Section 599.516 - Payment of Surcharges for Late Enrollment in Medicare Part B(a) As used in this section and Government Code section 22831(b): (1) "Surcharge for late enrollment in Part B of Medicare" means the Part B penalties for late enrollment, exclusive of the Part B premium and interest or penalties for the late payment of premiums. At the discretion of the Board, Part B penalties may be paid directly to the Medicare program or annuitants may be reimbursed for the costs of their Part B penalties.(2) "Annuitants" means annuitants and their family members.(3) "Medicare eligible annuitants" means those annuitants and their family members who (a) are enrolled in a basic health benefits plan, (b) are eligible for Part A of Medicare without cost, (c) turned 65 between January 1, 1985 and June 30, 2005, and (d) have not previously enrolled in Part B of Medicare.(4) "Adverse selection" means that the costs of covering Medicare eligible annuitants in a particular basic plan results in higher premiums for all members of that plan.(5) "Less costly" means one of the following: (A) The reduction in a carrier's basic plan premium and resulting savings from moving a Medicare eligible annuitant into the carrier's Medicare plan are greater than an amount equal to the costs of that annuitant's Part B penalties and the employer's mandatory contribution for enrollment in the carrier's Medicare plan. For purposes of this section, the employer's mandatory contribution shall include all amounts that the employer would be required to pay pursuant to Government Code section 22879.(B) In the case of a self-funded plan administered by the Board, the costs of medical and pharmaceutical claims paid from the Health Care Fund on behalf of a Medicare-eligible annuitant have been, and are projected to be, an amount greater than the Part B penalties for that annuitant and the claim costs that would be paid by the Health Care Fund if the annuitant were enrolled in the plan's Medicare supplement.(6) "Defined class of Medicare eligible annuitants" means a specific category or group of Medicare eligible annuitants identified or established at the discretion of the Board.(7) "Determination" means an evaluation and decision made by the Board pursuant to these regulations and Section 22831(b) as to whether (a) adverse selection due to the enrollment of Medicare eligible annuitants has impacted a basic health benefits plan contracted for or approved by the Board and (b) the payment of the Part B penalties for the Medicare eligible annuitant(s) enrolled in that basic plan and their enrollment in a Medicare health benefits plan would be less costly than continued enrollment in the basic plan. An affirmative determination shall be referred to as a determination of cost savings.(8) "CMS" means the Centers for Medicare and Medicaid Services, the federal agency which administers the Medicare program.(b) If the Board makes a determination of cost savings with respect to a Medicare eligible annuitant or defined class of Medicare eligible annuitants enrolled in a basic health benefits plan, the Board may seek funding for, or otherwise arrange for, payment of the Part B penalties on behalf of those annuitants.(c) Determinations will be specific to a designated basic health benefits plan and the costs of the Part B penalties will be based on CMS Medicare eligibility data. At its discretion, the Board may make determinations hereunder on an individual basis or for a defined class of Medicare eligible annuitants. Nothing in this section shall be construed as requiring the Board to undertake or make a determination with respect to a particular basic health benefit plan, individual annuitant, or group of annuitants.(d) Except as specifically provided herein and approved by the Board, neither the California Public Employees' Retirement System nor any employer or other entity shall have any obligation to pay Part B penalties or reimburse individual annuitants for the costs of such penalties.(e) Unless otherwise provided by law, the California Public Employees' Retirement System shall not be financially liable for the payment of Part B penalties.(f) Neither the employer nor any other entity which funds the payment of Part B penalties pursuant to this section shall have any obligation to continue to pay, or fund the payment of, Part B penalties on behalf of any annuitant or family member in the event that:(1) Funding is not available for payment of Part B penalties; or(2) The Board determines that payment of the Part B penalties and the employer's mandated contribution is no longer less costly than enrollment in a basic health benefits plan; or(3) The annuitant or family member, once enrolled in Medicare Part B, fails to pay the Part B premiums or otherwise fails to maintain continuous coverage under Part B.(g) A Medicare Part B Penalty Reimbursement Program is hereby established for the payment or reimbursement of the penalties for late enrollment in Medicare Part B. If the Board makes a determination of cost-savings with respect to a Medicare eligible annuitant or defined class of Medicare eligible annuitants, each annuitant shall: (1) Enroll in the Part B Penalty Reimbursement Program.(2) Enroll in Medicare Part B at the earliest possible date, but no later than the end of the current Part B open enrollment period or, if the open enrollment period has closed, the next Part B open enrollment.(3) Maintain continuous enrollment in Part B of Medicare and pay all Part B premiums when due. In the event that the program elects to reimburse the program participants for the costs of the Part B penalties rather than paying those penalties directly to Medicare, the annuitant must also timely pay all Part B penalties.(4) Enroll in a Medicare health benefits plan approved or contracted for by the Board effective as of the date that Part B coverage commences.(h) A Medicare Part B Penalty Reimbursement Program participant who fails to maintain Medicare Part B coverage, including due to a failure to timely pay the Part B premium and all penalties that are the responsibility of the participant, will not be eligible to re-enroll in a basic plan and may be required to reimburse the Part B penalties previously paid on his or her behalf. Termination of Medicare coverage for failure to pay the Part B premiums shall not constitute an involuntary termination of Medicare benefits under section 599.502(e)(13). In the event that the annuitant later re-enrolls in Part B, he or she will not be eligible to re-enroll in the program unless it is determined that there would be cost savings. Penalties and costs associated with lapse or cancellation of, and subsequent re-enrollment in, Part B of Medicare will not be reimbursed.(i) Any Medicare eligible annuitant who is included in a cost savings determination made by the Board and who, after adequate notice from the Board of his or her right to enroll in the Part B Penalty Program, refuses to enroll in Medicare Part B and a Medicare health benefits plan approved or contracted for by the Board, shall no longer be eligible for continued enrollment in a basic health benefits plan.Cal. Code Regs. Tit. 2, § 599.516
1. New section filed 1-15-2004 as an emergency; operative 1-15-2004 (Register 2004, No. 3). A Certificate of Compliance must be transmitted to OAL by 5-14-2004 or emergency language will be repealed by operation of law on the following day.
2. Certificate of Compliance as to 1-15-2004 order, including amendment of subsections (a)(5)(A) and (h), transmitted to OAL 5-13-2004 and filed 6-28-2004 (Register 2004, No. 27).
3. Change without regulatory effect amending subsections (a), (a)(5)(A) and (a)(7) and amending NOTE filed 10-31-2006 pursuant to section 100, title 1, California Code of Regulations (Register 2006, No. 44).
4. Amendment of subsection (h) and amendment of NOTE filed 2-28-2020; operative 4-1-2020 (Register 2020, No. 9). Note: Authority cited: Sections 22794, 22796 and 22831, Government Code. Reference: Section 22831, Government Code.
1. New section filed 1-15-2004 as an emergency; operative 1-15-2004 (Register 2004, No. 3). A Certificate of Compliance must be transmitted to OAL by 5-14-2004 or emergency language will be repealed by operation of law on the following day.
2. Certificate of Compliance as to 1-15-2004 order, including amendment of subsections (a)(5)(A) and (h), transmitted to OAL 5-13-2004 and filed 6-28-2004 (Register 2004, No. 27).
3. Change without regulatory effect amending subsections (a), (a)(5)(A) and (a)(7) and amendingNote filed 10-31-2006 pursuant to section 100, title 1, California Code of Regulations (Register 2006, No. 44).
4. Amendment of subsection (h) and amendment of Note filed 2-28-2020; operative 4/1/2020 (Register 2020, No. 9).