To restore health care coverage to retired members of the uniformed services, and for other purposes.

Summary: Keep Our Promise to America's Military Retirees Act - Directs the Secretary of Defense to enter into an agreement with the Office of Personnel Management to provide Federal Employees Health Benefits (FEHB) coverage to the following eligible beneficiaries: (1) a member or former member of the Armed Forces entitled to military retired or retainer pay; (2) an unremarried former spouse who was married to a member for at least 20 years, during which such member performed at least 20 years of retirement-creditable military service; (3) a dependent of a deceased qualifying member or former member; (4) a dependent of a living member or former member; and (5) a family member.

Directs the Secretary to reimburse such eligible persons for pharmacy benefits received from a pharmacy that is not a TRICARE (Department of Defense managed health care plan) network pharmacy in the same manner as the Secretary would reimburse such person for such benefits received from a TRICARE network pharmacy. Requires such persons, in order to receive such reimbursement, to submit a certification from their physician stating that the person does not have access to a TRICARE network pharmacy due to physical or medical constraints.

Amends title XVIII (Medicare) of the Social Security Act to waive the monthly part B premium (Supplementary Medical Insurance Benefits for the Aged and Disabled) with respect to: (1) an individual who is entitled to military retired or retainer pay based upon service that began before December 7, 1956; and (2) the spouse, widow, or widower of such individuals.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Keep Our Promise to America's 
Military Retirees Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) No statutory health care program existed for members of 
        the uniformed services who entered service prior to December 7, 
        1956, and retired after serving a minimum of 20 years.
            (2) Recruiters, re-enlistment counselors, and officers at 
        all levels of the uniformed services, and other government 
        officials, as agents of the United States Government, used 
        recruiting tactics that allowed members who entered the 
        uniformed services prior to December 7, 1956, to believe they 
        would be entitled to fully paid lifetime health care upon 
        retirement.
            (3) In the United States Court of Appeals for the Federal 
        Circuit decision of November 18, 2002, in Schism v. United 
        States (No. 99-1402), the Court said: ``Accordingly, we must 
        affirm the district court's judgment and can do no more than 
        hope Congress will make good on the promises recruiters made in 
        good faith to plaintiffs and others of the World War II and 
        Korean War era--from 1941 to 1956, when Congress enacted its 
        first health care insurance act for military members, excluding 
        older retirees. . . . We cannot readily imagine more 
        sympathetic plaintiffs than the retired officers of the World 
        War II and Korean War era involved in this case. They served 
        their country for at least 20 years with the understanding that 
        when they retired they and their dependents would receive full 
        free health care for life. The promise of such health care was 
        made in good faith and relied upon. Again, however, because no 
        authority existed to make such promises in the first place, and 
        because Congress has never ratified or acquiesced to this 
        promise, we have no alternative but to uphold the judgment 
        against the retirees' breach-of-contract claim. . . . Perhaps 
        Congress will consider using its legal power to address the 
        moral claims raised by Schism and Reinlie on their own behalf, 
        and indirectly for other affected retirees.''.
            (4) Only the United States Congress can make good on the 
        promises recruiters made in good faith to plaintiffs and others 
        of the World War II and Korean War era.
            (5) Statutes enacted in 1956 allowed those who entered 
        service on or after December 7, 1956, and retired after serving 
        a minimum of 20 years or by reason of a service-connected 
        disability to medical and dental care in any facility of the 
        uniformed services, subject to the availability of space and 
        facilities and the capabilities of the medical and dental 
        staff.
            (6) Recruiters, re-enlistment counselors, and officers at 
        all levels of the uniformed services, and other government 
        officials, as agents of the United States Government, continued 
        to allow members who entered the uniformed services to believe 
        they would be entitled to fully paid lifetime health care upon 
        retirement, despite enactment of statutes in 1956, subsequent 
        statutes, and the issuance of regulations that defined and 
        limited the availability of medical care to retired members of 
        the uniformed services.
            (7) After 4 rounds of base closures between 1988 and 1995 
        and further drawdowns of remaining military medical treatment 
        facilities, access to ``space available'' health care in a 
        military medical treatment facility is difficult or virtually 
        nonexistent for many military retirees.
            (8) The failure to provide adequate health care upon 
        retirement is preventing the retired members of the uniformed 
        services from recommending, without reservation, that young men 
        and women make a career of any military service.
            (9) Although provisions in the Floyd D. Spence National 
        Defense Authorization Act for Fiscal Year 2001 (as enacted into 
        law by Public Law 106-398) extended coverage under the TRICARE 
        program to medicare eligible military retirees age 65 and 
        older, those provisions did not address the health care needs 
        of military retirees under the age of 65.
            (10) The United States should make good on the promises 
        recruiters made in good faith in the World War II and Korean 
        War era and reestablish high quality health care for all 
        retired members of the uniformed services.

SEC. 3. COVERAGE OF MILITARY RETIREES UNDER THE FEDERAL EMPLOYEES 
              HEALTH BENEFITS PROGRAM.

    (a) Coverage for Retirees and Dependents.--(1) Section 1108 of 
title 10, United States Code, is amended to read as follows:
``Sec. 1108. Health care coverage through Federal Employees Health 
              Benefits program
    ``(a) FEHBP Option.--The Secretary of Defense, after consulting 
with the other administering Secretaries, shall enter into an agreement 
with the Office of Personnel Management to provide coverage to eligible 
beneficiaries described in subsection (b) under the health benefits 
plans offered through the Federal Employees Health Benefits program 
under chapter 89 of title 5.
    ``(b) Eligible Beneficiaries; Coverage.--(1) An eligible 
beneficiary under this subsection is--
            ``(A) a member or former member of the uniformed services 
        described in section 1074(b) of this title;
            ``(B) an individual who is an unremarried former spouse of 
        a member or former member described in section 1072(2)(F) or 
        1072(2)(G);
            ``(C) an individual who is--
                    ``(i) a dependent of a deceased member or former 
                member described in section 1076(b) or 1076(a)(2)(B) of 
                this title or of a member who died while on active duty 
                for a period of more than 30 days; and
                    ``(ii) a member of family as defined in section 
                8901(5) of title 5; or
            ``(D) an individual who is--
                    ``(i) a dependent of a living member or former 
                member described in section 1076(b)(1) of this title; 
                and
                    ``(ii) a member of family as defined in section 
                8901(5) of title 5.
    ``(2) Eligible beneficiaries may enroll in a Federal Employees 
Health Benefit plan under chapter 89 of title 5 under this section for 
self-only coverage or for self and family coverage which includes any 
dependent of the member or former member who is a family member for 
purposes of such chapter.
    ``(3) A person eligible for coverage under this subsection shall 
not be required to satisfy any eligibility criteria specified in 
chapter 89 of title 5 (except as provided in paragraph (1)(C) or 
(1)(D)) as a condition for enrollment in health benefits plans offered 
through the Federal Employees Health Benefits program under this 
section.
    ``(4) For purposes of determining whether an individual is a member 
of family under paragraph (5) of section 8901 of title 5 for purposes 
of paragraph (1)(C) or (1)(D), a member or former member described in 
section 1076(b) or 1076(a)(2)(B) of this title shall be deemed to be an 
employee under such section.
    ``(5) An eligible beneficiary who enrolls in the Federal Employees 
Health Benefits program under this section shall not be eligible to 
receive health care under section 1086 or section 1097. Such a 
beneficiary may continue to receive health care in a military medical 
treatment facility, in which case the treatment facility shall be 
reimbursed by the Federal Employees Health Benefits program for health 
care services or drugs received by the beneficiary.
    ``(c) Change of Health Benefits Plan.--An eligible beneficiary 
enrolled in a Federal Employees Health Benefits plan under this section 
may change health benefits plans and coverage in the same manner as any 
other Federal Employees Health Benefits program beneficiary may change 
such plans.
    ``(d) Government Contributions.--The amount of the Government 
contribution for an eligible beneficiary who enrolls in a health 
benefits plan under chapter 89 of title 5 in accordance with this 
section may not exceed the amount of the Government contribution which 
would be payable if the electing beneficiary were an employee (as 
defined for purposes of such chapter) enrolled in the same health 
benefits plan and level of benefits.
    ``(e) Separate Risk Pools.--The Director of the Office of Personnel 
Management shall require health benefits plans under chapter 89 of 
title 5 to maintain a separate risk pool for purposes of establishing 
premium rates for eligible beneficiaries who enroll in such a plan in 
accordance with this section.
    ``(f) Reimbursement for Expenses for Health Care Services Normally 
Provided by the Department of Defense Under TRICARE Standard.--The 
Secretary of Defense shall develop and implement a system to reimburse 
an eligible beneficiary who enrolls in a health benefits plan under 
chapter 89 of title 5 in accordance with this section for health care 
costs incurred by the beneficiary that are not paid under the health 
benefits plan but would have been paid by the Department of Defense 
under TRICARE Standard.''.
    (2) The item relating to section 1108 at the beginning of such 
chapter is amended to read as follows:

``1108. Health care coverage through Federal Employees Health Benefits 
                            program.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on October 1, 2005.

SEC. 4. REIMBURSEMENT FOR TRICARE PHARMACY BENEFITS AT TRICARE NETWORK 
              PHARMACY LEVELS TO CERTAIN MILITARY RETIREES AND 
              DEPENDENTS IN HARDSHIP CASES.

    (a) In General.--In the case of an eligible person who has a 
certification described in subsection (b), the Secretary shall 
reimburse such person for pharmacy benefits received from a pharmacy 
that is not a TRICARE network pharmacy in the same manner and in the 
same amounts as the Secretary would reimburse such person for such 
benefits received from a pharmacy that is a TRICARE network pharmacy.
    (b) Certification.--The certification referred to in subsection (a) 
is a certification from an eligible person's physician--
            (1) stating that the person does not have access to a 
        TRICARE network pharmacy due to physical or medical 
        constraints; and
            (2) meeting such other criteria as the Secretary of Defense 
        considers appropriate.
    (c) Eligible Person.--In this section, an eligible person is an 
eligible beneficiary as described in section 1108(b) of title 10, 
United States Code who has another insurance plan or program that 
provides primary coverage for health benefits.

SEC. 5. WAIVER OF MEDICARE PART B PREMIUM FOR CERTAIN MILITARY 
              RETIREES.

    (a) In General.--Section 1839 of the Social Security Act (42 U.S.C. 
1395r) is amended--
            (1) in subsection (a)(2), by striking ``The monthly 
        premium'' and inserting ``Except as provided in subsection (j), 
        the monthly premium''; and
            (2) by adding at the end the following new subsection:
    ``(j)(1) The amount of the monthly premium for an eligible 
individual enrolled under this part is equal to $0.
    ``(2) For purposes of paragraph (1), the term `eligible individual' 
means--
            ``(A) an individual who is entitled to retired or retainer 
        pay based upon service in the uniformed services (as defined in 
        section 101 of title 10, United States Code) that began before 
        December 7, 1956;
            ``(B) the spouse (as determined under section 7703 of the 
        Internal Revenue Code of 1986) of an individual described in 
        subparagraph (A); and
            ``(C) the widow or widower, as the case may be, of an 
        individual described in subparagraph (A).
    ``(3) With respect to years beginning after the date of the 
enactment of this subsection, the monthly premium rate calculated under 
subsection (a)(3) for individuals enrolled under this part who are not 
eligible individuals under this subsection shall be determined without 
regard to benefits and administrative costs attributable to such 
eligible individuals during such years.''.
    (b) Conforming Amendment.--Section 1839(i) of the Social Security 
Act (42 U.S.C. 1395r(i)) is amended by adding at the end the following 
new paragraph:
            ``(7) Inapplicability to certain military retirees.--This 
        subsection shall not apply to eligible individuals (as defined 
        in subsection (j)(2)).''.
    (c) Effective Date.--(1) The amendments made by this section shall 
apply to premiums for months beginning with January 2005.
    (2) The Secretary of Health and Human Services shall use the rebate 
methodology established pursuant to section 625(a)(2) of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (Public 
Law 108-173, 117 Stat. 2318) to provide rebates to eligible individuals 
(as defined in subsection (j)(2) of section 1839 of the Social Security 
Act, as added by subsection (a)) of any premium or premium penalty paid 
under such section for months beginning on or after January 1, 2005.