ADMINISTRATION 
OFFICE OF CENTRAL OPERATIONS 
PO Box 32914 
BALTIMORE, MARYLAND 21298 
 
3. any other request to SSA that shows the unequivocal desire to end coverage.  
 
Note: The Office of Central Operations Office of Disability Operations teleservice 
center (ODO TSC) only will handle the telephonic disenrollment and PC 7 will 
process the disenrollment for Part B-ID. 
 
When the individual is reporting other coverage and choosing a future termination date, 
a termination effective date that is more than 6 months in the future cannot be processed 
 
40.9.9 - Medicare Savings Programs for Part B-ID Premiums 
(Rev. 11764; Issued 12-22-22; Implementation: 01-01-2023; Effective 01-03-23) 
 
Individuals enrolled in Part B-ID with limited income and resources may be eligible for 
assistance through the Medicare Savings Programs (MSPs). The MSPs include three 
eligibility groups that cover Part B-ID premiums and sometimes cost sharing, including: 
 
  Qualified Medicare Beneficiary (QMB) 
  Specified Low-Income Medicare Beneficiary (SLMB) 
  Qualifying Individuals (QI) 
 
There are two ways to enroll in the MSPs for the payment of the Part B-ID premiums.  
First, once enrolled in Part B-ID, individuals may apply for the MSPs and be determined 
eligible by their state for an MSP eligibility group based on Part B-ID.  
 
Second, individuals who are enrolled in an MSP group and lose Medicare entitlement 
based on ESRD 36 months after the month in which they receive a kidney transplant can 
transition to an MSP based on Part B-ID enrollment without a break in coverage if: 
(1)they attest that they do not have other health coverage as described in 40.9.1 by the 
end of the 36th month after the month in which they receive a kidney transplant; and (2) 
the state redetermines the individuals Medicaid eligibility on all bases and does not 
otherwise find the individual ineligible for the MSP group. 
 
50 - Identifying the Patient's Health Insurance Record Using the 
Medicare Card 
(Rev. 124, Issued: 05-17-19, Effective: 06-18-19, Implementation: 06-18-19 
 
As part of health insurance electronic data processing, Medicare cards are issued by CMS 
to individuals who have established entitlement to health insurance.  
  Below is an example of the Medicare card.  
 
New Medicare Card 
 
 
You may be asked to show this card when you get health care services. 
Only give your personal Medicare information to health care providers, 
your insurers, or people you trust who work with Medicare on your behalf. 
WARNING: Intentionally misusing this card may be considered fraud 
and/or other violation of federal law and is punishable by law. 
Es posible que le pidan que muestre esta tarjeta cuando reciba servicios de 
cuidado medico. Solamente de su informacion personal de Medicare a los 
proveedores de salud, sus aseguradores o personas de su confianza que 
trabajan con Medicare en su nombre. 
ADVERTENCIA! El mal uso intencional de esta tarjeta puede ser 
considerado como fraude y/u otra violacion de la ley federal y es sancionada 
por la ley. 
1-800-MEDICARE (1-800-633-4227 / 
TTY: 1-877-486-2048); Medicare.gov 
        New Medicare Card Front             New Medicare Card 
Back                                 
The Medicare card is used to identify the individual as being entitled and also serves as a 
source of information required to process Medicare claims or bills. It displays the 
beneficiary's name, Medicare number, and effective date of entitlement to hospital 
insurance and/or medical insurance. The Social Security Administration's Social Security 
Office assists in replacing a lost or destroyed Medicare cards. 
 
50.1 - Medicare Beneficiary Identifier (Mbi) 
(Rev. 124, Issued: 05-17-19, Effective: 06-18-19, Implementation: 06-18-19 
 
The term Medicare beneficiary identifier (Mbi) is a general term describing a 
beneficiarys Medicare identification number. For purposes of this manual, Medicare 
beneficiary identifier references both the Health Insurance Claim Number (HICN) and 
the Medicare Beneficiary Identifier (MBI) during the new Medicare card transition 
period and after for certain business areas that will continue to use the HICN as part of 
their processes. 
 
The MBI has 11 characters, like the Health Insurance Claim Number (HICN), which can 
have up to 11. Each MBI is randomly generated. This makes MBIs different than HICNs, 
which are based on the Social Security Numbers (SSNs) of people with Medicare. The 
MBIs characters are non-intelligent so they dont have any hidden or special meaning.  
MBIs are numbers and upper-case letters. Well use numbers 0-9 and all letters from A to 
Z, except for S, L, O, I, B, and Z. This will help the characters be easier to read. If you 
use lowercase letters, our system will convert them to uppercase letters. 
  
The MBI will contain letters and numbers. Heres an example: 1EG4-TE5-MK73  
 The MBIs 2nd, 5th, 8th, and 9th characters will always be a letter.  
 Characters 1, 4, 7, 10, and 11 will always be a number.    The 3rd and 6th characters will be a letter or a number.  
 The dashes arent used as part of the MBI. They wont be entered into computer 
systems or used in file formats.  
 
60 - Medicare Part C, Medicare+Choice 
(Rev. 1, 09-11-02) 
 
Medicare Part C, which is also known as Medicare+Choice, is a Medicare program that 
gives beneficiaries more choices among health plans.  Everyone who has Medicare Parts 
A and B is eligible, except those who have end stage renal disease, and were not in a 
Medicare+Choice plan at the onset of this condition. 
 
Public Law 105-33, the Balanced Budget Act of 1997, establishes a new authority 
permitting contracts between CMS and a variety of different managed care and fee-for-
service entities.  The types of entities that may be granted contracts under this new 
authority include: 
 
  Coordinated care plans, including Health Maintenance Organizations (HMOs), 
Preferred Provider Organizations (PPOs), and Provider-Sponsored Organizations 
(PSOs).  A PSO is defined as a public or private entity established by health care 
providers, which provide a substantial proportion of health care items and services 
directly through affiliated providers who share, directly or indirectly, substantial 
financial risk. 
 
  Religious fraternal benefit society plans which may restrict enrollment to 
members of the church, convention or group with which the society is affiliated.  
Payments to such plans may be adjusted, as appropriate to take into account the 
actuarial characteristics and experience of plan enrollees. 
 
  Private fee-for-service plans which reimburse providers on a fee-for-service basis, 
and are authorized to charge enrolled beneficiaries up to 115 percent of the plan's 
payment schedule (which may be different from the Medicare fee schedule). 
 
In addition to the Medicare+Choice contractors, beginning in January, 1999, up to 
390,000 beneficiaries will have the choice (on a demonstration basis ending January 1, 
2003) of enrolling in a Medical Savings Account (MSA) option.  Under this option, 
beneficiaries would obtain high deductible health policies that pay for at least all 
Medicare-covered items and services after an enrollee meets the annual deductible of up 
to $6,000.  The difference between the premiums for such high deductible policies and 
the applicable Medicare+Choice premium amount would be placed into an account for 
the beneficiary to use in meeting his or her deductible expenses. 
 
Past 1876 Contracts - HMO/CMP risk plans that remain in compliance with current 
contracting standards and comply with new requirements established under this statutory 
authority automatically transitioned into the Part C Medicare+Choice program.  Section 
1876 risk-based contractors were paid under a new Medicare+Choice payment  methodology rather than the prior method in section 1876(a), and were subject to certain 
other Medicare+Choice provisions.  The Secretary no longer accepts new 1876 risk 
applications.  As of January 1, 1999, existing 1876 risk-based contracts were terminated, 
and plans in good standing transitioned to the Medicare+Choice program. 
 
Repeal of Cost Option - As of August 5, 1997, the Secretary is prohibited from entering 
into any new 1876 cost-based contracts, unless the plan is a Health Care Prepayment Plan 
with an agreement under section 1833 of the Social Security Act.  The 1876 cost-based 
payment authority is repealed and all cost contracts are terminated as of December 31, 
2002. 
 
Limited HCPP Option - Beginning January 1, 1999, the Secretary may only contract 
with those HCPPs that are sponsored by Union or Employer groups, or HCPPs that do 
not "provide, or arrange for the provision of, any inpatient hospital services ...."  This 
amendment will result in the termination of section 1833 agreements with any 
organization that does not meet the new definition.  CMS will establish transition rules 
for 1876 risk-based contractors that currently receive reimbursement on a cost basis for 
enrollees remaining under a previous HCPP agreement. 
 
For more information, see the Managed Care Manual.  Transmittals Issued for this Chapter 
 
Rev #  Issue Date  Subject  Impl Date  CR# 
R11764BP 12/22/2022  New Medicare Part B Immunosuppressant  01/03/2023 12804 
Drug Benefit (PBID) - Implementation 
R11646GI  10/19/2022  New Medicare Part B Immunosuppressant  01/03/2023 12804 
Drug Benefit (PBID)  Implementation  
Rescinded and Replaced by Transmittal 
11764  
  07/28/2022  New Medicare Part B Immunosuppressant  01/03/2023 12804 
Drug Benefit (PBID)  Implementation  
SENSITIVE/CONTOVERSIAL DO NOT 
POST- Rescinded and Replaced by 
Transmittal 11646 
R124GI  05/17/2019  Update to Publication (Pub.) 100-01 to  06/18/2019 11240 
Provide Language-Only Changes for the 
New Medicare Card Project 
 
R01MGI  09/11/2002  Initial Publication of Manual  NA  NA 
 
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