42 CFR § 408.6 - Methods and priorities for payment.
(a) Methods of payment—(1) General rules. Premiums are paid by one of the following four methods:
(i) Payment by a State under a buy-in agreement.
(ii) Deduction from monthly railroad retirement of social security cash benefits or Federal civil service annuities.
(iii) Direct remittance on an individual basis, by or on behalf of the enrollee.
(iv) Direct remittance on a group basis, by an employer, union, lodge or other organization, or by an entity of State or local government.
(2) Special situations.
(i) If the monthly social security benefit or age 72 special benefit is less than the monthly premium, the benefit is withheld and the enrollee is required to pay the balance through direct remittance. (This situation may arise if the individual first becomes eligible for social security benefits after December 31, 1981, and is, therefore, not eligible for the fixed minimum, or receives age 72 special benefits that are reduced because the individual receives a government pension.)
(ii) If the monthly railroad retirement benefit or civil service annuity payment is less than the premium, the monthly payment is not withheld and the enrollee is required to pay the total premium by direct remittance.
(b) Priorities for payment.
(1) If an enrollee is enrolled under a State buy-in agreement—
(i) SMI premiums may not be deducted from monthly cash benefits or annuities; and
(ii) The enrollee may not be required to pay by direct remittance.
(2) If an enrollee is not covered under a State buy-in agreement, but is receiving a monthly benefit or an annuity specified in paragraph (a)(1)(ii) of this section—
(i) The premiums are deducted from that benefit or annuity; or
(ii) If the monthly benefit or payment is less than the monthly premium, the rules of paragraph (a)(2) of this section apply.
(3) If an enrollee is neither covered under a State buy-in agreement, nor receiving monthly benefits or annuity payments, the premiums must be paid totally by direct remittance.
(c) Payment by a State under a buy-in agreement.
(1) A buy-in agreement is an agreement under which a State, through enrollment and payment of SMI premiums, secures SMI benefits for individuals who are eligible for that program and also eligible for certain other cash or medical benefits. (Policies on enrollment under State buy-in agreements are contained in subpart C of part 407 of this chapter.)
(2) The State pays the premiums for each month for which an individual is covered under the agreement.
(3) If an individual's coverage under a State buy-in agreement terminates, his coverage continues on an individual enrollment basis. The premiums are then deducted from benefits, as set forth in subpart C of this part, or paid by direct remittance in accordance with subpart D or subpart E of this part.
(4) Policy on collection of premiums from buy-in States is set forth in a Federal Register notice published on September 30, 1985 at 50 FR 39784.