I

106TH CONGRESS

2D SESSION H. R. 4938

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 the Internal Revenue Code of 1986 to allow a credit against income tax for payment

of such premiums and of premiums for certain COBRA continuation

coverage, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 24, 2000

Mr. STARK (for himself, Mr. BROWN of Ohio, Mr. GEPHARDT, Mr. DINGELL,

Mr. RANGEL, Mr. WEYGAND, Mr. MATSUI, Mr. ABERCROMBIE, Mrs.

CAPPS, Mr. GEORGE MILLER of California, Mr. FROST, Mr. OBERSTAR,

Mr. GREEN of Texas, Ms. KILPATRICK, Mr. WEINER, Mr. LEWIS of

Georgia, Mr. BRADY of Pennsylvania, Mr. MEEHAN, Mr. CROWLEY, Mr.

MCGOVERN, Mr. LEVIN, Mrs. MALONEY of New York, Ms. BERKLEY,

Mr. DEUTSCH, Mr. ANDREWS, Mr. STUPAK, Ms. SLAUGHTER, Mr.

BONIOR, Mr. RAHALL, Mr. LANTOS, Mr. PALLONE, Mr. SERRANO, Ms.

MILLENDER-MCDONALD, Mr. FILNER, Ms. KAPTUR, Mr. BORSKI, Mr.

HINCHEY, Mr. CARDIN, Mr. SANDLIN, Mr. FRANK of Massachusetts, Mr.

FALEOMAVAEGA, Mr. TIERNEY, Mr. MENENDEZ, Mr. KANJORSKI, Mr.

DEFAZIO, Mr. DOYLE, Mr. BARRETT of Wisconsin, Mr. THOMPSON of

Mississippi, Mr. NADLER, Mr. WAXMAN, Mr. FARR of California, Mr.

KLECZKA, Mr. CUMMINGS, and Mr. KUCINICH) introduced the following

bill; which was referred to the Committee on Ways and Means, and in

addition to the Committees on 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
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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 the Internal Revenue Code of 1986 to allow a credit against

income tax for payment of such premiums and of premiums for certain COBRA continuation coverage, 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,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Medicare Early Access and Tax Credit Act of 2000’’.

6 (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
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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

Sec. 401. Reference to financing provisions.

TITLE V—CREDIT AGAINST INCOME TAX FOR MEDICARE BUY-IN

PREMIUMS AND FOR CERTAIN COBRA CONTINUATION COVERAGE PREMIUMS

Sec. 501. Credit for medicare buy-in premiums and for certain COBRA continuation coverage premiums.

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 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:
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1 ‘‘PART D—PURCHASE OF MEDICARE BENEFITS BY

2 CERTAIN INDIVIDUALS AGE 62-TO-65 YEARS OF AGE

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

4 ‘‘(a) ENTITLEMENT TO MEDICARE BENEFITS FOR

5 ENROLLED INDIVIDUALS.—

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

7 under this part is entitled to the same benefits

8 under this title as an individual entitled to benefits

9 under part A and enrolled under part B.

10 ‘‘(2) DEFINITIONS.—For purposes of this part:

11 ‘‘(A) FEDERAL OR STATE COBRA CONTINU12 ATION PROVISION.—The term ‘Federal or State

13 COBRA continuation provision’ has the mean14 ing given the term ‘COBRA continuation provi15 sion’ in section 2791(d)(4) of the Public Health

16 Service Act and includes a comparable State

17 program, as determined by the Secretary.

18 ‘‘(B) FEDERAL HEALTH INSURANCE PRO19 GRAM DEFINED.—The term ‘Federal health in20 surance program’ means any of the following:

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

22 this title (other than by reason of this

23 part).

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

25 title XIX.
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1 ‘‘(iii) FEHBP.—The Federal employ2 ees health benefit program under chapter

3 89 of title 5, United States Code.

4 ‘‘(iv) TRICARE.—The TRICARE

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

6 title 10, United States Code).

7 ‘‘(v) ACTIVE DUTY MILITARY.—Health

8 benefits under title 10, United States

9 Code, to an individual as a member of the

10 uniformed services of the United States.

11 ‘‘(C) GROUP HEALTH PLAN.—The term

12 ‘group health plan’ has the meaning given such

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

14 Service Act.

15 ‘‘(b) ELIGIBILITY OF INDIVIDUALS AGE 62-TO-65

16 YEARS OF AGE.—

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

18 an individual who meets the following requirements

19 with respect to a month is eligible to enroll under

20 this part with respect to such month:

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

22 month, the individual has attained 62 years of

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

24 ‘‘(B) MEDICARE ELIGIBILITY (BUT FOR

25 AGE).—The individual would be eligible for ben-
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1 efits under part A or part B for the month if

2 the individual were 65 years of age.

3 ‘‘(C) NOT ELIGIBLE FOR COVERAGE

4 UNDER GROUP HEALTH PLANS OR FEDERAL

5 HEALTH INSURANCE PROGRAMS.—The indi6 vidual is not eligible for benefits or coverage

7 under a Federal health insurance program (as

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

9 group health plan (other than such eligibility

10 merely through a Federal or State COBRA con11 tinuation provision) as of the last day of the

12 month involved.

13 ‘‘(2) LIMITATION ON ELIGIBILITY IF TERMI14 NATED ENROLLMENT.—If an individual described in

15 paragraph (1) enrolls under this part and coverage

16 of the individual is terminated under section

17 1859A(d) (other than because of age), the individual

18 is not again eligible to enroll under this subsection

19 unless the following requirements are met:

20 ‘‘(A) NEW COVERAGE UNDER GROUP

21 HEALTH PLAN OR FEDERAL HEALTH INSUR22 ANCE PROGRAM.—After the date of termination

23 of coverage under such section, the individual

24 obtains coverage under a group health plan or

25 under a Federal health insurance program.
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1 ‘‘(B) SUBSEQUENT LOSS OF NEW COV2 ERAGE.—The individual subsequently loses eli3 gibility for the coverage described in subpara4 graph (A) and exhausts any eligibility the indi5 vidual may subsequently have for coverage

6 under a Federal or State COBRA continuation

7 provision.

8 ‘‘(3) CHANGE IN HEALTH PLAN ELIGIBILITY

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

10 individual who is eligible for and enrolls under this

11 part under this subsection, the individual’s continued

12 entitlement to benefits under this part shall not be

13 affected by the individual’s subsequent eligibility for

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

15 or entitlement to such benefits or coverage.

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

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

18 program established under this part only in such manner

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

20 during an enrollment period prescribed by the Secretary

21 consistent with the provisions of this section. Such regula22 tions shall provide a process under which—

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

24 are permitted to pre-enroll during a prior month
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1 within an enrollment period described in subsection

2 (b); and

3 ‘‘(2) each individual seeking to enroll under sec4 tion 1859(b) is notified, before enrolling, of the de5 ferred monthly premium amount the individual will

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

7 65 years of age as determined under section

8 1859B(c)(3).

9 ‘‘(b) ENROLLMENT PERIODS.—

10 ‘‘(1) INDIVIDUALS 62-TO-65 YEARS OF AGE.—In

11 the case of individuals eligible to enroll under this

12 part under section 1859(b)—

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

14 the individual is eligible to enroll under such

15 section for January 2001, the enrollment period

16 shall begin on November 1, 2000, and shall end

17 on February 28, 2001. Any such enrollment be18 fore January 1, 2001, is conditioned upon com19 pliance with the conditions of eligibility for Jan20 uary 2001.

21 ‘‘(B) SUBSEQUENT PERIODS.—If the indi22 vidual is eligible to enroll under such section for

23 a month after January 2001, the enrollment pe24 riod shall begin on the first day of the second

25 month before the month in which the individual
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1 first is eligible to so enroll and shall end four

2 months later. Any such enrollment before the

3 first day of the third month of such enrollment

4 period is conditioned upon compliance with the

5 conditions of eligibility for such third month.

6 ‘‘(2) AUTHORITY TO CORRECT FOR GOVERN7 MENT ERRORS.—The provisions of section 1837(h)

8 apply with respect to enrollment under this part in

9 the same manner as they apply to enrollment under

10 part B.

11 ‘‘(c) DATE COVERAGE BEGINS.—

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

13 an individual is entitled to benefits under this part

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

15 January 1, 2001:

16 ‘‘(A) In the case of an individual who en17 rolls (including pre-enrolls) before the month in

18 which the individual satisfies eligibility for en19 rollment under section 1859, the first day of

20 such month of eligibility.

21 ‘‘(B) In the case of an individual who en22 rolls during or after the month in which the in23 dividual first satisfies eligibility for enrollment

24 under such section, the first day of the fol25 lowing month.
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1 ‘‘(2) AUTHORITY TO PROVIDE FOR PARTIAL

2 MONTHS OF COVERAGE.—Under regulations, the

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

4 for coverage periods that include portions of a

5 month in order to avoid lapses of coverage.

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

7 may be made under this title with respect to the ex8 penses of an individual enrolled under this part un9 less such expenses were incurred by such individual

10 during a period which, with respect to the individual,

11 is a coverage period under this section.

12 ‘‘(d) TERMINATION OF COVERAGE.—

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

14 period under this part shall continue until the indi15 vidual’s enrollment has been terminated at the ear16 liest of the following:

17 ‘‘(A) GENERAL PROVISIONS.—

18 ‘‘(i) NOTICE.—The individual files no19 tice (in a form and manner prescribed by

20 the Secretary) that the individual no

21 longer wishes to participate in the insur22 ance program under this part.

23 ‘‘(ii) NONPAYMENT OF PREMIUMS.—

24 The individual fails to make payment of
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1 premiums required for enrollment under

2 this part.

3 ‘‘(iii) MEDICARE ELIGIBILITY.—The

4 individual becomes entitled to benefits

5 under part A or enrolled under part B

6 (other than by reason of this part).

7 ‘‘(B) TERMINATION BASED ON AGE.—The

8 individual attains 65 years of age.

9 ‘‘(2) EFFECTIVE DATE OF TERMINATION.—

10 ‘‘(A) NOTICE.—The termination of a cov11 erage period under paragraph (1)(A)(i) shall

12 take effect at the close of the month following

13 for which the notice is filed.

14 ‘‘(B) NONPAYMENT OF PREMIUM.—The

15 termination of a coverage period under para16 graph (1)(A)(ii) shall take effect on a date de17 termined under regulations, which may be de18 termined so as to provide a grace period in

19 which overdue premiums may be paid and cov20 erage continued. The grace period determined

21 under the preceding sentence shall not exceed

22 60 days; except that it may be extended for an

23 additional 30 days in any case where the Sec24 retary determines that there was good cause for
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1 failure to pay the overdue premiums within

2 such 60-day period.

3 ‘‘(C) AGE OR MEDICARE ELIGIBILITY.—

4 The termination of a coverage period under

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

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

7 individual attains 65 years of age or becomes

8 entitled to benefits under part A or enrolled for

9 benefits under part B (other than by reason of

10 this part).

11 ‘‘SEC. 1859B. PREMIUMS.

12 ‘‘(a) AMOUNT OF MONTHLY PREMIUMS.—

13 ‘‘(1) BASE MONTHLY PREMIUMS.—The Sec14 retary shall, during September of each year (begin15 ning with 1998), determine the following premium

16 rates which shall apply with respect to coverage pro17 vided under this title for any month in the suc18 ceeding year:

19 ‘‘(A) BASE MONTHLY PREMIUM FOR INDI20 VIDUALS 62 YEARS OF AGE OR OLDER.—A base

21 monthly premium for individuals 62 years of

age or older, equal to 1 22 ⁄12 of the base annual

23 premium rate computed under subsection (b)

24 for each premium area.
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1 ‘‘(2) DEFERRED MONTHLY PREMIUMS FOR IN2 DIVIDUALS 62 YEARS OF AGE OR OLDER.—The Sec3 retary shall, during September of each year (begin4 ning with 1998), determine under subsection (c) the

5 amount of deferred monthly premiums that shall

6 apply with respect to individuals who first obtain

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

8 the succeeding year.

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

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

11 means such an area as the Secretary shall specify to

12 carry out this part. The Secretary from time to time

13 may change the boundaries of such premium areas.

14 The Secretary shall seek to minimize the number of

15 such areas specified under this paragraph.

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

17 YEARS OF AGE OR OLDER.—

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

19 Secretary shall estimate the average, annual per

20 capita amount that would be payable under this title

21 with respect to individuals residing in the United

22 States who meet the requirement of section

23 1859(b)(1)(A) as if all such individuals were eligible

24 for (and enrolled) under this title during the entire
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1 year (and assuming that section 1862(b)(2)(A)(i)

2 did not apply).

3 ‘‘(2) GEOGRAPHIC ADJUSTMENT.—The Sec4 retary shall adjust the amount determined under

5 paragraph (1) for each premium area (specified

6 under subsection (a)(3)) in order to take into ac7 count such factors as the Secretary deems appro8 priate and shall limit the maximum premium under

9 this paragraph in a premium area to assure partici10 pation in all areas throughout the United States.

11 ‘‘(3) BASE ANNUAL PREMIUM.—The base an12 nual premium under this subsection for months in a

13 year for individuals 62 years of age or older residing

14 in a premium area is equal to the average, annual

15 per capita amount estimated under paragraph (1)

16 for the year, adjusted for such area under paragraph

17 (2).

18 ‘‘(c) DEFERRED PREMIUM RATE FOR INDIVIDUALS

19 62 YEARS OF AGE OR OLDER.—The deferred premium

20 rate for individuals with a group of individuals who obtain

21 coverage under section 1859(b) in a year shall be com22 puted by the Secretary as follows:

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

24 ANNUAL AVERAGE EXPENDITURES FOR ENROLL25 MENT GROUP.—The Secretary shall estimate the av-
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1 erage, per capita annual amount that will be paid

2 under this part for individuals in such group during

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

4 making such estimate for coverage beginning in a

5 year before 2004, the Secretary may base such esti6 mate on the average, per capita amount that would

7 be payable if the program had been in operation over

8 a previous period of at least 4 years.

9 ‘‘(2) DIFFERENCE BETWEEN ESTIMATED EX10 PENDITURES AND ESTIMATED PREMIUMS.—Based

11 on the characteristics of individuals in such group,

12 the Secretary shall estimate during the period of

13 coverage of the group under this part under section

14 1859(b) the amount by which—

15 ‘‘(A) the amount estimated under para16 graph (1); exceeds

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

18 amount of premiums that will be payable for

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

20 for individuals in such group (including pre21 miums that would be payable if there were no

22 terminations in enrollment under clause (i) or

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

24 ‘‘(3) ACTUARIAL COMPUTATION OF DEFERRED

25 MONTHLY PREMIUM RATES.—The Secretary shall
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1 determine deferred monthly premium rates for indi2 viduals in such group in a manner so that—

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

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

5 equal to

6 ‘‘(B) the estimated actuarial present value

7 of the differences described in paragraph (2).

8 Such rate shall be computed for each individual in

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

10 the number of months between the first month of

11 coverage based on enrollment under section 1859(b)

12 and the month in which the individual attains 65

13 years of age.

14 ‘‘(4) DETERMINANTS OF ACTUARIAL PRESENT

15 VALUES.—The actuarial present values described in

16 paragraph (3) shall reflect—

17 ‘‘(A) the estimated probabilities of survival

18 at ages 62 through 84 for individuals enrolled

19 during the year; and

20 ‘‘(B) the estimated effective average inter21 est rates that would be earned on investments

22 held in the trust funds under this title during

23 the period in question.

24 ‘‘SEC. 1859C. PAYMENT OF PREMIUMS.

25 ‘‘(a) PAYMENT OF BASE MONTHLY PREMIUM.—
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1 ‘‘(1) IN GENERAL.—The Secretary shall provide

2 for payment and collection of the base monthly pre3 mium, determined under section 1859B(a)(1) for the

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

5 involved and the premium area in which the indi6 vidual principally resides, in the same manner as for

7 payment of monthly premiums under section 1840,

8 except that, for purposes of applying this section,

9 any reference in such section to the Federal Supple10 mentary Medical Insurance Trust Fund is deemed a

11 reference to the Trust Fund established under sec12 tion 1859D.

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

14 individual who participates in the program estab15 lished by this title, the base monthly premium shall

16 be payable for the period commencing with the first

17 month of the individual’s coverage period and ending

18 with the month in which the individual’s coverage

19 under this title terminates.

20 ‘‘(b) PAYMENT OF DEFERRED PREMIUM FOR INDI21 VIDUALS COVERED AFTER ATTAINING AGE 62.—

22 ‘‘(1) RATE OF PAYMENT.—

23 ‘‘(A) IN GENERAL.—In the case of an indi24 vidual who is covered under this part for a

25 month pursuant to an enrollment under section
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1 1859(b), subject to subparagraph (B), the indi2 vidual is liable for payment of a deferred pre3 mium in each month during the period de4 scribed in paragraph (2) in an amount equal to

5 the full deferred monthly premium rate deter6 mined for the individual under section

7 1859B(c).

8 ‘‘(B) SPECIAL RULES FOR THOSE WHO

9 DISENROLL EARLY.—

10 ‘‘(i) IN GENERAL.—If such an individ11 ual’s enrollment under such section is ter12 minated under clause (i) or (ii) of section

13 1859A(d)(1)(A), subject to clause (ii), the

14 amount of the deferred premium otherwise

15 established under this paragraph shall be

16 pro-rated to reflect the number of months

17 of coverage under this part under such en18 rollment compared to the maximum num19 ber of months of coverage that the indi20 vidual would have had if the enrollment

21 were not so terminated.

22 ‘‘(ii) ROUNDING TO 12-MONTH MIN23 IMUM COVERAGE PERIODS.—In applying

24 clause (i), the number of months of cov25 erage (if not a multiple of 12) shall be
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1 rounded to the next highest multiple of 12

2 months, except that in no case shall this

3 clause result in a number of months of

4 coverage exceeding the maximum number

5 of months of coverage that the individual

6 would have had if the enrollment were not

7 so terminated.

8 ‘‘(2) PERIOD OF PAYMENT.—The period de9 scribed in this paragraph for an individual is the pe10 riod beginning with the first month in which the in11 dividual has attained 65 years of age and ending

12 with the month before the month in which the indi13 vidual attains 85 years of age.

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

15 who is liable for a premium under this subsection,

16 the amount of the premium shall be collected in the

17 same manner as the premium for enrollment under

18 such part is collected under section 1840, except

19 that any reference in such section to the Federal

20 Supplementary Medical Insurance Trust Fund is

21 deemed to be a reference to the Medicare Early Ac22 cess Trust Fund established under section 1859D.

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

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

25 shall apply to premiums collected under this section in the
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1 same manner as they apply to premiums collected under

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

3 Federal Supplementary Medical Insurance Trust Fund is

4 deemed a reference to the Trust Fund established under

5 section 1859D.

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

7 ‘‘(a) ESTABLISHMENT OF TRUST FUND.—

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

9 the books of the Treasury of the United States a

10 trust fund to be known as the ‘Medicare Early Ac11 cess Trust Fund’ (in this section referred to as the

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

13 gifts and bequests as may be made as provided in

14 section 201(i)(1) and such amounts as may be de15 posited in, or appropriated to, such fund as provided

16 in this title.

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

18 section 1859B shall be transferred to the Trust

19 Fund.

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

21 AND ABUSE INITIATIVES.—

22 ‘‘(A) IN GENERAL.—There is hereby trans23 ferred to the Trust Fund from the Federal

24 Hospital Insurance Trust Fund and from the

25 Federal Supplementary Medical Insurance
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1 Trust Fund amounts equivalent to the amounts

2 (specified under subparagraph (B)) of the re3 ductions in expenditures under such respective

4 trust fund as may be attributable to the enact5 ment of the Medicare Fraud and Reimburse6 ment Reform Act of 1999 (H.R. 2229).

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

8 fiscal year during the 10-fiscal-year period be9 ginning with fiscal year 2001, the amounts

10 under subparagraph (A) shall be the amounts

11 described in such subparagraph as determined

12 by the Congressional Budget Office at the time

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

14 Medicare Early Access and Tax Credit Act of

15 2000. For subsequent fiscal years, the amounts

16 under subparagraph (A) shall be the amount

17 determined under this subparagraph for the

18 previous fiscal year increased by the same per19 centage as the percentage increase in aggregate

20 expenditures under this title from the second

21 previous fiscal year to the previous fiscal year.

22 ‘‘(b) INCORPORATION OF PROVISIONS.—

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

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

25 apply with respect to the Trust Fund and this title
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1 in the same manner as they apply with respect to

2 the Federal Supplementary Medical Insurance Trust

3 Fund and part B, respectively.

4 ‘‘(2) MISCELLANEOUS REFERENCES.—In apply5 ing provisions of section 1841 under paragraph

6 (1)—

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

8 part’ is construed to refer to this part D;

9 ‘‘(B) any reference in section 1841(h) to

10 section 1840(d) and in section 1841(i) to sec11 tions 1840(b)(1) and 1842(g) are deemed ref12 erences to comparable authority exercised under

13 this part; and

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

15 1841(g) to the Trust Funds under sections

16 1817 and 1841 as reimbursement to such funds

17 for payments they made for benefits provided

18 under this part.

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

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

21 The Board of Trustees of the Medicare Early Access

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

23 annual basis to Congress concerning the status of the

24 Trust Fund and the need for adjustments in the program
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1 under this part to maintain financial solvency of the pro2 gram under this part.

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

4 General of the United States shall periodically submit to

5 Congress reports on the adequacy of the financing of cov6 erage provided under this part. The Comptroller General

7 shall include in such report such recommendations for ad8 justments in such financing and coverage as the Comp9 troller General deems appropriate in order to maintain fi10 nancial solvency of the program under this part.

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

12 ‘‘(a) TREATMENT FOR PURPOSES OF TITLE.—Ex13 cept as otherwise provided in this part—

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

15 be treated for purposes of this title as though the in16 dividual were entitled to benefits under part A and

17 enrolled under part B; and

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

19 payable under this title to such individuals in the

20 same manner as if such individuals were so entitled

21 and enrolled.

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

23 PURPOSES OF MEDICAID PROGRAM.—For purposes of ap24 plying title XIX (including the provision of medicare cost25 sharing assistance under such title), an individual who is
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1 enrolled under this part shall not be treated as being enti2 tled to benefits under this title.

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

4 PURPOSES OF COBRA CONTINUATION PROVISIONS.—In

5 applying a COBRA continuation provision (as defined in

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

7 reference to an entitlement to benefits under this title

8 shall not be construed to include entitlement to benefits

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

10 (b) CONFORMING AMENDMENTS TO SOCIAL SECU11 RITY ACT PROVISIONS.—

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

13 (42 U.S.C. 401(i)(1)) is amended by striking ‘‘or the

14 Federal Supplementary Medical Insurance Trust

15 Fund’’ and inserting ‘‘the Federal Supplementary

16 Medical Insurance Trust Fund, and the Medicare

17 Early Access Trust Fund’’.

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

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

20 the Federal Supplementary Medical Insurance Trust

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

22 the Federal Supplementary Medical Insurance Trust

23 Fund, and the Medicare Early Access Trust Fund

24 established by title XVIII’’.
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1 (3) Section 1820(i) of such Act (42 U.S.C.

2 1395i–4(i)) is amended by striking ‘‘part D’’ and in3 serting ‘‘part E’’.

4 (4) Part C of title XVIII of such Act is

5 amended—

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

7 1395w–21(a)(2)(B)), by striking ‘‘1859(b)(3)’’

8 and inserting ‘‘1858(b)(3)’’;

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

10 1395w–21(a)(2)(C)), by striking ‘‘1859(b)(2)’’

11 and inserting ‘‘1858(b)(2)’’;

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

13 1395w–22(a)(1)), by striking ‘‘1859(b)(3)’’ and

14 inserting ‘‘1858(b)(3)’’;

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

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

17 ‘‘1859(b)(2)(B)’’ and inserting

18 ‘‘1858(b)(2)(B)’’;

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

20 1395w–23(a)(1)(A)), by striking ‘‘1859(e)(4)’’

21 and inserting ‘‘1858(e)(4)’’; and

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

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

24 and inserting ‘‘1858(e)(4)’’.
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1 (5) Section 1853(c) of such Act (42 U.S.C.

2 1395w–23(c)) is amended—

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

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

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

6 ‘‘(8) ADJUSTMENT FOR EARLY ACCESS.—In ap7 plying this subsection with respect to individuals en8 titled to benefits under part D, the Secretary shall

9 provide for an appropriate adjustment in the

10 Medicare+Choice capitation rate as may be appro11 priate to reflect differences between the population

12 served under such part and the population under

13 parts A and B.’’.

14 (c) OTHER CONFORMING AMENDMENTS.—

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

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

17 and inserting ‘‘1858(b)(3)’’.

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

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

20 1162(2)) is amended by inserting ‘‘(not including an

21 individual who is so entitled pursuant to enrollment

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

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

24 Service Act (42 U.S.C. 300bb–2(2)(D)(ii)) is amend25 ed by inserting ‘‘(not including an individual who is
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•HR 4938 IH

1 so entitled pursuant to enrollment under section

2 1859A)’’ after ‘‘Social Security Act’’.

3 (C) Section 4980B(f)(2)(B)(i)(V) of the Inter4 nal Revenue Code of 1986 is amended by inserting

5 ‘‘(not including an individual who is so entitled pur6 suant to enrollment under section 1859A)’’ after

7 ‘‘Social Security Act’’.

8 TITLE II—ACCESS TO MEDICARE

9 BENEFITS FOR DISPLACED

10 WORKERS 55-TO-62 YEARS OF

11 AGE

12 SEC. 201. ACCESS TO MEDICARE BENEFITS FOR DISPLACED

13 WORKERS 55-TO-62 YEARS OF AGE.

14 (a) ELIGIBILITY.—Section 1859 of the Social Secu15 rity Act, as inserted by section 101(a)(2), is amended by

16 adding at the end the following new subsection:

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

18 ‘‘(1) DISPLACED WORKERS.—Subject to para19 graph (3), an individual who meets the following re20 quirements with respect to a month is eligible to en21 roll under this part with respect to such month:

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

23 month, the individual has attained 55 years of

24 age, but has not attained 62 years of age.
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1 ‘‘(B) MEDICARE ELIGIBILITY (BUT FOR

2 AGE).—The individual would be eligible for ben3 efits under part A or part B for the month if

4 the individual were 65 years of age.

5 ‘‘(C) LOSS OF EMPLOYMENT-BASED COV6 ERAGE.—

7 ‘‘(i) ELIGIBLE FOR UNEMPLOYMENT

8 COMPENSATION.—The individual meets the

9 requirements relating to period of covered

10 employment and conditions of separation

11 from employment to be eligible for unem12 ployment compensation (as defined in sec13 tion 85(b) of the Internal Revenue Code of

14 1986), based on a separation from employ15 ment occurring on or after July 1, 2000.

16 The previous sentence shall not be con17 strued as requiring the individual to be re18 ceiving such unemployment compensation.

19 ‘‘(ii) LOSS OF EMPLOYMENT-BASED

20 COVERAGE.—Immediately before the time

21 of such separation of employment, the indi22 vidual was covered under a group health

23 plan on the basis of such employment, and,

24 because of such loss, is no longer eligible

25 for coverage under such plan (including
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1 such eligibility based on the application of

2 a Federal or State COBRA continuation

3 provision) as of the last day of the month

4 involved.

5 ‘‘(iii) PREVIOUS CREDITABLE COV6 ERAGE FOR AT LEAST 1 YEAR.—As of the

7 date on which the individual loses coverage

8 described in clause (ii), the aggregate of

9 the periods of creditable coverage (as de10 termined under section 2701(c) of the

11 Public Health Service Act) is 12 months or

12 longer.

13 ‘‘(D) EXHAUSTION OF AVAILABLE COBRA

14 CONTINUATION BENEFITS.—

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

16 individual described in clause (ii) for a

17 month described in clause (iii)—

18 ‘‘(I) the individual (or spouse)

19 elected coverage described in clause

20 (ii); and

21 ‘‘(II) the individual (or spouse)

22 has continued such coverage for all

23 months described in clause (iii) in

24 which the individual (or spouse) is eli25 gible for such coverage.
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1 ‘‘(ii) INDIVIDUALS TO WHOM COBRA

2 CONTINUATION COVERAGE MADE AVAIL3 ABLE.—An individual described in this

4 clause is an individual—

5 ‘‘(I) who was offered coverage

6 under a Federal or State COBRA

7 continuation provision at the time of

8 loss of coverage eligibility described in

9 subparagraph (C)(ii); or

10 ‘‘(II) whose spouse was offered

11 such coverage in a manner that per12 mitted coverage of the individual at

13 such time.

14 ‘‘(iii) MONTHS OF POSSIBLE COBRA

15 CONTINUATION COVERAGE.—A month de16 scribed in this clause is a month for which

17 an individual described in clause (ii) could

18 have had coverage described in such clause

19 as of the last day of the month if the indi20 vidual (or the spouse of the individual, as

21 the case may be) had elected such coverage

22 on a timely basis.

23 ‘‘(E) NOT ELIGIBLE FOR COVERAGE

24 UNDER FEDERAL HEALTH INSURANCE PRO25 GRAM OR GROUP HEALTH PLANS.—The indi-
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1 vidual is not eligible for benefits or coverage

2 under a Federal health insurance program or

3 under a group health plan (whether on the

4 basis of the individual’s employment or employ5 ment of the individual’s spouse) as of the last

6 day of the month involved.

7 ‘‘(2) SPOUSE OF DISPLACED WORKER.—Subject

8 to paragraph (3), an individual who meets the fol9 lowing requirements with respect to a month is eligi10 ble to enroll under this part with respect to such

11 month:

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

13 month, the individual has not attained 62 years

14 of age.

15 ‘‘(B) MARRIED TO DISPLACED WORKER.—

16 The individual is the spouse of an individual at

17 the time the individual enrolls under this part

18 under paragraph (1) and loses coverage de19 scribed in paragraph (1)(C)(ii) because the in20 dividual’s spouse lost such coverage.

21 ‘‘(C) MEDICARE ELIGIBILITY (BUT FOR

22 AGE); EXHAUSTION OF ANY COBRA CONTINU23 ATION COVERAGE; AND NOT ELIGIBLE FOR COV24 ERAGE UNDER FEDERAL HEALTH INSURANCE

25 PROGRAM OR GROUP HEALTH PLAN.—The indi-
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•HR 4938 IH

1 vidual meets the requirements of subparagraphs

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

3 ‘‘(3) CHANGE IN HEALTH PLAN ELIGIBILITY

4 AFFECTS CONTINUED ELIGIBILITY.—For provision

5 that terminates enrollment under this section in the

6 case of an individual who becomes eligible for cov7 erage under a group health plan or under a Federal

8 health insurance program, see section

9 1859A(d)(1)(C).

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

11 this subsection shall be construed as preventing an

12 individual who, after enrolling under this subsection,

13 terminates such enrollment from subsequently re14 enrolling under this subsection if the individual is el15 igible to enroll under this subsection at that time.’’.

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

17 so inserted, is amended—

18 (1) in subsection (a), by striking ‘‘and’’ at the

19 end of paragraph (1), by striking the period at the

20 end of paragraph (2) and inserting ‘‘; and’’, and by

21 adding at the end the following new paragraph:

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

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

24 are provided notice and an opportunity to continue
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1 enrollment in accordance with section

2 1859E(c)(1).’’;

3 (2) in subsection (b), by inserting after Not4 withstanding any other provision of law, (1) the fol5 lowing:

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

7 the case of individuals eligible to enroll under this

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

9 apply:

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

11 the individual is first eligible to enroll under

12 such section for January 2001, the enrollment

13 period shall begin on November 1, 2000, and

14 shall end on February 28, 2001. Any such en15 rollment before January 1, 2001, is conditioned

16 upon compliance with the conditions of eligi17 bility for January 2001.

18 ‘‘(B) SUBSEQUENT PERIODS.—If the indi19 vidual is eligible to enroll under such section for

20 a month after January 2001, the enrollment pe21 riod based on such eligibility shall begin on the

22 first day of the second month before the month

23 in which the individual first is eligible to so en24 roll (or reenroll) and shall end four months

25 later.’’;
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1 (3) in subsection (d)(1), by amending subpara2 graph (B) to read as follows:

3 ‘‘(B) TERMINATION BASED ON AGE.—

4 ‘‘(i) AT AGE 65.—Subject to clause

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

6 ‘‘(ii) AT AGE 62 FOR DISPLACED

7 WORKERS AND SPOUSES.—In the case of

8 an individual enrolled under this part pur9 suant to section 1859(c), subject to sub10 section (a)(1), the individual attains 62

11 years of age.’’;

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

13 the following new subparagraph:

14 ‘‘(C) OBTAINING ACCESS TO EMPLOYMENT15 BASED COVERAGE OR FEDERAL HEALTH INSUR16 ANCE PROGRAM FOR INDIVIDUALS UNDER 62

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

18 who has not attained 62 years of age, the indi19 vidual is covered (or eligible for coverage) as a

20 participant or beneficiary under a group health

21 plan or under a Federal health insurance pro22 gram.’’;

23 (5) in subsection (d)(2), by amending subpara24 graph (C) to read as follows:

25 ‘‘(C) AGE OR MEDICARE ELIGIBILITY.—
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1 ‘‘(i) IN GENERAL.—The termination

2 of a coverage period under paragraph

3 (1)(A)(iii) or (1)(B)(i) shall take effect as

4 of the first day of the month in which the

5 individual attains 65 years of age or be6 comes entitled to benefits under part A or

7 enrolled for benefits under part B.

8 ‘‘(ii) DISPLACED WORKERS.—The ter9 mination of a coverage period under para10 graph (1)(B)(ii) shall take effect as of the

11 first day of the month in which the indi12 vidual attains 62 years of age, unless the

13 individual has enrolled under this part pur14 suant to section 1859(b) and section

15 1859E(c)(1).’’; and

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

17 the following new subparagraph:

18 ‘‘(D) ACCESS TO COVERAGE.—The termi19 nation of a coverage period under paragraph

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

21 the individual is eligible to begin a period of

22 creditable coverage (as defined in section

23 2701(c) of the Public Health Service Act)

24 under a group health plan or under a Federal

25 health insurance program.’’.
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1 (c) PREMIUMS.—Section 1859B of such Act, as so

2 inserted, is amended—

3 (1) in subsection (a)(1), by adding at the end

4 the following:

5 ‘‘(B) BASE MONTHLY PREMIUM FOR INDI6 VIDUALS UNDER 62 YEARS OF AGE.—A base

7 monthly premium for individuals under 62

years of age, equal to 1 8 ⁄12 of the base annual

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

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

11 (2) by adding at the end the following new sub12 section:

13 ‘‘(d) BASE MONTHLY PREMIUM FOR INDIVIDUALS

14 UNDER 62 YEARS OF AGE.—

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

16 GROUPS.—

17 ‘‘(A) ESTIMATE OF AMOUNT.—The Sec18 retary shall estimate the average, annual per

19 capita amount that would be payable under this

20 title with respect to individuals residing in the

21 United States who meet the requirement of sec22 tion 1859(c)(1)(A) within each of the age co23 horts established under subparagraph (B) as if

24 all such individuals within such cohort were eli25 gible for (and enrolled) under this title during
37

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1 the entire year (and assuming that section

2 1862(b)(2)(A)(i) did not apply).

3 ‘‘(B) AGE COHORTS.—For purposes of

4 subparagraph (A), the Secretary shall establish

5 separate age cohorts in 5 year age increments

6 for individuals who have not attained 60 years

7 of ages and a separate cohort for individuals

8 who have attained 60 years of age.

9 ‘‘(2) GEOGRAPHIC ADJUSTMENT.—The Sec10 retary shall adjust the amount determined under

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

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

13 the same extent as the Secretary provides for adjust14 ments under subsection (b)(2).

15 ‘‘(3) BASE ANNUAL PREMIUM.—The base an16 nual premium under this subsection for months in a

17 year for individuals in an age cohort under para18 graph (1)(B) in a premium area is equal to 165 per19 cent of the average, annual per capita amount esti20 mated under paragraph (1) for the age cohort and

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

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

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

24 Secretary provides for coverage of portions of a

25 month under section 1859A(c)(2), the Secretary
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1 shall pro-rate the premiums attributable to such cov2 erage under this section to reflect the portion of the

3 month so covered.’’.

4 (d) ADMINISTRATIVE PROVISIONS.—Section 1859F

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

6 end the following:

7 ‘‘(d) ADDITIONAL ADMINISTRATIVE PROVISIONS.—

8 ‘‘(1) PROCESS FOR CONTINUED ENROLLMENT

9 OF DISPLACED WORKERS WHO ATTAIN 62 YEARS OF

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

11 continuation of enrollment of individuals whose en12 rollment under section 1859(c) would be terminated

13 upon attaining 62 years of age. Under such process

14 such individuals shall be provided appropriate and

15 timely notice before the date of such termination

16 and of the requirement to enroll under this part pur17 suant to section 1859(b) in order to continue entitle18 ment to benefits under this title after attaining 62

19 years of age.

20 ‘‘(2) ARRANGEMENTS WITH STATES FOR DE21 TERMINATIONS RELATING TO UNEMPLOYMENT COM22 PENSATION ELIGIBILITY.—The Secretary may pro23 vide for appropriate arrangements with States for

24 the determination of whether individuals in the State
39

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1 meet or would meet the requirements of section

2 1859(c)(1)(C)(i).’’.

3 (e) CONFORMING AMENDMENT TO HEADING TO

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

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

6 and inserting ‘‘55’’.

7 TITLE III—COBRA PROTECTION

8 FOR EARLY RETIREES

9 Subtitle A—Amendments to the

10 Employee Retirement Income

11 Security Act of 1974

12 SEC. 301. COBRA CONTINUATION BENEFITS FOR CERTAIN

13 RETIRED WORKERS WHO LOSE RETIREE

14 HEALTH COVERAGE.

15 (a) ESTABLISHMENT OF NEW QUALIFYING

16 EVENT.—

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

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

19 1163) is amended by inserting after paragraph (6)

20 the following new paragraph:

21 ‘‘(7) The termination or substantial reduction

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

23 health plan coverage as a result of plan changes or

24 termination in the case of a covered employee who

25 is a qualified retiree.’’.
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1 (2) QUALIFIED RETIREE; QUALIFIED BENE2 FICIARY; AND SUBSTANTIAL REDUCTION DE3 FINED.—Section 607 of such Act (29 U.S.C. 1167)

4 is amended—

5 (A) in paragraph (3)—

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

7 ‘‘except as otherwise provided in this para8 graph,’’ after ‘‘means,’’; and

9 (ii) by adding at the end the following

10 new subparagraph:

11 ‘‘(D) SPECIAL RULE FOR QUALIFYING RE12 TIREES AND DEPENDENTS.—In the case of a

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

14 term ‘qualified beneficiary’ means a qualified

15 retiree and any other individual who, on the day

16 before such qualifying event, is a beneficiary

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

18 relationship to such qualified retiree.’’; and

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

20 paragraphs:

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

22 retiree’ means, with respect to a qualifying event de23 scribed in section 603(7), a covered employee who,

24 at the time of the event—

25 ‘‘(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, 2000), 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-
44

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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, 2000. 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, 2000), 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, 2000. 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

9 amended—

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, 2000), 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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•HR 4938 IH

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

19 amended—

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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•HR 4938 IH

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, 2000. 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 Reimbursement Reform Act

11 of 1999 (H.R. 2229).

12 TITLE V—CREDIT AGAINST IN13 COME TAX FOR MEDICARE

14 BUY-IN PREMIUMS AND FOR

15 CERTAIN COBRA CONTINU16 ATION COVERAGE PREMIUMS

17 SEC. 501. CREDIT FOR MEDICARE BUY-IN PREMIUMS AND

18 FOR CERTAIN COBRA CONTINUATION COV19 ERAGE PREMIUMS.

20 (a) IN GENERAL.—Subpart A of part IV of sub21 chapter A of chapter 1 of the Internal Revenue Code of

22 1986 (relating to nonrefundable personal credits) is

23 amended by inserting after section 25A the following new

24 section:
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1 ‘‘SEC. 25B. MEDICARE BUY-IN PREMIUMS AND CERTAIN

2 COBRA CONTINUATION COVERAGE PRE3 MIUMS.

4 ‘‘(a) IN GENERAL.—In the case of an individual,

5 there shall be allowed as a credit against the tax imposed

6 by this chapter for the taxable year an amount equal to

7 25 percent of the amount paid during such year as—

8 ‘‘(1) qualified continuation health coverage pre9 miums, and

10 ‘‘(2) medicare buy-in coverage premiums.

11 ‘‘(b) DEFINITIONS.—For purposes of this section—

12 ‘‘(1) QUALIFIED CONTINUATION HEALTH COV13 ERAGE PREMIUMS.—The term ‘qualified continu14 ation health coverage premiums’ means, for any pe15 riod, premiums paid for continuation coverage (as

16 defined in section 4980B(f)) under a group health

17 plan for such period but only if failure to offer such

18 coverage to the taxpayer for such period would con19 stitute a failure by such health plan to meet the re20 quirements of section 4980B(f) and only if the con21 tinuation coverage is provided because of a quali22 fying event described in section 4980B(f)(3)(G).

23 ‘‘(2) MEDICARE BUY-IN COVERAGE PRE24 MIUMS.—The term ‘medicare buy-in coverage pre25 miums’ means premiums paid under part D of title

26 XVIII of the Social Security Act.’’
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1 (b) CLERICAL AMENDMENT.—The table of sections

2 for subpart A of part IV of subchapter A of chapter 1

3 of such Code is amended by inserting after the item relat4 ing to section 25A the following new item:

‘‘Sec. 25B. Medicare buy-in premiums and certain COBRA continuation coverage premiums.’’

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

6 this section shall apply to taxable years beginning after

7 December 31, 2001.

Æ