Health Care Refunds Will Begin in February : Medicare: Beneficiaries paying for the repealed catastrophic coverage will get checks totaling $21.20. A computer program is still deducting premiums.

The federal government will begin sending refunds in February to millions of Medicare beneficiaries who continue paying premiums for the repealed catastrophic care law, officials said Thursday.

The Treasury will make two payments of $10.60, in February and again in April, for each Medicare enrollee, the Treasury and Social Security Administration announced.

The total refund of $21.20 will compensate for the $5.30 a month premium that will be deducted from Social Security checks each month from January through April. Although the catastrophic care benefits end as of Jan. 1, Social Security computers will continue making the premium deductions through April because it takes months to rewrite instructions for such a massive computer system.

The Social Security Administration first indicated that its computers could not be corrected to stop the deductions until May or later. Officials originally promised that a lump sum refund payment would be issued in the summer by the Treasury, which prints and mails checks for government agencies.

But Social Security officials then consulted with outside experts and proposed that refund checks be sent beginning in February. A dispute developed with Treasury, which claimed that it would be difficult and costly to issue 28 million refund checks in addition to the normal monthly mailings.

The agencies settled their conflict Thursday.

“Today’s announcement is great news for America’s elderly, many of whom live on fixed incomes,” said Social Security Commissioner Gwendolyn S. King. “We are working diligently to expedite the computer changes required to properly adjust Social Security checks but we must be extremely careful not to destroy a carefully constructed system of payments (providing) $19 billion a month,” she said.

She noted that the agency must alter “more than 150 different computer software programs” to eliminate the $5.30 a month deduction.

The refunds will total an estimated $1.2 billion.

“We are pleased to assist (the Social Security Administration) in expeditiously refunding these payments to senior citizens,” said Treasury official W. E. Douglas. The procedure “will provide the most timely service to recipients without jeopardizing” the 250 million other payments disbursed by Treasury “at this peak time of the year,” Douglas said.

The service he heads handles Social Security payments, tax refunds, federal salaries, veterans benefits and other government payments.

The repealed catastrophic care law, passed by Congress enthusiastically in 1988, was repudiated with equally intense fervor 17 months later. It provided expanded hospital care, a ceiling on payments for doctor bills and coverage of prescription drugs.

But its financing mechanism--the monthly premium and a surtax on those over 65 who pay federal income taxes--proved politically fatal. The surtax, which would have touched about 40% of those over 65, was resented as an unfair levy on a narrow segment of the population. Complaints from angry Medicare beneficiaries, many of whom already had supplemental health insurance, forced an abrupt turnaround in Congress. It voted in November to scrap the entire catastrophic care program.