I 

108TH CONGRESS 

1ST SESSION H. R. 3189

To amend title XVIII of the Social Security Act and the Employee Retirement 

Income Security Act of 1974 to improve access to health insurance 

and Medicare benefits for individuals ages 55 to 65 to be fully funded 

through premiums and anti-fraud provisions, to amend title XIX of 

the Social Security Act to provide financial assistance for those individuals who are too poor to afford the premiums, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 25, 2003

Mr. PALLONE introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Energy 

and Commerce, and Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of 

such provisions as fall within the jurisdiction of the committee concerned 

A BILL

To amend title XVIII of the Social Security Act and the 

Employee Retirement Income Security Act of 1974 to 

improve access to health insurance and Medicare benefits 

for individuals ages 55 to 65 to be fully funded through 

premiums and anti-fraud provisions, to amend title XIX 

of the Social Security Act to provide financial assistance 

for those individuals who are too poor to afford the 

premiums, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

2 (a) SHORT TITLE.—This Act may be cited as the 

3 ‘‘Early Medicare Access and Affordability Act of 2003’’. 

4 (b) TABLE OF CONTENTS.—

Sec. 1. Short title; table of contents. 

TITLE I—ACCESS TO MEDICARE BENEFITS FOR INDIVIDUALS 62 

TO 65 YEARS OF AGE 

Sec. 101. Access to Medicare benefits for individuals 62 to 65 years of age. 

‘‘PART D—PURCHASE OF MEDICARE BENEFITS BY CERTAIN INDIVIDUALS

AGE 62 TO 65 YEARS OF AGE

‘‘Sec. 1859. Program benefits; eligibility. 

‘‘Sec. 1859A. Enrollment process; coverage. 

‘‘Sec. 1859B. Premiums. 

‘‘Sec. 1859C. Payment of premiums. 

‘‘Sec. 1859D. Medicare Early Access Trust Fund. 

‘‘Sec. 1859E. Oversight and accountability. 

‘‘Sec. 1859F. Administration and miscellaneous. 

TITLE II—ACCESS TO MEDICARE BENEFITS FOR DISPLACED 

WORKERS 55 TO 62 YEARS OF AGE 

Sec. 201. Access to Medicare benefits for displaced workers 55 to 62 years of 

age. 

TITLE III—COBRA PROTECTION FOR EARLY RETIREES 

Subtitle A—Amendments to the Employee Retirement Income Security Act of 

1974

Sec. 301. COBRA continuation benefits for certain retired workers who lose retiree health coverage. 

Subtitle B—Amendments to the Public Health Service Act 

Sec. 311. COBRA continuation benefits for certain retired workers who lose retiree health coverage. 

Subtitle C—Amendments to the Internal Revenue Code of 1986

Sec. 321. COBRA continuation benefits for certain retired workers who lose retiree health coverage. 

TITLE IV—FINANCING 
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Sec. 401. Reference to financing provisions. 

TITLE V—PROVISION OF PREMIUM ASSISTANCE FOR LOW-INCOME INDIVIDUALS PURCHASING EARLY COVERAGE UNDER 

THE MEDICARE PROGRAM 

Sec. 501. Provision of premium assistance for low-income individuals purchasing 

early coverage under the Medicare program.

1 TITLE I—ACCESS TO MEDICARE 

2 BENEFITS FOR INDIVIDUALS 

3 62 TO 65 YEARS OF AGE 

4 SEC. 101. ACCESS TO MEDICARE BENEFITS FOR INDIVID5 UALS 62 TO 65 YEARS OF AGE. 

6 (a) IN GENERAL.—Title XVIII of the Social Security 

7 Act (42 U.S.C. 1395 et seq.) is amended—

8 (1) by redesignating section 1859 and part D 

9 as section 1858 and part E, respectively; and 

10 (2) by inserting after such section the following 

11 new part:

12 ‘‘PART D—PURCHASE OF MEDICARE BENEFITS BY

13 CERTAIN INDIVIDUALS AGE 62 TO 65 YEARS OF AGE

14 ‘‘SEC. 1859. PROGRAM BENEFITS; ELIGIBILITY. 

15 ‘‘(a) ENTITLEMENT TO MEDICARE BENEFITS FOR

16 ENROLLED INDIVIDUALS.—

17 ‘‘(1) IN GENERAL.—An individual enrolled 

18 under this part is entitled to the same benefits 

19 under this title as an individual entitled to benefits 

20 under part A and enrolled under part B. 

21 ‘‘(2) DEFINITIONS.—For purposes of this part: 
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1 ‘‘(A) FEDERAL OR STATE COBRA CONTINU2 ATION PROVISION.—The term ‘Federal or State 

3 COBRA continuation provision’ has the mean4 ing given the term ‘COBRA continuation provi5 sion’ in section 2791(d)(4) of the Public Health 

6 Service Act and includes a comparable State 

7 program, as determined by the Secretary. 

8 ‘‘(B) FEDERAL HEALTH INSURANCE PRO9 GRAM DEFINED.—The term ‘Federal health in10 surance program’ means any of the following: 

11 ‘‘(i) MEDICARE.—Part A or part B of 

12 this title (other than by reason of this 

13 part). 

14 ‘‘(ii) MEDICAID.—A State plan under 

15 title XIX. 

16 ‘‘(iii) FEHBP.—The Federal employ17 ees health benefit program under chapter 

18 89 of title 5, United States Code. 

19 ‘‘(iv) TRICARE.—The TRICARE 

20 program (as defined in section 1072(7) of 

21 title 10, United States Code). 

22 ‘‘(v) ACTIVE DUTY MILITARY.—Health 

23 benefits under title 10, United States 

24 Code, to an individual as a member of the 

25 uniformed services of the United States. 
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1 ‘‘(C) GROUP HEALTH PLAN.—The term 

2 ‘group health plan’ has the meaning given such

3 term in section 2791(a)(1) of the Public Health 

4 Service Act.

5 ‘‘(b) ELIGIBILITY OF INDIVIDUALS AGE 62 TO 65 

6 YEARS OF AGE.—

7 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

8 an individual who meets the following requirements 

9 with respect to a month is eligible to enroll under 

10 this part with respect to such month: 

11 ‘‘(A) AGE.—As of the last day of the 

12 month, the individual has attained 62 years of 

13 age, but has not attained 65 years of age. 

14 ‘‘(B) MEDICARE ELIGIBILITY (BUT FOR

15 AGE).—The individual would be eligible for ben16 efits under part A or part B for the month if 

17 the individual were 65 years of age. 

18 ‘‘(C) NOT ELIGIBLE FOR COVERAGE

19 UNDER GROUP HEALTH PLANS OR FEDERAL

20 HEALTH INSURANCE PROGRAMS.—The indi21 vidual is not eligible for benefits or coverage 

22 under a Federal health insurance program (as 

23 defined in subsection (a)(2)(B)) or under a 

24 group health plan (other than such eligibility 

25 merely through a Federal or State COBRA con-
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1 tinuation provision) as of the last day of the 

2 month involved.

3 ‘‘(2) LIMITATION ON ELIGIBILITY IF TERMI4 NATED ENROLLMENT.—If an individual described in 

5 paragraph (1) enrolls under this part and coverage 

6 of the individual is terminated under section 

7 1859A(d) (other than because of age), the individual 

8 is not again eligible to enroll under this subsection 

9 unless the following requirements are met: 

10 ‘‘(A) NEW COVERAGE UNDER GROUP

11 HEALTH PLAN OR FEDERAL HEALTH INSUR12 ANCE PROGRAM.—After the date of termination 

13 of coverage under such section, the individual 

14 obtains coverage under a group health plan or 

15 under a Federal health insurance program. 

16 ‘‘(B) SUBSEQUENT LOSS OF NEW COV17 ERAGE.—The individual subsequently loses eli18 gibility for the coverage described in subpara19 graph (A) and exhausts any eligibility the indi20 vidual may subsequently have for coverage 

21 under a Federal or State COBRA continuation 

22 provision. 

23 ‘‘(3) CHANGE IN HEALTH PLAN ELIGIBILITY

24 DOES NOT AFFECT COVERAGE.—In the case of an 

25 individual who is eligible for and enrolls under this 
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1 part under this subsection, the individual’s continued 

2 entitlement to benefits under this part shall not be 

3 affected by the individual’s subsequent eligibility for 

4 benefits or coverage described in paragraph (1)(C), 

5 or entitlement to such benefits or coverage. 

6 ‘‘SEC. 1859A. ENROLLMENT PROCESS; COVERAGE. 

7 ‘‘(a) IN GENERAL.—An individual may enroll in the 

8 program established under this part only in such manner 

9 and form as may be prescribed by regulations, and only 

10 during an enrollment period prescribed by the Secretary 

11 consistent with the provisions of this section. Such regula12 tions shall provide a process under which—

13 ‘‘(1) individuals eligible to enroll as of a month 

14 are permitted to pre-enroll during a prior month 

15 within an enrollment period described in subsection 

16 (b); and 

17 ‘‘(2) each individual seeking to enroll under sec18 tion 1859(b) is notified, before enrolling, of the de19 ferred monthly premium amount the individual will 

20 be liable for under section 1859C(b) upon attaining 

21 65 years of age as determined under section 

22 1859B(c)(3). 

23 ‘‘(b) ENROLLMENT PERIODS.—
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1 ‘‘(1) INDIVIDUALS 62 TO 65 YEARS OF AGE.—In 

2 the case of individuals eligible to enroll under this 

3 part under section 1859(b)—

4 ‘‘(A) INITIAL ENROLLMENT PERIOD.—If 

5 the individual is eligible to enroll under such 

6 section for July 2005, the enrollment period 

7 shall begin on May 1, 2005, and shall end on 

8 August 31, 2005. Any such enrollment before 

9 July 1, 2005, is conditioned upon compliance 

10 with the conditions of eligibility for July 2005. 

11 ‘‘(B) SUBSEQUENT PERIODS.—If the indi12 vidual is eligible to enroll under such section for 

13 a month after July 2005, the enrollment period 

14 shall begin on the first day of the second month 

15 before the month in which the individual first is 

16 eligible to so enroll and shall end four months 

17 later. Any such enrollment before the first day 

18 of the third month of such enrollment period is 

19 conditioned upon compliance with the condi20 tions of eligibility for such third month. 

21 ‘‘(2) AUTHORITY TO CORRECT FOR GOVERN22 MENT ERRORS.—The provisions of section 1837(h) 

23 apply with respect to enrollment under this part in 

24 the same manner as they apply to enrollment under 

25 part B. 
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1 ‘‘(c) DATE COVERAGE BEGINS.—

2 ‘‘(1) IN GENERAL.—The period during which 

3 an individual is entitled to benefits under this part 

4 shall begin as follows, but in no case earlier than 

5 July 1, 2005:

6 ‘‘(A) In the case of an individual who en7 rolls (including pre-enrolls) before the month in 

8 which the individual satisfies eligibility for en9 rollment under section 1859, the first day of 

10 such month of eligibility. 

11 ‘‘(B) In the case of an individual who en12 rolls during or after the month in which the in13 dividual first satisfies eligibility for enrollment 

14 under such section, the first day of the fol15 lowing month. 

16 ‘‘(2) AUTHORITY TO PROVIDE FOR PARTIAL

17 MONTHS OF COVERAGE.—Under regulations, the 

18 Secretary may, in the Secretary’s discretion, provide 

19 for coverage periods that include portions of a 

20 month in order to avoid lapses of coverage. 

21 ‘‘(3) LIMITATION ON PAYMENTS.—No payments 

22 may be made under this title with respect to the ex23 penses of an individual enrolled under this part un24 less such expenses were incurred by such individual 
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1 during a period which, with respect to the individual, 

2 is a coverage period under this section. 

3 ‘‘(d) TERMINATION OF COVERAGE.—

4 ‘‘(1) IN GENERAL.—An individual’s coverage 

5 period under this part shall continue until the indi6 vidual’s enrollment has been terminated at the ear7 liest of the following: 

8 ‘‘(A) GENERAL PROVISIONS.—

9 ‘‘(i) NOTICE.—The individual files no10 tice (in a form and manner prescribed by 

11 the Secretary) that the individual no 

12 longer wishes to participate in the insur13 ance program under this part. 

14 ‘‘(ii) NONPAYMENT OF PREMIUMS.—

15 The individual fails to make payment of 

16 premiums required for enrollment under 

17 this part. 

18 ‘‘(iii) MEDICARE ELIGIBILITY.—The 

19 individual becomes entitled to benefits 

20 under part A or enrolled under part B 

21 (other than by reason of this part). 

22 ‘‘(B) TERMINATION BASED ON AGE.—The 

23 individual attains 65 years of age. 

24 ‘‘(2) EFFECTIVE DATE OF TERMINATION.—
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1 ‘‘(A) NOTICE.—The termination of a cov2 erage period under paragraph (1)(A)(i) shall 

3 take effect at the close of the month following 

4 for which the notice is filed.

5 ‘‘(B) NONPAYMENT OF PREMIUM.—The 

6 termination of a coverage period under para7 graph (1)(A)(ii) shall take effect on a date de8 termined under regulations, which may be de9 termined so as to provide a grace period in 

10 which overdue premiums may be paid and cov11 erage continued. The grace period determined 

12 under the preceding sentence shall not exceed 

13 60 days; except that it may be extended for an 

14 additional 30 days in any case where the Sec15 retary determines that there was good cause for 

16 failure to pay the overdue premiums within 

17 such 60-day period. 

18 ‘‘(C) AGE OR MEDICARE ELIGIBILITY.—

19 The termination of a coverage period under 

20 paragraph (1)(A)(iii) or (1)(B) shall take effect 

21 as of the first day of the month in which the 

22 individual attains 65 years of age or becomes 

23 entitled to benefits under part A or enrolled for 

24 benefits under part B (other than by reason of 

25 this part). 
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1 ‘‘SEC. 1859B. PREMIUMS. 

2 ‘‘(a) AMOUNT OF MONTHLY PREMIUMS.—

3 ‘‘(1) BASE MONTHLY PREMIUMS.—The Sec4 retary shall, during September of each year (begin5 ning with 2004), determine the following premium 

6 rates which shall apply with respect to coverage pro7 vided under this title for any month in the suc8 ceeding year: 

9 ‘‘(A) BASE MONTHLY PREMIUM FOR INDI10 VIDUALS 62 YEARS OF AGE OR OLDER.—A base 

11 monthly premium for individuals 62 years of 

age or older, equal to 1 12 ⁄12 of the base annual 

13 premium rate computed under subsection (b) 

14 for each premium area. 

15 ‘‘(2) DEFERRED MONTHLY PREMIUMS FOR IN16 DIVIDUALS 62 YEARS OF AGE OR OLDER.—The Sec17 retary shall, during September of each year (begin18 ning with 2004), determine under subsection (c) the 

19 amount of deferred monthly premiums that shall 

20 apply with respect to individuals who first obtain 

21 coverage under this part under section 1859(b) in 

22 the succeeding year. 

23 ‘‘(3) ESTABLISHMENT OF PREMIUM AREAS.—

24 For purposes of this part, the term ‘premium area’ 

25 means such an area as the Secretary shall specify to 

26 carry out this part. The Secretary from time to time 
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1 may change the boundaries of such premium areas. 

2 The Secretary shall seek to minimize the number of 

3 such areas specified under this paragraph.

4 ‘‘(b) BASE ANNUAL PREMIUM FOR INDIVIDUALS 62 

5 YEARS OF AGE OR OLDER.—

6 ‘‘(1) NATIONAL, PER CAPITA AVERAGE.—The 

7 Secretary shall estimate the average, annual per 

8 capita amount that would be payable under this title 

9 with respect to individuals residing in the United 

10 States who meet the requirement of section 

11 1859(b)(1)(A) as if all such individuals were eligible 

12 for (and enrolled) under this title during the entire 

13 year (and assuming that section 1862(b)(2)(A)(i) 

14 did not apply). 

15 ‘‘(2) GEOGRAPHIC ADJUSTMENT.—The Sec16 retary shall adjust the amount determined under 

17 paragraph (1) for each premium area (specified 

18 under subsection (a)(3)) in order to take into ac19 count such factors as the Secretary deems appro20 priate and shall limit the maximum premium under 

21 this paragraph in a premium area to assure partici22 pation in all areas throughout the United States. 

23 ‘‘(3) BASE ANNUAL PREMIUM.—The base an24 nual premium under this subsection for months in a 

25 year for individuals 62 years of age or older residing 
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1 in a premium area is equal to the average, annual 

2 per capita amount estimated under paragraph (1) 

3 for the year, adjusted for such area under paragraph 

4 (2).

5 ‘‘(c) DEFERRED PREMIUM RATE FOR INDIVIDUALS

6 62 YEARS OF AGE OR OLDER.—The deferred premium 

7 rate for individuals with a group of individuals who obtain 

8 coverage under section 1859(b) in a year shall be com9 puted by the Secretary as follows: 

10 ‘‘(1) ESTIMATION OF NATIONAL, PER CAPITA

11 ANNUAL AVERAGE EXPENDITURES FOR ENROLL12 MENT GROUP.—The Secretary shall estimate the av13 erage, per capita annual amount that will be paid 

14 under this part for individuals in such group during 

15 the period of enrollment under section 1859(b). In 

16 making such estimate for coverage beginning in a 

17 year before 2004, the Secretary may base such esti18 mate on the average, per capita amount that would 

19 be payable if the program had been in operation over 

20 a previous period of at least 4 years. 

21 ‘‘(2) DIFFERENCE BETWEEN ESTIMATED EX22 PENDITURES AND ESTIMATED PREMIUMS.—Based 

23 on the characteristics of individuals in such group, 

24 the Secretary shall estimate during the period of 
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1 coverage of the group under this part under section 

2 1859(b) the amount by which—

3 ‘‘(A) the amount estimated under para4 graph (1); exceeds 

5 ‘‘(B) the average, annual per capita 

6 amount of premiums that will be payable for 

7 months during the year under section 1859C(a) 

8 for individuals in such group (including pre9 miums that would be payable if there were no 

10 terminations in enrollment under clause (i) or 

11 (ii) of section 1859A(d)(1)(A)). 

12 ‘‘(3) ACTUARIAL COMPUTATION OF DEFERRED

13 MONTHLY PREMIUM RATES.—The Secretary shall 

14 determine deferred monthly premium rates for indi15 viduals in such group in a manner so that—

16 ‘‘(A) the estimated actuarial value of such 

17 premiums payable under section 1859C(b), is 

18 equal to 

19 ‘‘(B) the estimated actuarial present value 

20 of the differences described in paragraph (2). 

21 Such rate shall be computed for each individual in 

22 the group in a manner so that the rate is based on 

23 the number of months between the first month of 

24 coverage based on enrollment under section 1859(b) 
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1 and the month in which the individual attains 65 

2 years of age.

3 ‘‘(4) DETERMINANTS OF ACTUARIAL PRESENT

4 VALUES.—The actuarial present values described in 

5 paragraph (3) shall reflect—

6 ‘‘(A) the estimated probabilities of survival 

7 at ages 62 through 84 for individuals enrolled 

8 during the year; and 

9 ‘‘(B) the estimated effective average inter10 est rates that would be earned on investments 

11 held in the trust funds under this title during 

12 the period in question. 

13 ‘‘SEC. 1859C. PAYMENT OF PREMIUMS. 

14 ‘‘(a) PAYMENT OF BASE MONTHLY PREMIUM.—

15 ‘‘(1) IN GENERAL.—The Secretary shall provide 

16 for payment and collection of the base monthly pre17 mium, determined under section 1859B(a)(1) for the 

18 age (and age cohort, if applicable) of the individual 

19 involved and the premium area in which the indi20 vidual principally resides, in the same manner as for 

21 payment of monthly premiums under section 1840, 

22 except that, for purposes of applying this section, 

23 any reference in such section to the Federal Supple24 mentary Medical Insurance Trust Fund is deemed a 
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1 reference to the Trust Fund established under sec2 tion 1859D. 

3 ‘‘(2) PERIOD OF PAYMENT.—In the case of an 

4 individual who participates in the program estab5 lished by this title, the base monthly premium shall 

6 be payable for the period commencing with the first 

7 month of the individual’s coverage period and ending 

8 with the month in which the individual’s coverage 

9 under this title terminates. 

10 ‘‘(b) PAYMENT OF DEFERRED PREMIUM FOR INDI11 VIDUALS COVERED AFTER ATTAINING AGE 62.—

12 ‘‘(1) RATE OF PAYMENT.—

13 ‘‘(A) IN GENERAL.—In the case of an indi14 vidual who is covered under this part for a 

15 month pursuant to an enrollment under section 

16 1859(b), subject to subparagraph (B), the indi17 vidual is liable for payment of a deferred pre18 mium in each month during the period de19 scribed in paragraph (2) in an amount equal to 

20 the full deferred monthly premium rate deter21 mined for the individual under section 

22 1859B(c). 

23 ‘‘(B) SPECIAL RULES FOR THOSE WHO

24 DISENROLL EARLY.—
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1 ‘‘(i) IN GENERAL.—If such an individ2 ual’s enrollment under such section is ter3 minated under clause (i) or (ii) of section 

4 1859A(d)(1)(A), subject to clause (ii), the 

5 amount of the deferred premium otherwise 

6 established under this paragraph shall be 

7 pro-rated to reflect the number of months 

8 of coverage under this part under such en9 rollment compared to the maximum num10 ber of months of coverage that the indi11 vidual would have had if the enrollment 

12 were not so terminated. 

13 ‘‘(ii) ROUNDING TO 12-MONTH MIN14 IMUM COVERAGE PERIODS.—In applying 

15 clause (i), the number of months of cov16 erage (if not a multiple of 12) shall be 

17 rounded to the next highest multiple of 12 

18 months, except that in no case shall this 

19 clause result in a number of months of 

20 coverage exceeding the maximum number 

21 of months of coverage that the individual 

22 would have had if the enrollment were not 

23 so terminated. 

24 ‘‘(2) PERIOD OF PAYMENT.—The period de25 scribed in this paragraph for an individual is the pe-
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1 riod beginning with the first month in which the in2 dividual has attained 65 years of age and ending 

3 with the month before the month in which the indi4 vidual attains 85 years of age. 

5 ‘‘(3) COLLECTION.—In the case of an individual 

6 who is liable for a premium under this subsection, 

7 the amount of the premium shall be collected in the

8 same manner as the premium for enrollment under 

9 such part is collected under section 1840, except 

10 that any reference in such section to the Federal 

11 Supplementary Medical Insurance Trust Fund is 

12 deemed to be a reference to the Medicare Early Ac13 cess Trust Fund established under section 1859D. 

14 ‘‘(c) APPLICATION OF CERTAIN PROVISIONS.—The 

15 provisions of section 1840 (other than subsection (h)) 

16 shall apply to premiums collected under this section in the 

17 same manner as they apply to premiums collected under 

18 part B, except that any reference in such section to the 

19 Federal Supplementary Medical Insurance Trust Fund is 

20 deemed a reference to the Trust Fund established under 

21 section 1859D. 

22 ‘‘SEC. 1859D. MEDICARE EARLY ACCESS TRUST FUND. 

23 ‘‘(a) ESTABLISHMENT OF TRUST FUND.—

24 ‘‘(1) IN GENERAL.—There is hereby created on 

25 the books of the Treasury of the United States a 
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1 trust fund to be known as the ‘Medicare Early Ac2 cess Trust Fund’ (in this section referred to as the

3 ‘Trust Fund’). The Trust Fund shall consist of such 

4 gifts and bequests as may be made as provided in 

5 section 201(i)(1) and such amounts as may be de6 posited in, or appropriated to, such fund as provided 

7 in this title.

8 ‘‘(2) PREMIUMS.—Premiums collected under 

9 section 1859B shall be transferred to the Trust 

10 Fund. 

11 ‘‘(3) TRANSFER OF SAVINGS FROM NEW FRAUD

12 AND ABUSE INITIATIVES.—

13 ‘‘(A) IN GENERAL.—There is hereby trans14 ferred to the Trust Fund from the Federal 

15 Hospital Insurance Trust Fund and from the 

16 Federal Supplementary Medical Insurance 

17 Trust Fund amounts equivalent to the amounts 

18 (specified under subparagraph (B)) of the re19 ductions in expenditures under such respective 

20 trust fund as may be attributable to the enact21 ment of the Medicare Fraud and Overpayment 

22 Act of 2003. 

23 ‘‘(B) USE OF CBO ESTIMATES.—For each 

24 fiscal year during the 10-fiscal-year period be25 ginning with fiscal year 2005, the amounts 
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1 under subparagraph (A) shall be the amounts 

2 described in such subparagraph as determined

3 by the Congressional Budget Office at the time 

4 of, and in connection with, the enactment of the 

5 Early Medicare Access and Affordability Act of 

6 2003. For subsequent fiscal years, the amounts 

7 under subparagraph (A) shall be the amount 

8 determined under this subparagraph for the 

9 previous fiscal year increased by the same per10 centage as the percentage increase in aggregate 

11 expenditures under this title from the second 

12 previous fiscal year to the previous fiscal year. 

13 ‘‘(b) INCORPORATION OF PROVISIONS.—

14 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

15 subsections (b) through (i) of section 1841 shall 

16 apply with respect to the Trust Fund and this title 

17 in the same manner as they apply with respect to 

18 the Federal Supplementary Medical Insurance Trust 

19 Fund and part B, respectively. 

20 ‘‘(2) MISCELLANEOUS REFERENCES.—In apply21 ing provisions of section 1841 under paragraph 

22 (1)—

23 ‘‘(A) any reference in such section to ‘this 

24 part’ is construed to refer to this part D; 
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1 ‘‘(B) any reference in section 1841(h) to 

2 section 1840(d) and in section 1841(i) to sec3 tions 1840(b)(1) and 1842(g) are deemed ref4 erences to comparable authority exercised under 

5 this part; and 

6 ‘‘(C) payments may be made under section 

7 1841(g) to the Trust Funds under sections 

8 1817 and 1841 as reimbursement to such funds 

9 for payments they made for benefits provided 

10 under this part. 

11 ‘‘SEC. 1859E. OVERSIGHT AND ACCOUNTABILITY. 

12 ‘‘(a) THROUGH ANNUAL REPORTS OF TRUSTEES.—

13 The Board of Trustees of the Medicare Early Access 

14 Trust Fund under section 1859D(b)(1) shall report on an 

15 annual basis to Congress concerning the status of the 

16 Trust Fund and the need for adjustments in the program 

17 under this part to maintain financial solvency of the pro18 gram under this part. 

19 ‘‘(b) PERIODIC GAO REPORTS.—The Comptroller 

20 General of the United States shall periodically submit to 

21 Congress reports on the adequacy of the financing of cov22 erage provided under this part. The Comptroller General 

23 shall include in such report such recommendations for ad24 justments in such financing and coverage as the Comp-
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1 troller General deems appropriate in order to maintain fi2 nancial solvency of the program under this part. 

3 ‘‘SEC. 1859F. ADMINISTRATION AND MISCELLANEOUS. 

4 ‘‘(a) TREATMENT FOR PURPOSES OF TITLE.—Ex5 cept as otherwise provided in this part—

6 ‘‘(1) individuals enrolled under this part shall 

7 be treated for purposes of this title as though the in8 dividual were entitled to benefits under part A and 

9 enrolled under part B; and 

10 ‘‘(2) benefits described in section 1859 shall be 

11 payable under this title to such individuals in the 

12 same manner as if such individuals were so entitled 

13 and enrolled. 

14 ‘‘(b) NOT TREATED AS MEDICARE PROGRAM FOR

15 PURPOSES OF MEDICAID PROGRAM.—For purposes of ap16 plying title XIX (including the provision of Medicare cost17 sharing assistance under such title), an individual who is 

18 enrolled under this part shall not be treated as being enti19 tled to benefits under this title. 

20 ‘‘(c) NOT TREATED AS MEDICARE PROGRAM FOR

21 PURPOSES OF COBRA CONTINUATION PROVISIONS.—In 

22 applying a COBRA continuation provision (as defined in 

23 section 2791(d)(4) of the Public Health Service Act), any 

24 reference to an entitlement to benefits under this title 
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1 shall not be construed to include entitlement to benefits 

2 under this title pursuant to the operation of this part.’’.

3 (b) CONFORMING AMENDMENTS TO SOCIAL SECU4 RITY ACT PROVISIONS.—

5 (1) Section 201(i)(1) of the Social Security Act 

6 (42 U.S.C. 401(i)(1)) is amended by striking ‘‘or the 

7 Federal Supplementary Medical Insurance Trust 

8 Fund’’ and inserting ‘‘the Federal Supplementary 

9 Medical Insurance Trust Fund, and the Medicare 

10 Early Access Trust Fund’’.

11 (2) Section 201(g)(1)(A) of such Act (42 

12 U.S.C. 401(g)(1)(A)) is amended by striking ‘‘and 

13 the Federal Supplementary Medical Insurance Trust 

14 Fund established by title XVIII’’ and inserting ‘‘, 

15 the Federal Supplementary Medical Insurance Trust 

16 Fund, and the Medicare Early Access Trust Fund 

17 established by title XVIII’’. 

18 (3) Section 1820(i) of such Act (42 U.S.C. 

19 1395i–4(i)) is amended by striking ‘‘part D’’ and in20 serting ‘‘part E’’. 

21 (4) Part C of title XVIII of such Act is amend22 ed—

23 (A) in section 1851(a)(2)(B) (42 U.S.C. 

24 1395w–21(a)(2)(B)), by striking ‘‘1859(b)(3)’’ 

25 and inserting ‘‘1858(b)(3); 
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1 (B) in section 1851(a)(2)(C) (42 U.S.C. 

2 1395w–21(a)(2)(C)), by striking ‘‘1859(b)(2)’’ 

3 and inserting ‘‘1858(b)(2)’’;

4 (C) in section 1852(a)(1) (42 U.S.C. 

5 1395w–22(a)(1)), by striking ‘‘1859(b)(3)’’ and 

6 inserting ‘‘1858(b)(3); 

7 (D) in section 1852(a)(3)(B)(ii) (42 

8 U.S.C. 1395w–22(a)(3)(B)(ii)), by striking 

9 ‘‘1859(b)(2)(B)’’ and inserting 

10 ‘‘1858(b)(2)(B)’’; 

11 (E) in section 1853(a)(1)(A) (42 U.S.C. 

12 1395w–23(a)(1)(A)), by striking ‘‘1859(e)(4)’’ 

13 and inserting ‘‘1858(e)(4)’’; and 

14 (F) in section 1853(a)(3)(D) (42 U.S.C. 

15 1395w–23(a)(3)(D)), by striking ‘‘1859(e)(4)’’ 

16 and inserting ‘‘1858(e)(4)’’. 

17 (5) Section 1853(c) of such Act (42 U.S.C. 

18 1395w–23(c)) is amended—

19 (A) in paragraph (1), by striking ‘‘or (7)’’ 

20 and inserting ‘‘, (7), or (8)’’, and 

21 (B) by adding at the end the following: 

22 ‘‘(8) ADJUSTMENT FOR EARLY ACCESS.—In ap23 plying this subsection with respect to individuals en24 titled to benefits under part D, the Secretary shall 

25 provide for an appropriate adjustment in the 
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1 Medicare+Choice capitation rate as may be appro2 priate to reflect differences between the population

3 served under such part and the population under 

4 parts A and B.’’. 

5 (c) OTHER CONFORMING AMENDMENTS.—

6 (1) Section 138(b)(4) of the Internal Revenue 

7 Code of 1986 is amended by striking ‘‘1859(b)(3)’’ 

8 and inserting ‘‘1858(b)(3)’’. 

9 (2)(A) Section 602(2)(D)(ii) of the Employee 

10 Retirement Income Security Act of 1974 (29 U.S.C. 

11 1162(2)) is amended by inserting ‘‘(not including an 

12 individual who is so entitled pursuant to enrollment 

13 under section 1859A)’’ after ‘‘Social Security Act’’. 

14 (B) Section 2202(2)(D)(ii) of the Public Health 

15 Service Act (42 U.S.C. 300bb–2(2)(D)(ii)) is amend16 ed by inserting ‘‘(not including an individual who is 

17 so entitled pursuant to enrollment under section 

18 1859A of such Act)’’ after ‘‘Social Security Act’’. 

19 (C) Section 4980B(f)(2)(B)(i)(V) of the Inter20 nal Revenue Code of 1986 is amended by inserting 

21 ‘‘(not including an individual who is so entitled pur22 suant to enrollment under section 1859A of such 

23 Act)’’ after ‘‘Social Security Act’’. 
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1 TITLE II—ACCESS TO MEDICARE 

2 BENEFITS FOR DISPLACED 

3 WORKERS 55 TO 62 YEARS OF 

4 AGE 

5 SEC. 201. ACCESS TO MEDICARE BENEFITS FOR DISPLACED 

6 WORKERS 55 TO 62 YEARS OF AGE. 

7 (a) ELIGIBILITY.—Section 1859 of the Social Secu8 rity Act, as inserted by section 101(a)(2), is amended by 

9 adding at the end the following new subsection:

10 ‘‘(c) DISPLACED WORKERS AND SPOUSES.—

11 ‘‘(1) DISPLACED WORKERS.—Subject to para12 graph (3), an individual who meets the following re13 quirements with respect to a month is eligible to en14 roll under this part with respect to such month: 

15 ‘‘(A) AGE.—As of the last day of the 

16 month, the individual has attained 55 years of 

17 age, but has not attained 62 years of age. 

18 ‘‘(B) MEDICARE ELIGIBILITY (BUT FOR

19 AGE).—The individual would be eligible for ben20 efits under part A or part B for the month if 

21 the individual were 65 years of age. 

22 ‘‘(C) LOSS OF EMPLOYMENT-BASED COV23 ERAGE.—

24 ‘‘(i) ELIGIBLE FOR UNEMPLOYMENT

25 COMPENSATION.—The individual meets the 
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1 requirements relating to period of covered 

2 employment and conditions of separation 

3 from employment to be eligible for unem4 ployment compensation (as defined in sec5 tion 85(b) of the Internal Revenue Code of 

6 1986), based on a separation from employ7 ment occurring on or after January 1, 

8 2004. The previous sentence shall not be 

9 construed as requiring the individual to be 

10 receiving such unemployment compensa11 tion. 

12 ‘‘(ii) LOSS OF EMPLOYMENT-BASED

13 COVERAGE.—Immediately before the time 

14 of such separation of employment, the indi15 vidual was covered under a group health 

16 plan on the basis of such employment, and, 

17 because of such loss, is no longer eligible 

18 for coverage under such plan (including 

19 such eligibility based on the application of 

20 a Federal or State COBRA continuation 

21 provision) as of the last day of the month 

22 involved. 

23 ‘‘(iii) PREVIOUS CREDITABLE COV24 ERAGE FOR AT LEAST 1 YEAR.—As of the 

25 date on which the individual loses coverage 
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1 described in clause (ii), the aggregate of 

2 the periods of creditable coverage (as de3 termined under section 2701(c) of the 

4 Public Health Service Act) is 12 months or 

5 longer. 

6 ‘‘(D) EXHAUSTION OF AVAILABLE COBRA

7 CONTINUATION BENEFITS.—

8 ‘‘(i) IN GENERAL.—In the case of an 

9 individual described in clause (ii) for a 

10 month described in clause (iii)—

11 ‘‘(I) the individual (or spouse) 

12 elected coverage described in clause 

13 (ii); and 

14 ‘‘(II) the individual (or spouse) 

15 has continued such coverage for all 

16 months described in clause (iii) in 

17 which the individual (or spouse) is eli18 gible for such coverage. 

19 ‘‘(ii) INDIVIDUALS TO WHOM COBRA

20 CONTINUATION COVERAGE MADE AVAIL21 ABLE.—An individual described in this 

22 clause is an individual—

23 ‘‘(I) who was offered coverage 

24 under a Federal or State COBRA 

25 continuation provision at the time of
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1 loss of coverage eligibility described in 

2 subparagraph (C)(ii); or 

3 ‘‘(II) whose spouse was offered 

4 such coverage in a manner that per5 mitted coverage of the individual at 

6 such time. 

7 ‘‘(iii) MONTHS OF POSSIBLE COBRA

8 CONTINUATION COVERAGE.—A month de9 scribed in this clause is a month for which 

10 an individual described in clause (ii) could 

11 have had coverage described in such clause 

12 as of the last day of the month if the indi13 vidual (or the spouse of the individual, as 

14 the case may be) had elected such coverage 

15 on a timely basis. 

16 ‘‘(E) NOT ELIGIBLE FOR COVERAGE

17 UNDER FEDERAL HEALTH INSURANCE PRO18 GRAM OR GROUP HEALTH PLANS.—The indi19 vidual is not eligible for benefits or coverage 

20 under a Federal health insurance program or 

21 under a group health plan (whether on the 

22 basis of the individual’s employment or employ23 ment of the individual’s spouse) as of the last 

24 day of the month involved.
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1 ‘‘(2) SPOUSE OF DISPLACED WORKER.—Subject 

2 to paragraph (3), an individual who meets the fol3 lowing requirements with respect to a month is eligi4 ble to enroll under this part with respect to such 

5 month: 

6 ‘‘(A) AGE.—As of the last day of the 

7 month, the individual has not attained 62 years 

8 of age. 

9 ‘‘(B) MARRIED TO DISPLACED WORKER.—

10 The individual is the spouse of an individual at 

11 the time the individual enrolls under this part 

12 under paragraph (1) and loses coverage de13 scribed in paragraph (1)(C)(ii) because the in14 dividual’s spouse lost such coverage. 

15 ‘‘(C) MEDICARE ELIGIBILITY (BUT FOR

16 AGE); EXHAUSTION OF ANY COBRA CONTINU17 ATION COVERAGE; AND NOT ELIGIBLE FOR COV18 ERAGE UNDER FEDERAL HEALTH INSURANCE

19 PROGRAM OR GROUP HEALTH PLAN.—The indi20 vidual meets the requirements of subparagraphs 

21 (B), (D), and (E) of paragraph (1). 

22 ‘‘(3) CHANGE IN HEALTH PLAN ELIGIBILITY

23 AFFECTS CONTINUED ELIGIBILITY.—For provision 

24 that terminates enrollment under this section in the 

25 case of an individual who becomes eligible for cov-
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1 erage under a group health plan or under a Federal 

2 health insurance program, see section 

3 1859A(d)(1)(C). 

4 ‘‘(4) REENROLLMENT PERMITTED.—Nothing in 

5 this subsection shall be construed as preventing an 

6 individual who, after enrolling under this subsection, 

7 terminates such enrollment from subsequently re8 enrolling under this subsection if the individual is el9 igible to enroll under this subsection at that time.’’. 

10 (b) ENROLLMENT.—Section 1859A of such Act, as 

11 so inserted, is amended—

12 (1) in subsection (a)—

13 (A) by striking ‘‘and’’ at the end of para14 graph (1), 

15 (B) by striking the period at the end of 

16 paragraph (2) and inserting ‘‘; and’’, and 

17 (C) by adding at the end the following new 

18 paragraph: 

19 ‘‘(3) individuals whose coverage under this part 

20 would terminate because of subsection (d)(1)(B)(ii) 

21 are provided notice and an opportunity to continue 

22 enrollment in accordance with section 

23 1859E(c)(1).’’; 
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1 (2) in subsection (b), by inserting after ‘‘Not2 withstanding any other provision of law, (1)’’ the fol3 lowing: 

4 ‘‘(2) DISPLACED WORKERS AND SPOUSES.—In 

5 the case of individuals eligible to enroll under this 

6 part under section 1859(c), the following rules 

7 apply: 

8 ‘‘(A) INITIAL ENROLLMENT PERIOD.—If 

9 the individual is first eligible to enroll under 

10 such section for July 2005, the enrollment pe11 riod shall begin on May 1, 2005, and shall end 

12 on August 31, 2005. Any such enrollment be13 fore July 1, 2005, is conditioned upon compli14 ance with the conditions of eligibility for July 

15 2005.

16 ‘‘(B) SUBSEQUENT PERIODS.—If the indi17 vidual is eligible to enroll under such section for 

18 a month after July 2005, the enrollment period 

19 based on such eligibility shall begin on the first 

20 day of the second month before the month in 

21 which the individual first is eligible to so enroll 

22 (or reenroll) and shall end four months later.’’; 

23 (3) in subsection (d)(1), by amending subpara24 graph (B) to read as follows: 

25 ‘‘(B) TERMINATION BASED ON AGE.—
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1 ‘‘(i) AT AGE 65.—Subject to clause 

2 (ii), the individual attains 65 years of age. 

3 ‘‘(ii) AT AGE 62 FOR DISPLACED

4 WORKERS AND SPOUSES.—In the case of 

5 an individual enrolled under this part pur6 suant to section 1859(c), subject to sub7 section (a)(1), the individual attains 62 

8 years of age.’’; 

9 (4) in subsection (d)(1), by adding at the end 

10 the following new subparagraph: 

11 ‘‘(C) OBTAINING ACCESS TO EMPLOYMENT12 BASED COVERAGE OR FEDERAL HEALTH INSUR13 ANCE PROGRAM FOR INDIVIDUALS UNDER 62

14 YEARS OF AGE.—In the case of an individual 

15 who has not attained 62 years of age, the indi16 vidual is covered (or eligible for coverage) as a 

17 participant or beneficiary under a group health 

18 plan or under a Federal health insurance pro19 gram.’’; 

20 (5) in subsection (d)(2), by amending subpara21 graph (C) to read as follows: 

22 ‘‘(C) AGE OR MEDICARE ELIGIBILITY.—

23 ‘‘(i) IN GENERAL.—The termination 

24 of a coverage period under paragraph 

25 (1)(A)(iii) or (1)(B)(i) shall take effect as
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1 of the first day of the month in which the 

2 individual attains 65 years of age or be3 comes entitled to benefits under part A or 

4 enrolled for benefits under part B. 

5 ‘‘(ii) DISPLACED WORKERS.—The ter6 mination of a coverage period under para7 graph (1)(B)(ii) shall take effect as of the 

8 first day of the month in which the indi9 vidual attains 62 years of age, unless the 

10 individual has enrolled under this part pur11 suant to section 1859(b) and section 

12 1859E(c)(1).’’; and 

13 (6) in subsection (d)(2), by adding at the end 

14 the following new subparagraph: 

15 ‘‘(D) ACCESS TO COVERAGE.—The termi16 nation of a coverage period under paragraph 

17 (1)(C) shall take effect on the date on which 

18 the individual is eligible to begin a period of 

19 creditable coverage (as defined in section 

20 2701(c) of the Public Health Service Act) 

21 under a group health plan or under a Federal 

22 health insurance program.’’. 

23 (c) PREMIUMS.—Section 1859B of such Act, as so 

24 inserted, is amended—
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1 (1) in subsection (a)(1), by adding at the end 

2 the following: 

3 ‘‘(B) BASE MONTHLY PREMIUM FOR INDI4 VIDUALS UNDER 62 YEARS OF AGE.—A base 

5 monthly premium for individuals under 62 

years of age, equal to 1 6 ⁄12 of the base annual 

7 premium rate computed under subsection (d)(3) 

8 for each premium area and age cohort.’’; and 

9 (2) by adding at the end the following new sub10 section: 

11 ‘‘(d) BASE MONTHLY PREMIUM FOR INDIVIDUALS

12 UNDER 62 YEARS OF AGE.—

13 ‘‘(1) NATIONAL, PER CAPITA AVERAGE FOR AGE

14 GROUPS.—

15 ‘‘(A) ESTIMATE OF AMOUNT.—The Sec16 retary shall estimate the average, annual per 

17 capita amount that would be payable under this 

18 title with respect to individuals residing in the 

19 United States who meet the requirement of sec20 tion 1859(c)(1)(A) within each of the age co21 horts established under subparagraph (B) as if 

22 all such individuals within such cohort were eli23 gible for (and enrolled) under this title during 

24 the entire year (and assuming that section 

25 1862(b)(2)(A)(i) did not apply). 
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1 ‘‘(B) AGE COHORTS.—For purposes of 

2 subparagraph (A), the Secretary shall establish 

3 separate age cohorts in 5 year age increments 

4 for individuals who have not attained 60 years 

5 of age and a separate cohort for individuals who 

6 have attained 60 years of age. 

7 ‘‘(2) GEOGRAPHIC ADJUSTMENT.—The Sec8 retary shall adjust the amount determined under 

9 paragraph (1)(A) for each premium area (specified 

10 under subsection (a)(3)) in the same manner and to 

11 the same extent as the Secretary provides for adjust12 ments under subsection (b)(2). 

13 ‘‘(3) BASE ANNUAL PREMIUM.—The base an14 nual premium under this subsection for months in a

15 year for individuals in an age cohort under para16 graph (1)(B) in a premium area is equal to 165 per17 cent of the average, annual per capita amount esti18 mated under paragraph (1) for the age cohort and 

19 year, adjusted for such area under paragraph (2). 

20 ‘‘(4) PRO-RATION OF PREMIUMS TO REFLECT

21 COVERAGE DURING A PART OF A MONTH.—If the 

22 Secretary provides for coverage of portions of a 

23 month under section 1859A(c)(2), the Secretary 

24 shall pro-rate the premiums attributable to such cov-
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1 erage under this section to reflect the portion of the 

2 month so covered.’’. 

3 (d) ADMINISTRATIVE PROVISIONS.—Section 1859F 

4 of such Act, as so inserted, is amended by adding at the 

5 end the following: 

6 ‘‘(d) ADDITIONAL ADMINISTRATIVE PROVISIONS.—

7 ‘‘(1) PROCESS FOR CONTINUED ENROLLMENT

8 OF DISPLACED WORKERS WHO ATTAIN 62 YEARS OF

9 AGE.—The Secretary shall provide a process for the 

10 continuation of enrollment of individuals whose en11 rollment under section 1859(c) would be terminated 

12 upon attaining 62 years of age. Under such process 

13 such individuals shall be provided appropriate and 

14 timely notice before the date of such termination 

15 and of the requirement to enroll under this part pur16 suant to section 1859(b) in order to continue entitle17 ment to benefits under this title after attaining 62 

18 years of age. 

19 ‘‘(2) ARRANGEMENTS WITH STATES FOR DE20 TERMINATIONS RELATING TO UNEMPLOYMENT COM21 PENSATION ELIGIBILITY.—The Secretary may pro22 vide for appropriate arrangements with States for 

23 the determination of whether individuals in the State 

24 meet or would meet the requirements of section 

25 1859(c)(1)(C)(i).’’. 
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1 (e) CONFORMING AMENDMENT TO HEADING TO

2 PART.—The heading of part D of title XVIII of the Social 

3 Security Act, as so inserted, is amended by striking ‘‘62’’ 

4 and inserting ‘‘55’’.

5 TITLE III—COBRA PROTECTION 

6 FOR EARLY RETIREES 

7 Subtitle A—Amendments to the 

8 Employee Retirement Income 

9 Security Act of 1974

10 SEC. 301. COBRA CONTINUATION BENEFITS FOR CERTAIN 

11 RETIRED WORKERS WHO LOSE RETIREE 

12 HEALTH COVERAGE. 

13 (a) ESTABLISHMENT OF NEW QUALIFYING

14 EVENT.—

15 (1) IN GENERAL.—Section 603 of the Employee 

16 Retirement Income Security Act of 1974 (29 U.S.C. 

17 1163) is amended by inserting after paragraph (6) 

18 the following new paragraph: 

19 ‘‘(7) The termination or substantial reduction 

20 in benefits (as defined in section 607(7)) of group 

21 health plan coverage as a result of plan changes or 

22 termination in the case of a covered employee who 

23 is a qualified retiree.’’.

24 (2) QUALIFIED RETIREE; QUALIFIED BENE25 FICIARY; AND SUBSTANTIAL REDUCTION DE-
40

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1 FINED.—Section 607 of such Act (29 U.S.C. 1167) 

2 is amended—

3 (A) in paragraph (3)—

4 (i) in subparagraph (A), by inserting 

5 ‘‘except as otherwise provided in this para6 graph,’’ after ‘‘means,’’; and 

7 (ii) by adding at the end the following 

8 new subparagraph: 

9 ‘‘(D) SPECIAL RULE FOR QUALIFYING RE10 TIREES AND DEPENDENTS.—In the case of a 

11 qualifying event described in section 603(7), the 

12 term ‘qualified beneficiary’ means a qualified 

13 retiree and any other individual who, on the day 

14 before such qualifying event, is a beneficiary 

15 under the plan on the basis of the individual’s 

16 relationship to such qualified retiree.’’; and 

17 (B) by adding at the end the following new 

18 paragraphs: 

19 ‘‘(6) QUALIFIED RETIREE.—The term ‘qualified 

20 retiree’ means, with respect to a qualifying event de21 scribed in section 603(7), a covered employee who, 

22 at the time of the event—

23 ‘‘(A) has attained 55 years of age; and
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1 ‘‘(B) was receiving group health coverage 

2 under the plan by reason of the retirement of 

3 the covered employee. 

4 ‘‘(7) SUBSTANTIAL REDUCTION.—The term 

5 ‘substantial reduction’—

6 ‘‘(A) means, as determined under regula7 tions of the Secretary and with respect to a 

8 qualified beneficiary, a reduction in the average 

9 actuarial value of benefits under the plan 

10 (through reduction or elimination of benefits, 

11 an increase in premiums, deductibles, copay12 ments, and coinsurance, or any combination 

13 thereof), since the date of commencement of 

14 coverage of the beneficiary by reason of the re15 tirement of the covered employee (or, if later, 

16 January 6, 2004), in an amount equal to at 

17 least 50 percent of the total average actuarial 

18 value of the benefits under the plan as of such 

19 date (taking into account an appropriate ad20 justment to permit comparison of values over 

21 time); and 

22 ‘‘(B) includes an increase in premiums re23 quired to an amount that exceeds the premium 

24 level described in the fourth sentence of section 

25 602(3).’’
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1 (b) DURATION OF COVERAGE THROUGH AGE 65.—

2 Section 602(2)(A) of such Act (29 U.S.C. 1162(2)(A)) is 

3 amended—

4 (1) in clause (ii), by inserting ‘‘or 603(7)’’ after 

5 ‘‘603(6)’’; 

6 (2) in clause (iv), by striking ‘‘or 603(6)’’ and 

7 inserting ‘‘, 603(6), or 603(7)’’; 

8 (3) by redesignating clause (iv) as clause (vi); 

9 (4) by redesignating clause (v) as clause (iv) 

10 and by moving such clause to immediately follow 

11 clause (iii); and 

12 (5) by inserting after such clause (iv) the fol13 lowing new clause: 

14 ‘‘(v) SPECIAL RULE FOR CERTAIN DE15 PENDENTS IN CASE OF TERMINATION OR

16 SUBSTANTIAL REDUCTION OF RETIREE

17 HEALTH COVERAGE.—In the case of a 

18 qualifying event described in section 

19 603(7), in the case of a qualified bene20 ficiary described in section 607(3)(D) who 

21 is not the qualified retiree or spouse of 

22 such retiree, the later of—

23 ‘‘(I) the date that is 36 months 

24 after the earlier of the date the quali25 fied retiree becomes entitled to bene-
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1 fits under title XVIII of the Social Se2 curity Act, or the date of the death of 

3 the qualified retiree; or 

4 ‘‘(II) the date that is 36 months 

5 after the date of the qualifying 

6 event.’’. 

7 (c) TYPE OF COVERAGE IN CASE OF TERMINATION

8 OR SUBSTANTIAL REDUCTION OF RETIREE HEALTH COV9 ERAGE.—Section 602(1) of such Act (29 U.S.C. 1162(1)) 

10 is amended—

11 (1) by striking ‘‘The coverage’’ and inserting 

12 the following: 

13 ‘‘(A) IN GENERAL.—Except as provided in 

14 subparagraph (B), the coverage’’; and 

15 (2) by adding at the end the following: 

16 ‘‘(B) CERTAIN RETIREES.—In the case of 

17 a qualifying event described in section 603(7), 

18 in applying the first sentence of subparagraph 

19 (A) and the fourth sentence of paragraph (3), 

20 the coverage offered that is the most prevalent 

21 coverage option (as determined under regula22 tions of the Secretary) continued under the 

23 group health plan (or, if none, under the most 

24 prevalent other plan offered by the same plan 

25 sponsor) shall be treated as the coverage de-
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1 scribed in such sentence, or (at the option of 

2 the plan and qualified beneficiary) such other 

3 coverage option as may be offered and elected 

4 by the qualified beneficiary involved.’’.

5 (d) INCREASED LEVEL OF PREMIUMS PERMITTED.—

6 Section 602(3) of such Act (29 U.S.C. 1162(3)) is amend7 ed by adding at the end the following new sentence: ‘‘In 

8 the case of an individual provided continuation coverage 

9 by reason of a qualifying event described in section 

10 603(7), any reference in subparagraph (A) of this para11 graph to ‘102 percent of the applicable premium’ is 

12 deemed a reference to ‘125 percent of the applicable pre13 mium for employed individuals (and their dependents, if 

14 applicable) for the coverage option referred to in para15 graph (1)(B)’.’’. 

16 (e) NOTICE.—Section 606(a) of such Act (29 U.S.C. 

17 1166) is amended—

18 (1) in paragraph (4)(A), by striking ‘‘or (6)’’ 

19 and inserting ‘‘(6), or (7)’’; and 

20 (2) by adding at the end the following: 

21 ‘‘The notice under paragraph (4) in the case of a quali22 fying event described in section 603(7) shall be provided 

23 at least 90 days before the date of the qualifying event.’’. 

24 (f) EFFECTIVE DATES.—
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1 (1) IN GENERAL.—The amendments made by 

2 this section (other than subsection (e)(2)) shall 

3 apply to qualifying events occurring on or after Jan4 uary 6, 2004. In the case of a qualifying event oc5 curring on or after such date and before the date of 

6 the enactment of this Act, such event shall be 

7 deemed (for purposes of such amendments) to have 

8 occurred on the date of the enactment of this Act. 

9 (2) ADVANCE NOTICE OF TERMINATIONS AND

10 REDUCTIONS.—The amendment made by subsection 

11 (e)(2) shall apply to qualifying events occurring 

12 after the date of the enactment of this Act, except 

13 that in no case shall notice be required under such 

14 amendment before such date. 

15 Subtitle B—Amendments to the 

16 Public Health Service Act 

17 SEC. 311. COBRA CONTINUATION BENEFITS FOR CERTAIN 

18 RETIRED WORKERS WHO LOSE RETIREE 

19 HEALTH COVERAGE. 

20 (a) ESTABLISHMENT OF NEW QUALIFYING

21 EVENT.—

22 (1) IN GENERAL.—Section 2203 of the Public 

23 Health Service Act (42 U.S.C. 300bb–3) is amended 

24 by inserting after paragraph (5) the following new 

25 paragraph:
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1 ‘‘(6) The termination or substantial reduction 

2 in benefits (as defined in section 2208(6)) of group 

3 health plan coverage as a result of plan changes or 

4 termination in the case of a covered employee who 

5 is a qualified retiree.’’.

6 (2) QUALIFIED RETIREE; QUALIFIED BENE7 FICIARY; AND SUBSTANTIAL REDUCTION DE8 FINED.—Section 2208 of such Act (42 U.S.C. 

9 300bb–8) is amended—

10 (A) in paragraph (3)—

11 (i) in subparagraph (A), by inserting 

12 ‘‘except as otherwise provided in this para13 graph,’’ after ‘‘means,’’; and 

14 (ii) by adding at the end the following 

15 new subparagraph: 

16 ‘‘(C) SPECIAL RULE FOR QUALIFYING RE17 TIREES AND DEPENDENTS.—In the case of a 

18 qualifying event described in section 2203(6), 

19 the term ‘qualified beneficiary’ means a quali20 fied retiree and any other individual who, on 

21 the day before such qualifying event, is a bene22 ficiary under the plan on the basis of the indi23 vidual’s relationship to such qualified retiree.’’; 

24 and 
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1 (B) by adding at the end the following new 

2 paragraphs: 

3 ‘‘(5) QUALIFIED RETIREE.—The term ‘qualified 

4 retiree’ means, with respect to a qualifying event de5 scribed in section 2203(6), a covered employee who, 

6 at the time of the event—

7 ‘‘(A) has attained 55 years of age; and 

8 ‘‘(B) was receiving group health coverage 

9 under the plan by reason of the retirement of 

10 the covered employee. 

11 ‘‘(6) SUBSTANTIAL REDUCTION.—The term 

12 ‘substantial reduction’—

13 ‘‘(A) means, as determined under regula14 tions of the Secretary of Labor and with respect

15 to a qualified beneficiary, a reduction in the av16 erage actuarial value of benefits under the plan 

17 (through reduction or elimination of benefits, 

18 an increase in premiums, deductibles, copay19 ments, and coinsurance, or any combination 

20 thereof), since the date of commencement of 

21 coverage of the beneficiary by reason of the re22 tirement of the covered employee (or, if later, 

23 January 6, 2004), in an amount equal to at 

24 least 50 percent of the total average actuarial 

25 value of the benefits under the plan as of such 
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1 date (taking into account an appropriate ad2 justment to permit comparison of values over 

3 time); and 

4 ‘‘(B) includes an increase in premiums re5 quired to an amount that exceeds the premium 

6 level described in the fourth sentence of section 

7 2202(3).’’. 

8 (b) DURATION OF COVERAGE THROUGH AGE 65.—

9 Section 2202(2)(A) of such Act (42 U.S.C. 300bb–

10 2(2)(A)) is amended—

11 (1) by redesignating clause (iii) as clause (iv); 

12 and 

13 (2) by inserting after clause (ii) the following 

14 new clause: 

15 ‘‘(iii) SPECIAL RULE FOR CERTAIN

16 DEPENDENTS IN CASE OF TERMINATION

17 OR SUBSTANTIAL REDUCTION OF RETIREE

18 HEALTH COVERAGE.—In the case of a 

19 qualifying event described in section 

20 2203(6), in the case of a qualified bene21 ficiary described in section 2208(3)(C) who 

22 is not the qualified retiree or spouse of 

23 such retiree, the later of—

24 ‘‘(I) the date that is 36 months 

25 after the earlier of the date the quali-
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1 fied retiree becomes entitled to bene2 fits under title XVIII of the Social Se3 curity Act, or the date of the death of 

4 the qualified retiree; or 

5 ‘‘(II) the date that is 36 months 

6 after the date of the qualifying 

7 event.’’. 

8 (c) TYPE OF COVERAGE IN CASE OF TERMINATION

9 OR SUBSTANTIAL REDUCTION OF RETIREE HEALTH COV10 ERAGE.—Section 2202(1) of such Act (42 U.S.C. 300bb–

11 2(1)) is amended—

12 (1) by striking ‘‘The coverage’’ and inserting 

13 the following: 

14 ‘‘(A) IN GENERAL.—Except as provided in 

15 subparagraph (B), the coverage’’; and 

16 (2) by adding at the end the following: 

17 ‘‘(B) CERTAIN RETIREES.—In the case of 

18 a qualifying event described in section 2203(6), 

19 in applying the first sentence of subparagraph 

20 (A) and the fourth sentence of paragraph (3), 

21 the coverage offered that is the most prevalent 

22 coverage option (as determined under regula23 tions of the Secretary of Labor) continued 

24 under the group health plan (or, if none, under 

25 the most prevalent other plan offered by the 
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1 same plan sponsor) shall be treated as the cov2 erage described in such sentence, or (at the op3 tion of the plan and qualified beneficiary) such 

4 other coverage option as may be offered and 

5 elected by the qualified beneficiary involved.’’.

6 (d) INCREASED LEVEL OF PREMIUMS PERMITTED.—

7 Section 2202(3) of such Act (42 U.S.C. 300bb–2(3)) is 

8 amended by adding at the end the following new sentence: 

9 ‘‘In the case of an individual provided continuation cov10 erage by reason of a qualifying event described in section 

11 2203(6), any reference in subparagraph (A) of this para12 graph to ‘102 percent of the applicable premium’ is 

13 deemed a reference to ‘125 percent of the applicable pre14 mium for employed individuals (and their dependents, if 

15 applicable) for the coverage option referred to in para16 graph (1)(B)’.’’. 

17 (e) NOTICE.—Section 2206(a) of such Act (42 U.S.C. 

18 300bb–6(a)) is amended—

19 (1) in paragraph (4)(A), by striking ‘‘or (4)’’ 

20 and inserting ‘‘(4), or (6)’’; and 

21 (2) by adding at the end the following: 

22 ‘‘The notice under paragraph (4) in the case of a quali23 fying event described in section 2203(6) shall be provided 

24 at least 90 days before the date of the qualifying event.’’. 

25 (f) EFFECTIVE DATES.—
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1 (1) IN GENERAL.—The amendments made by 

2 this section (other than subsection (e)(2)) shall 

3 apply to qualifying events occurring on or after Jan4 uary 6, 2004. In the case of a qualifying event oc5 curring on or after such date and before the date of 

6 the enactment of this Act, such event shall be 

7 deemed (for purposes of such amendments) to have 

8 occurred on the date of the enactment of this Act. 

9 (2) ADVANCE NOTICE OF TERMINATIONS AND

10 REDUCTIONS.—The amendment made by subsection 

11 (e)(2) shall apply to qualifying events occurring 

12 after the date of the enactment of this Act, except 

13 that in no case shall notice be required under such 

14 amendment before such date. 

15 Subtitle C—Amendments to the 

16 Internal Revenue Code of 1986

17 SEC. 321. COBRA CONTINUATION BENEFITS FOR CERTAIN 

18 RETIRED WORKERS WHO LOSE RETIREE 

19 HEALTH COVERAGE. 

20 (a) ESTABLISHMENT OF NEW QUALIFYING

21 EVENT.—

22 (1) IN GENERAL.—Section 4980B(f)(3) of the 

23 Internal Revenue Code of 1986 is amended by in24 serting after subparagraph (F) the following new 

25 subparagraph: 
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1 ‘‘(G) The termination or substantial reduc2 tion in benefits (as defined in subsection (g)(6)) 

3 of group health plan coverage as a result of 

4 plan changes or termination in the case of a 

5 covered employee who is a qualified retiree.’’.

6 (2) QUALIFIED RETIREE; QUALIFIED BENE7 FICIARY; AND SUBSTANTIAL REDUCTION DE8 FINED.—Section 4980B(g) of such Code is amend9 ed—

10 (A) in paragraph (1)—

11 (i) in subparagraph (A), by inserting 

12 ‘‘except as otherwise provided in this para13 graph,’’ after ‘‘means,’’; and 

14 (ii) by adding at the end the following 

15 new subparagraph: 

16 ‘‘(E) SPECIAL RULE FOR QUALIFYING RE17 TIREES AND DEPENDENTS.—In the case of a 

18 qualifying event described in subsection 

19 (f)(3)(G), the term ‘qualified beneficiary’ means 

20 a qualified retiree and any other individual who, 

21 on the day before such qualifying event, is a 

22 beneficiary under the plan on the basis of the 

23 individual’s relationship to such qualified re24 tiree.’’; and 
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1 (B) by adding at the end the following new 

2 paragraphs: 

3 ‘‘(5) QUALIFIED RETIREE.—The term ‘qualified 

4 retiree’ means, with respect to a qualifying event de5 scribed in subsection (f)(3)(G), a covered employee 

6 who, at the time of the event—

7 ‘‘(A) has attained 55 years of age; and 

8 ‘‘(B) was receiving group health coverage 

9 under the plan by reason of the retirement of 

10 the covered employee. 

11 ‘‘(6) SUBSTANTIAL REDUCTION.—The term 

12 ‘substantial reduction’—

13 ‘‘(A) means, as determined under regula14 tions of the Secretary of Labor and with respect 

15 to a qualified beneficiary, a reduction in the av16 erage actuarial value of benefits under the plan 

17 (through reduction or elimination of benefits, 

18 an increase in premiums, deductibles, copay19 ments, and coinsurance, or any combination 

20 thereof), since the date of commencement of 

21 coverage of the beneficiary by reason of the re22 tirement of the covered employee (or, if later, 

23 January 6, 2004), in an amount equal to at 

24 least 50 percent of the total average actuarial 

25 value of the benefits under the plan as of such 
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1 date (taking into account an appropriate ad2 justment to permit comparison of values over 

3 time); and 

4 ‘‘(B) includes an increase in premiums re5 quired to an amount that exceeds the premium 

6 level described in the fourth sentence of sub7 section (f)(2)(C).’’. 

8 (b) DURATION OF COVERAGE THROUGH AGE 65.—

9 Section 4980B(f)(2)(B)(i) of such Code is amended—

10 (1) in subclause (II), by inserting ‘‘or (3)(G)’’ 

11 after ‘‘(3)(F)’’; 

12 (2) in subclause (IV), by striking ‘‘or (3)(F)’’ 

13 and inserting ‘‘, (3)(F), or (3)(G)’’; 

14 (3) by redesignating subclause (IV) as sub15 clause (VI); 

16 (4) by redesignating subclause (V) as subclause 

17 (IV) and by moving such clause to immediately fol18 low subclause (III); and 

19 (5) by inserting after such subclause (IV) the 

20 following new subclause: 

21 ‘‘(V) SPECIAL RULE FOR CER22 TAIN DEPENDENTS IN CASE OF TER23 MINATION OR SUBSTANTIAL REDUC24 TION OF RETIREE HEALTH COV25 ERAGE.—In the case of a qualifying 
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1 event described in paragraph (3)(G), 

2 in the case of a qualified beneficiary 

3 described in subsection (g)(1)(E) who 

4 is not the qualified retiree or spouse 

5 of such retiree, the later of—

6 ‘‘(a) the date that is 36 

7 months after the earlier of the 

8 date the qualified retiree becomes 

9 entitled to benefits under title 

10 XVIII of the Social Security Act, 

11 or the date of the death of the 

12 qualified retiree; or 

13 ‘‘(b) the date that is 36 

14 months after the date of the 

15 qualifying event.’’. 

16 (c) TYPE OF COVERAGE IN CASE OF TERMINATION

17 OR SUBSTANTIAL REDUCTION OF RETIREE HEALTH COV18 ERAGE.—Section 4980B(f)(2)(A) of such Code is amend19 ed—

20 (1) by striking ‘‘The coverage’’ and inserting 

21 the following: 

22 ‘‘(i) IN GENERAL.—Except as pro23 vided in clause (ii), the coverage’’; and 

24 (2) by adding at the end the following:
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1 ‘‘(ii) CERTAIN RETIREES.—In the 

2 case of a qualifying event described in 

3 paragraph (3)(G), in applying the first 

4 sentence of clause (i) and the fourth sen5 tence of subparagraph (C), the coverage 

6 offered that is the most prevalent coverage 

7 option (as determined under regulations of 

8 the Secretary of Labor) continued under 

9 the group health plan (or, if none, under 

10 the most prevalent other plan offered by 

11 the same plan sponsor) shall be treated as 

12 the coverage described in such sentence, or 

13 (at the option of the plan and qualified 

14 beneficiary) such other coverage option as 

15 may be offered and elected by the qualified 

16 beneficiary involved.’’.

17 (d) INCREASED LEVEL OF PREMIUMS PERMITTED.—

18 Section 4980B(f)(2)(C) of such Code is amended by add19 ing at the end the following new sentence: ‘‘In the case 

20 of an individual provided continuation coverage by reason 

21 of a qualifying event described in paragraph (3)(G), any 

22 reference in clause (i) of this subparagraph to ‘102 per23 cent of the applicable premium’ is deemed a reference to 

24 ‘125 percent of the applicable premium for employed indi-
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1 viduals (and their dependents, if applicable) for the cov2 erage option referred to in subparagraph (A)(ii)’.’’. 

3 (e) NOTICE.—Section 4980B(f)(6) of such Code is 

4 amended—

5 (1) in subparagraph (D)(i), by striking ‘‘or 

6 (F)’’ and inserting ‘‘(F), or (G)’’; and 

7 (2) by adding at the end the following: 

8 ‘‘The notice under subparagraph (D)(i) in the case of a 

9 qualifying event described in paragraph (3)(G) shall be 

10 provided at least 90 days before the date of the qualifying 

11 event.’’.

12 (f) EFFECTIVE DATES.—

13 (1) IN GENERAL.—The amendments made by 

14 this section (other than subsection (e)(2)) shall 

15 apply to qualifying events occurring on or after Jan16 uary 6, 2004. In the case of a qualifying event oc17 curring on or after such date and before the date of 

18 the enactment of this Act, such event shall be 

19 deemed (for purposes of such amendments) to have 

20 occurred on the date of the enactment of this Act. 

21 (2) ADVANCE NOTICE OF TERMINATIONS AND

22 REDUCTIONS.—The amendment made by subsection 

23 (e)(2) shall apply to qualifying events occurring 

24 after the date of the enactment of this Act, except 
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1 that in no case shall notice be required under such 

2 amendment before such date. 

3 TITLE IV—FINANCING 

4 SEC. 401. REFERENCE TO FINANCING PROVISIONS. 

5 Any increase in payments under the medicare pro6 gram under title XVIII of the Social Security Act that 

7 results from the enactment of this Act shall be offset by 

8 reductions in payments under such program pursuant to 

9 the anti-fraud and anti-abuse provisions enacted as part 

10 of the Medicare Fraud and Overpayment Act of 1998.

11 TITLE V—PROVISION OF PRE12 MIUM ASSISTANCE FOR LOW13 INCOME INDIVIDUALS PUR14 CHASING EARLY COVERAGE 

15 UNDER THE MEDICARE PRO16 GRAM

17 SEC. 501. PROVISION OF PREMIUM ASSISTANCE FOR LOW18 INCOME INDIVIDUALS PURCHASING EARLY 

19 COVERAGE UNDER THE MEDICARE PRO20 GRAM. 

21 (a) IN GENERAL.—Section 1902(a)(10) of the Social 

22 Security Act (42 U.S.C. 1396a(a)(10)) is amended—

23 (1) in subparagraph (E)—

24 (A) by striking ‘‘and’’ at the end of clause 

25 (iii), and 
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1 (B) by adding at the end the following new 

2 clause: 

3 ‘‘(v) for making medical assistance avail4 able consistent with section 1916(d)(2) for 

5 medicare cost-sharing described in section 

6 1905(p)(3)(A)(iii) for individuals who have en7 rolled for benefits under part D of title XVIII, 

8 whose income (as determined in the same man9 ner as income is determined under section 

10 1905(p) for qualified medicare beneficiaries) 

11 does not exceed 200 percent of the official pov12 erty line (referred to in such section) applicable 

13 to a family of the size involved, and who are not 

14 otherwise entitled to medical assistance under 

15 the plan;’’; and 

16 (2) in the matter following subparagraph (G)—

17 (A) by striking ‘‘and’’ before ‘‘(XIV)’’, and 

18 (B) by inserting before the semicolon at 

19 the end the following: ‘‘, and (XV) the medical 

20 assistance made available to an individual de21 scribed in subparagraph (E)(v) shall be limited 

22 to medical assistance for medicare cost-sharing 

23 described in the last sentence of section 

24 1905(p)(3)’’.
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1 (b) SLIDING SCALE FOR BENEFITS.—Section 

2 1916(d) of such Act (42 U.S.C. 1396o(d)) is amended—

3 (1) by inserting ‘‘(1)’’ after ‘‘(d)’’, and 

4 (2) by adding at the end the following: 

5 ‘‘(2) With respect to an individual described in sec6 tion 1902(a)(10)(E)(v), the State plan of a State shall 

7 provide for the charging of a premium (expressed as a per8 centage of the medicare cost-sharing described in the last 

9 sentence of paragraph (3) of section 1905(p)(3) provided 

10 with respect to the individual) according to a sliding scale 

11 under which such percentage increases from 10 percent 

12 to 100 percent, in reasonable increments (as determined 

13 by the Secretary), as the individual’s income increases 

14 from 100 percent of the official poverty line (referred to 

15 in such section) to 200 percent of such poverty line.’’. 

16 (c) 100 PERCENT FEDERAL MEDICAL ASSISTANCE

17 PERCENTAGE.—The first sentence of section 1905(b) of 

18 such Act (42 U.S.C. 1396d(b)) is amended—

19 (1) by striking ‘‘and’’ before ‘‘(4)’’, and 

20 (2) by inserting before the period at the end the 

21 following: ‘‘, and (5) the Federal medical assistance 

22 percentage shall be 100 percent with respect to med23 ical assistance provided under section 

24 1902(a)(10)(E)(v)’’. 
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1 (d) MEDICARE COST-SHARING INCLUDING BUY-IN

2 PREMIUM.—Section 1905(p)(3) of such Act (42 U.S.C. 

3 1396d(p)(3)) is amended by adding at the end the fol4 lowing: ‘‘Such term also includes premiums under part D 

5 of title XVIII but only with respect to individuals de6 scribed in section 1902(a)(10)(E)(v).’’. 

7 (e) TREATMENT OF TERRITORIES.—Section 1108(g) 

8 of such Act (42 U.S.C. 1308(g)) is amended by adding 

9 at the end the following new paragraph: 

10 ‘‘(3) Notwithstanding the preceding provisions of this 

11 subsection, with respect to fiscal year 2005 and any fiscal 

12 year thereafter, the amount otherwise determined under 

13 this subsection (and subsection (f)) for the fiscal year for 

14 a Commonwealth or territory shall be increased by the 

15 ratio (as estimated by the Secretary) of—

16 ‘‘(A) the aggregate amount of payments made 

17 to the 50 States and the District of Columbia for 

18 the fiscal year under title XIX that are attributable 

19 to the amendments made by the Early Medicare Ac20 cess and Affordability Act of 2003; to 

21 ‘‘(B) the aggregate amount of total payments 

22 made to such States and District for the fiscal year 

23 under such title.’’. 
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1 (f) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to premiums for months beginning 

3 with July 2005.

Æ