The USDA Announces Emergency Interest Deferral
On July 27, due to severe drought conditions, the USDA announced that it will provide additional time for policyholders to make payment of premium and administrative fees (MGR-21-006).
Interest accrual on premium payments and administrative fees will be waived to the earliest of an additional 60 days after the scheduled payment due date or the termination date, for policies with premium billing dates between August 1, 2021 and September 30, 2021.
After this time, interest will accrue at the standard rate of 15% per annum. Some examples of this are provided below for your reference.
Please note that this extension applies only to MPCI premium.
Interest Deferral Examples
For a policy with an 8/15/2021 billing date and a 2/28/2022 or 3/15/2022 termination date:
Normally, to avoid interest, an insured must pay premium by September 30, and as of October 1, the insured owes the premium plus one month of interest. Under MGR-21-006, no premium interest will be owed unless the insured has not paid the premium by November 30. Then, as of December 1, the insured would owe the premium plus one month of interest. Interest will continue to accrue until the balance is paid in full.
For a policy with an 8/15/2021 billing date and an 11/20/2021 termination date:
Normally, to avoid interest, an insured must pay premium by September 30, and as of October 1, the insured owes the premium plus one month of interest. Under MGR-21-006, no premium interest will be owed unless the insured has not paid the premium by the termination date of 11/20/2021. Then, as of the termination date of 11/20/2021, the insured would be placed on ITS for nonpayment and interest will accrue until the balance is paid in full.
For a policy with a 9/1/2021 billing date and an 11/15/2021 termination date:
Normally, to avoid interest, an insured must pay premium by September 30, and as of October 1, the insured owes the premium plus one month of interest. Under MGR-21-006, no premium interest will be owed unless the insured has not paid the premium by the termination date of 11/15/2021. Then, as of the termination date of 11/15/2021, the insured would be placed on ITS for nonpayment and interest will accrue until the balance is paid in full.