To amend the Social Security Act to improve choices available to Medicare eligible seniors by permitting them to elect (instead of regular Medicare benefits) to receive a voucher for a health savings account, for premiums for a high deductible health insurance plan, or both and by suspending Medicare late enrollment penalties between ages 65 and 70.

Summary: Health Care Choices for Seniors Act - Amends title II (Old Age, Survivor's and Disability Insurance) (OASDI) of the Social Security Act (SSA) to require the Secretary of Health and Human Services to establish a procedure under which an individual otherwise entitled to benefits under part A (Hospital Insurance) of SSA title XVIII (Medicare) may waive such entitlement and be automatically enrolled in the Medicare Alternative Voucher Program (MAV Program).

Directs the Secretary to establish the MAV Program, under which a voucher may be used as a contribution into a health savings account and for the payment of enrollment premiums under a high deductible health plan.

Amends the Internal Revenue Code to increase the amount of the itemized deduction for health savings accounts by the amount of the MAV that is contributed to an individual's health savings account.

Suspends Medicare late enrollment penalties for an individual between ages 65 and 70.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Care Choices for Seniors 
Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) The Social Security Administration's Program Operations 
        Manual System section HI 00801.002, titled ``Waiver of Hospital 
        Insurance Entitlement by Monthly Beneficiary'', provides that 
        an individual who does not sign up for part A of the Medicare 
        program when the individual signs up for social security 
        benefits will lose such benefits, regardless of the desire of 
        the individual to not participate in the Medicare program 
        because of religious or philosophical reasons or a preference 
        to have private health insurance.
            (2) As part of the Medicare Prescription Drug, Improvement, 
        and Modernization Act of 2003 (Public Law 108-173), Congress 
        increased health insurance options by authorizing health 
        savings accounts into which individuals may make annual 
        contributions of not more than $2,650 and families may make 
        such contributions of not more than $5,250 that are allowable 
        as deductions for income tax purposes. Seniors are not allowed 
        to deduct contributions to their health savings account after 
        the date of the entitlement of such seniors to Medicare 
        benefits.
            (3) Section 1802(b) of the Social Security Act (42 U.S.C. 
        1395a(b)), added by section 4507 of the Balanced Budget Act of 
        1997, states that a Medicare beneficiary may only enter into a 
        private contract with a physician for an item or service if no 
        claim for payment under title XVIII of such Act will be 
        submitted. In the case of such contract, the physician must 
        sign an affidavit that acknowledges such contract and that 
        provides that the physician will not submit a claim, and will 
        forgo reimbursement, under such title for an item or service 
        provided to any Medicare beneficiary for a period of two years.

SEC. 3. AUTHORITY TO ELECT VOUCHER PROGRAM INSTEAD OF MEDICARE PART A 
              ENTITLEMENT.

    (a) In General.--Section 226 of the Social Security Act (42 U.S.C. 
426) is amended by adding at the end the following new subsections:
    ``(k) Waiver of Entitlement and Election of Voucher Program.--
            ``(1) In general.--Notwithstanding the previous provisions 
        of this section, the Secretary shall establish a procedure 
        under which an individual otherwise entitled under subsection 
        (a) to benefits under part A of title XVIII may waive such 
        entitlement and be automatically enrolled in the Medicare 
        Alternative Voucher Program established under subsection (l) 
        if--
                    ``(A) at the time such waiver is made the 
                individual--
                            ``(i) has a health savings account 
                        described in subsection (d) of section 223 of 
                        the Internal Revenue Code of 1986 (26 U.S.C. 
                        223); and
                            ``(ii) is enrolled under a high deductible 
                        health plan, as defined in subsection (c)(1) of 
                        such section; and
                    ``(B) the individual makes such waiver during the 
                initial enrollment period described in section 1837(d).
            ``(2) Treatment under the internal revenue code of 1986.--
        An individual who waives entitlement under paragraph (1) shall 
        not be treated as entitled to benefits under title XVIII for 
        purposes of section 223(b)(7) of the Internal Revenue Code of 
        1986.
            ``(3) Ineligibility for part b or d benefits.--An 
        individual shall not be eligible for benefits under part B or D 
        of title XVIII during the period for which the individual 
        waives entitlement under part A of such title under paragraph 
        (1).
            ``(4) Termination of waiver and reenrollment under medicare 
        program.--The Secretary shall establish a procedure under which 
        an individual who waives entitlement under paragraph (1) may 
        terminate such waiver during an annual period that shall be the 
        same as the annual general enrollment period described in 
        section 1837(e). For purposes of applying parts B and D of 
        title XVIII, such individual shall be treated as if the 
        individual were entitled to benefits under part A of such title 
        as of the date such individual terminates the waiver under this 
        paragraph. An individual who has terminated such a waiver may 
        not subsequently make such a waiver.
    ``(l) Medicare Alternative Voucher Program.--
            ``(1) Establishment of program.--The Secretary shall 
        establish a program to be known as the Medicare Alternative 
        Voucher Program (in this subsection referred to as the `voucher 
        program') consistent with this subsection.
            ``(2) Automatic enrollment.--An individual who waives 
        entitlement under subsection (k)(1) shall be enrolled in the 
        voucher program for the period during which such waiver is in 
        effect.
            ``(3) Amount of voucher.--
                    ``(A) Amount based on age cohort.--
                            ``(i) In general.--Subject to clause (ii), 
                        for each month that an individual within an age 
                        cohort is enrolled in the voucher program, the 
                        Secretary shall provide a voucher to such 
                        individual in an amount that is equal to the 
                        monthly actuarial rate for that month computed 
                        under section 1818(d)(1) multiplied by the age 
                        cohort adjustment factor for such age cohort 
                        under subparagraph (B).
                            ``(ii) Monthly limit.--The amount of a 
                        voucher provided to an individual for a month 
                        may not exceed $200.
                    ``(B) Age cohort adjustment factor.--For each age 
                cohort the Secretary shall determine an age cohort 
                adjustment factor equal to the ratio of--
                            ``(i) the monthly actuarial rate described 
                        in section 1818(d)(1) as determined by the 
                        Secretary for individuals in such age cohort, 
                        to
                            ``(ii) the monthly actuarial rate described 
                        in such section.
                    ``(C) Age cohort defined.--For purposes of this 
                paragraph, an `age cohort' means a group of individuals 
                whose age falls within a span of five consecutive 
                years, consistent with the following:
                            ``(i) The first such span begins at age 65.
                            ``(ii) Other spans follow consecutively.
            ``(4) Permissible use of voucher.--A voucher under 
        paragraph (3) may be used only for the following purposes:
                    ``(A) As a contribution into a health savings 
                account established by such individual, as described in 
                subsection (k)(1)(A).
                    ``(B) For payment of premiums for enrollment of 
                such individual under a high deductible health plan 
                described in such subsection.
            ``(5) Effect of subsequent termination of waiver.--If an 
        individual terminates a waiver under subsection (k)(3), the 
        enrollment of such individual in the voucher program shall be 
        terminated on the date on which the termination becomes 
        effective.''.
    (b) Amendment of Internal Revenue Code of 1986.--Paragraph (7) of 
section 223(b) of the Internal Revenue Code of 1986 (relating to 
Medicare eligible individuals) is amended to read as follows:
            ``(7) Medicare eligible individuals.--
                    ``(A) In general.--The limitation under this 
                subsection for any month with respect to an individual 
                shall be zero for any month such individual is entitled 
                to benefits under title XVIII of the Social Security 
                Act.
                    ``(B) Medicare alternative voucher program.--In the 
                case of an individual who is enrolled in the Medicare 
                Alternative Voucher Program under section 226(l) of the 
                Social Security Act, the applicable limitation under 
                subparagraphs (A) and (B) of paragraph (2) shall be 
                increased by the amount of the voucher described in 
                paragraph (3) of such section which is contributed to a 
                health savings account of such individual.''.
    (c) Effective Date.--
            (1) In general.--The amendment made by subsection (a) shall 
        take effect on the date that is six months after the date of 
        the enactment of this Act and shall apply to an individual who 
        becomes entitled to benefits under part A of title XVIII of the 
        Social Security Act on or after such date of the enactment.
            (2) Amendment of internal revenue code of 1986.--The 
        amendment made by subsection (b) shall apply to months ending 
        after the date referred to in paragraph (1), in taxable years 
        ending after such date.

SEC. 4. SUSPENSION OF MEDICARE LATE ENROLLMENT PENALTIES BETWEEN AGES 
              65 AND 70.

    (a) Part B.--The second sentence of section 1839(b) of the Social 
Security Act (42 U.S.C. 1395r(b)) is amended by inserting before the 
period the following: ``and there shall not be taken into account (for 
individuals not entitled to benefits under section 226A) any month 
during any part of which the individual attained age 65 and has not 
attained age 70''.
    (b) Part D.--
            (1) In general.--Section 1860D-13(b)(2) of such Act (42 
        U.S.C. 1395w-113(b)(2)) is amended by adding at the end the 
        following sentence: ``For purposes of the preceeding sentence, 
        in the case of an individual not entitled to benefits under 
        part A under section 226A, a continuous period of eligibility 
        shall not include any month during any part of which the 
        individual attained age 65 and has not attained age 70.''.
            (2) Conforming amendment.--Section 1860D-1(b)(6)(A) of such 
        Act (42 U.S.C. 1395w-101(b)(6)(A)) is amended by inserting 
        after ``paragraph (2)'' the following: ``, but excluding the 
        period between 65 and 70 years of age''.
    (c) Effective Date.--The amendments made by this section shall 
apply to individuals who attain 65 years of age in a month after the 
month in which this Act is enacted.