II 

109TH CONGRESS 

2D SESSION S. 2601 

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. 

IN THE SENATE OF THE UNITED STATES 

APRIL 7, 2006 

Mr. ALEXANDER (for himself and Mr. DEMINT) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Health Care Choices 

5 for Seniors Act’’. 


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1 SEC. 2. FINDINGS. 

2 Congress finds the following: 

3 (1) The Social Security Administration’s Pro4 gram Operations Manual System section HI 

5 00801.002, titled ‘‘Waiver of Hospital Insurance 

6 Entitlement by Monthly Beneficiary’’, provides that 

7 an individual who does not sign up for part A of the 

8 medicare program when the individual signs up for 

9 social security benefits will lose such benefits, re10 gardless of the desire of the individual to not partici11 pate in the medicare program because of religious or 

12 philosophical reasons or a preference to have private 

13 health insurance. 

14 (2) As part of the Medicare Prescription Drug, 

15 Improvement, and Modernization Act of 2003 (Pub16 lic Law 108–173), Congress increased health insur17 ance options by authorizing health savings accounts 

18 into which individuals may make annual contribu19 tions of not more than $2,650 and families may 

20 make such contributions of not more than $5,250 

21 that are allowable as deductions for income tax pur22 poses. Seniors are not allowed to deduct contribu23 tions to their health savings account after the date 

24 of the entitlement of such seniors to medicare bene25 fits. 


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1 (3) Section 1802(b) of the Social Security Act 

2 (42 U.S.C. 1395a(b)), added by section 4507 of the 

3 Balanced Budget Act of 1997, states that a medi4 care beneficiary may only enter into a private con5 tract with a physician for an item or service if no 

6 claim for payment under title XVIII of such Act will 

7 be submitted. In the case of such contract, the phy8 sician must sign an affidavit that acknowledges such 

9 contract and that provides that the physician will 

10 not submit a claim, and will forgo reimbursement, 

11 under such title for an item or service provided to 

12 any medicare beneficiary for a period of two years. 

13 SEC. 3. AUTHORITY TO ELECT VOUCHER PROGRAM IN14 STEAD OF MEDICARE PART A ENTITLEMENT. 

15 (a) IN GENERAL.—Section 226 of the Social Security 

16 Act (42 U.S.C. 426) is amended by adding at the end the 

17 following new subsections: 

18 ‘‘(k) WAIVER OF ENTITLEMENT AND ELECTION OF

19 VOUCHER PROGRAM.— 

20 ‘‘(1) IN GENERAL.—Notwithstanding the pre21 vious provisions of this section, the Secretary shall 

22 establish a procedure under which an individual oth23 erwise entitled under subsection (a) to benefits 

24 under part A of title XVIII may waive such entitle25 ment and be automatically enrolled in the Medicare 


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1 Alternative Voucher Program established under sub2 section (l) if— 

3 ‘‘(A) at the time such waiver is made the 

4 individual— 

5 ‘‘(i) has a health savings account de6 scribed in subsection (d) of section 223 of 

7 the Internal Revenue Code of 1986 (26 

8 U.S.C. 223); and 

9 ‘‘(ii) is enrolled under a high deduct10 ible health plan, as defined in subsection 

11 (c)(1) of such section; and 

12 ‘‘(B) the individual makes such waiver dur13 ing the initial enrollment period described in 

14 section 1837(d). 

15 ‘‘(2) TREATMENT UNDER THE INTERNAL REV16 ENUE CODE OF 1986.—An individual who waives en17 titlement under paragraph (1) shall not be treated 

18 as entitled to benefits under title XVIII for purposes 

19 of section 223(b)(7) of the Internal Revenue Code of 

20 1986. 

21 ‘‘(3) INELIGIBILITY FOR PART B OR D BENE22 FITS.—An individual shall not be eligible for benefits 

23 under part B or D of title XVIII during the period 

24 for which the individual waives entitlement under 

25 part A of such title under paragraph (1). 


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1 ‘‘(4) TERMINATION OF WAIVER AND REENROLL2 MENT UNDER MEDICARE PROGRAM.—The Secretary 

3 shall establish a procedure under which an individual 

4 who waives entitlement under paragraph (1) may 

5 terminate such waiver during an annual period that 

6 shall be the same as the annual general enrollment 

7 period described in section 1837(e). For purposes of 

8 applying parts B and D of title XVIII, such indi9 vidual shall be treated as if the individual were enti10 tled to benefits under part A of such title as of the 

11 date such individual terminates the waiver under 

12 this paragraph. An individual who has terminated 

13 such a waiver may not subsequently make such a 

14 waiver. 

15 ‘‘(l) MEDICARE ALTERNATIVE VOUCHER PRO16 GRAM.— 

17 ‘‘(1) ESTABLISHMENT OF PROGRAM.—The Sec18 retary shall establish a program to be known as the 

19 Medicare Alternative Voucher Program (in this sub20 section referred to as the ‘voucher program’) con21 sistent with this subsection. 

22 ‘‘(2) AUTOMATIC ENROLLMENT.—An individual 

23 who waives entitlement under subsection (k)(1) shall 

24 be enrolled in the voucher program for the period 

25 during which such waiver is in effect. 


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1 ‘‘(3) AMOUNT OF VOUCHER.— 

2 ‘‘(A) AMOUNT BASED ON AGE COHORT.— 

3 ‘‘(i) IN GENERAL.—Subject to clause 

4 (ii), for each month that an individual 

5 within an age cohort is enrolled in the 

6 voucher program, the Secretary shall pro7 vide a voucher to such individual in an 

8 amount that is equal to the monthly actu9 arial rate for that month computed under 

10 section 1818(d)(1) multiplied by the age 

11 cohort adjustment factor for such age co12 hort under subparagraph (B). 

13 ‘‘(ii) MONTHLY LIMIT.—The amount 

14 of a voucher provided to an individual for 

15 a month may not exceed $200. 

16 ‘‘(B) AGE COHORT ADJUSTMENT FAC17 TOR.—For each age cohort the Secretary shall 

18 determine an age cohort adjustment factor 

19 equal to the ratio of— 

20 ‘‘(i) the monthly actuarial rate de21 scribed in section 1818(d)(1) as deter22 mined by the Secretary for individuals in 

23 such age cohort, to 

24 ‘‘(ii) the monthly actuarial rate de25 scribed in such section. 


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1 ‘‘(C) AGE COHORT DEFINED.—For pur2 poses of this paragraph, an ‘age cohort’ means 

3 a group of individuals whose age falls within a 

4 span of five consecutive years, consistent with 

5 the following: 

6 ‘‘(i) The first such span begins at age 

7 65. 

8 ‘‘(ii) Other spans follow consecutively. 

9 ‘‘(4) PERMISSIBLE USE OF VOUCHER.—A 

10 voucher under paragraph (3) may be used only for 

11 the following purposes: 

12 ‘‘(A) As a contribution into a health sav13 ings account established by such individual, as 

14 described in subsection (k)(1)(A). 

15 ‘‘(B) For payment of premiums for enroll16 ment of such individual under a high deductible 

17 health plan described in such subsection. 

18 ‘‘(5) EFFECT OF SUBSEQUENT TERMINATION

19 OF WAIVER.—If an individual terminates a waiver 

20 under subsection (k)(4), the enrollment of such indi21 vidual in the voucher program shall be terminated 

22 on the date on which the termination becomes effec23 tive.’’. 

24 (b) AMENDMENT OF INTERNAL REVENUE CODE OF

25 1986.—Paragraph (7) of section 223(b) of the Internal 


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1 Revenue Code of 1986 (relating to medicare eligible indi2 viduals) is amended to read as follows: 

3 ‘‘(7) MEDICARE ELIGIBLE INDIVIDUALS.— 

4 ‘‘(A) IN GENERAL.—The limitation under 

5 this subsection for any month with respect to 

6 an individual shall be zero for any month such 

7 individual is entitled to benefits under title 

8 XVIII of the Social Security Act. 

9 ‘‘(B) MEDICARE ALTERNATIVE VOUCHER

10 PROGRAM.—In the case of an individual who is 

11 enrolled in the Medicare Alternative Voucher 

12 Program under section 226(l) of the Social Se13 curity Act, the applicable limitation under sub14 paragraphs (A) and (B) of paragraph (2) shall 

15 be increased by the amount of the voucher de16 scribed in paragraph (3) of such section which 

17 is contributed to a health savings account of 

18 such individual.’’. 

19 (c) EFFECTIVE DATE.— 

20 (1) IN GENERAL.—The amendment made by 

21 subsection (a) shall take effect on the date that is 

22 six months after the date of the enactment of this 

23 Act and shall apply to an individual who becomes 

24 entitled to benefits under part A of title XVIII of 


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1 the Social Security Act on or after such date of the 

2 enactment. 

3 (2) AMENDMENT OF INTERNAL REVENUE CODE

4 OF 1986.—The amendment made by subsection (b) 

5 shall apply to months ending after the date referred 

6 to in paragraph (1), in taxable years ending after 

7 such date. 

8 SEC. 4. SUSPENSION OF MEDICARE LATE ENROLLMENT 

9 PENALTIES BETWEEN AGES 65 AND 70 IF THE 

10 INDIVIDUAL IS ENROLLED IN THE MEDICARE 

11 ALTERNATIVE VOUCHER PROGRAM. 

12 (a) PART B.—The second sentence of section 1839(b) 

13 of the Social Security Act (42 U.S.C. 1395r(b)) is amend14 ed by inserting before the period the following: ‘‘and there 

15 shall not be taken into account (for individuals not entitled 

16 to benefits under section 226A) any month during any 

17 part of which the individual attained age 65 and had not 

18 attained age 70 and was enrolled in the Medicare Alter19 native Voucher Program under section 226(l)’’. 

20 (b) PART D.— 

21 (1) IN GENERAL.—Section 1860D–13(b)(2) of 

22 such Act (42 U.S.C. 1395w–113(b)(2)) is amended 

23 by adding at the end the following sentence: ‘‘For 

24 purposes of the preceding sentence, in the case of an 

25 individual not entitled to benefits under part A 


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1 under section 226A, a continuous period of eligibility 

2 shall not include any month during any part of 

3 which the individual attained age 65 and had not at4 tained age 70 and was enrolled in the Medicare Al5 ternative Voucher Program under section 226(l).’’. 

6 (2) CONFORMING AMENDMENT.—Section 

7 1860D–1(b)(6)(A) of such Act (42 U.S.C. 1395w– 

8 101(b)(6)(A)) is amended by inserting after ‘‘para9 graph (2)’’ the following: ‘‘, but excluding the period 

10 between 65 and 70 years of age if the individual was 

11 enrolled in the Medicare Alternative Voucher Pro12 gram under section 226(l)’’. 

13 (c) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to individuals who attain 65 years 

15 of age in a month after the month in which this Act is 

16 enacted. 

Æ 


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