II

106TH CONGRESS

2D SESSION S. 2918

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 SENATE OF THE UNITED STATES

JULY 25, 2000

Mr. ROCKEFELLER (for himself, Mr. DASCHLE, Mr. KENNEDY, Mr. HARKIN,

Mr. SARBANES, and Mr. LAUTENBERG) introduced the following bill;

which was read twice and referred to the Committee on Finance

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 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,
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

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

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

Sec. 401. Reference to financing provisions.

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

PREMIUMS AND FOR CERTAIN COBRA CONTINUATION COVERAGE PREMIUMS
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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:

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:

22 ‘‘(A) FEDERAL OR STATE COBRA CONTINU23 ATION PROVISION.—The term ‘Federal or State

24 COBRA continuation provision’ has the mean-
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1 ing given the term ‘COBRA continuation provi2 sion’ in section 2791(d)(4) of the Public Health

3 Service Act and includes a comparable State

4 program, as determined by the Secretary.

5 ‘‘(B) FEDERAL HEALTH INSURANCE PRO6 GRAM DEFINED.—The term ‘Federal health in7 surance program’ means any of the following:

8 ‘‘(i) MEDICARE.—Part A or part B of

9 this title (other than by reason of this

10 part).

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

12 title XIX.

13 ‘‘(iii) FEHBP.—The Federal employ14 ees health benefit program under chapter

15 89 of title 5, United States Code.

16 ‘‘(iv) TRICARE.—The TRICARE

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

18 title 10, United States Code).

19 ‘‘(v) ACTIVE DUTY MILITARY.—Health

20 benefits under title 10, United States

21 Code, to an individual as a member of the

22 uniformed services of the United States.

23 ‘‘(C) GROUP HEALTH PLAN.—The term

24 ‘group health plan’ has the meaning given such
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1 term in section 2791(a)(1) of the Public Health

2 Service Act.

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

4 YEARS OF AGE.—

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

6 an individual who meets the following requirements

7 with respect to a month is eligible to enroll under

8 this part with respect to such month:

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

10 month, the individual has attained 62 years of

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

12 ‘‘(B) MEDICARE ELIGIBILITY (BUT FOR

13 AGE).—The individual would be eligible for ben14 efits under part A or part B for the month if

15 the individual were 65 years of age.

16 ‘‘(C) NOT ELIGIBLE FOR COVERAGE

17 UNDER GROUP HEALTH PLANS OR FEDERAL

18 HEALTH INSURANCE PROGRAMS.—The indi19 vidual is not eligible for benefits or coverage

20 under a Federal health insurance program (as

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

22 group health plan (other than such eligibility

23 merely through a Federal or State COBRA con24 tinuation provision) as of the last day of the

25 month involved.
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1 ‘‘(2) LIMITATION ON ELIGIBILITY IF TERMI2 NATED ENROLLMENT.—If an individual described in

3 paragraph (1) enrolls under this part and coverage

4 of the individual is terminated under section

5 1859A(d) (other than because of age), the individual

6 is not again eligible to enroll under this subsection

7 unless the following requirements are met:

8 ‘‘(A) NEW COVERAGE UNDER GROUP

9 HEALTH PLAN OR FEDERAL HEALTH INSUR10 ANCE PROGRAM.—After the date of termination

11 of coverage under such section, the individual

12 obtains coverage under a group health plan or

13 under a Federal health insurance program.

14 ‘‘(B) SUBSEQUENT LOSS OF NEW COV15 ERAGE.—The individual subsequently loses eli16 gibility for the coverage described in subpara17 graph (A) and exhausts any eligibility the indi18 vidual may subsequently have for coverage

19 under a Federal or State COBRA continuation

20 provision.

21 ‘‘(3) CHANGE IN HEALTH PLAN ELIGIBILITY

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

23 individual who is eligible for and enrolls under this

24 part under this subsection, the individual’s continued

25 entitlement to benefits under this part shall not be
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1 affected by the individual’s subsequent eligibility for

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

3 or entitlement to such benefits or coverage.

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

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

6 program established under this part only in such manner

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

8 during an enrollment period prescribed by the Secretary

9 consistent with the provisions of this section. Such regula10 tions shall provide a process under which—

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

12 are permitted to pre-enroll during a prior month

13 within an enrollment period described in subsection

14 (b); and

15 ‘‘(2) each individual seeking to enroll under sec16 tion 1859(b) is notified, before enrolling, of the de17 ferred monthly premium amount the individual will

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

19 65 years of age as determined under section

20 1859B(c)(3).

21 ‘‘(b) ENROLLMENT PERIODS.—

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

23 the case of individuals eligible to enroll under this

24 part under section 1859(b)—
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1 ‘‘(A) INITIAL ENROLLMENT PERIOD.—If

2 the individual is eligible to enroll under such

3 section for January 2001, the enrollment period

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

5 on February 28, 2001. Any such enrollment be6 fore January 1, 2001, is conditioned upon com7 pliance with the conditions of eligibility for Jan8 uary 2001.

9 ‘‘(B) SUBSEQUENT PERIODS.—If the indi10 vidual is eligible to enroll under such section for

11 a month after January 2001, the enrollment pe12 riod shall begin on the first day of the second

13 month before the month in which the individual

14 first is eligible to so enroll and shall end four

15 months later. Any such enrollment before the

16 first day of the third month of such enrollment

17 period is conditioned upon compliance with the

18 conditions of eligibility for such third month.

19 ‘‘(2) AUTHORITY TO CORRECT FOR GOVERN20 MENT ERRORS.—The provisions of section 1837(h)

21 apply with respect to enrollment under this part in

22 the same manner as they apply to enrollment under

23 part B.

24 ‘‘(c) DATE COVERAGE BEGINS.—
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1 ‘‘(1) IN GENERAL.—The period during which

2 an individual is entitled to benefits under this part

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

4 January 1, 2001:

5 ‘‘(A) In the case of an individual who en6 rolls (including pre-enrolls) before the month in

7 which the individual satisfies eligibility for en8 rollment under section 1859, the first day of

9 such month of eligibility.

10 ‘‘(B) In the case of an individual who en11 rolls during or after the month in which the in12 dividual first satisfies eligibility for enrollment

13 under such section, the first day of the fol14 lowing month.

15 ‘‘(2) AUTHORITY TO PROVIDE FOR PARTIAL

16 MONTHS OF COVERAGE.—Under regulations, the

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

18 for coverage periods that include portions of a

19 month in order to avoid lapses of coverage.

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

21 may be made under this title with respect to the ex22 penses of an individual enrolled under this part un23 less such expenses were incurred by such individual

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

25 is a coverage period under this section.
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1 ‘‘(d) TERMINATION OF COVERAGE.—

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

3 period under this part shall continue until the indi4 vidual’s enrollment has been terminated at the ear5 liest of the following:

6 ‘‘(A) GENERAL PROVISIONS.—

7 ‘‘(i) NOTICE.—The individual files no8 tice (in a form and manner prescribed by

9 the Secretary) that the individual no

10 longer wishes to participate in the insur11 ance program under this part.

12 ‘‘(ii) NONPAYMENT OF PREMIUMS.—

13 The individual fails to make payment of

14 premiums required for enrollment under

15 this part.

16 ‘‘(iii) MEDICARE ELIGIBILITY.—The

17 individual becomes entitled to benefits

18 under part A or enrolled under part B

19 (other than by reason of this part).

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

21 individual attains 65 years of age.

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

23 ‘‘(A) NOTICE.—The termination of a cov24 erage period under paragraph (1)(A)(i) shall
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1 take effect at the close of the month following

2 for which the notice is filed.

3 ‘‘(B) NONPAYMENT OF PREMIUM.—The

4 termination of a coverage period under para5 graph (1)(A)(ii) shall take effect on a date de6 termined under regulations, which may be de7 termined so as to provide a grace period in

8 which overdue premiums may be paid and cov9 erage continued. The grace period determined

10 under the preceding sentence shall not exceed

11 60 days; except that it may be extended for an

12 additional 30 days in any case where the Sec13 retary determines that there was good cause for

14 failure to pay the overdue premiums within

15 such 60-day period.

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

17 The termination of a coverage period under

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

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

20 individual attains 65 years of age or becomes

21 entitled to benefits under part A or enrolled for

22 benefits under part B (other than by reason of

23 this part).

24 ‘‘SEC. 1859B. PREMIUMS.

25 ‘‘(a) AMOUNT OF MONTHLY PREMIUMS.—
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1 ‘‘(1) BASE MONTHLY PREMIUMS.—The Sec2 retary shall, during September of each year (begin3 ning with 1998), determine the following premium

4 rates which shall apply with respect to coverage pro5 vided under this title for any month in the suc6 ceeding year:

7 ‘‘(A) BASE MONTHLY PREMIUM FOR INDI8 VIDUALS 62 YEARS OF AGE OR OLDER.—A base

9 monthly premium for individuals 62 years of

age or older, equal to 1 10 ⁄12 of the base annual

11 premium rate computed under subsection (b)

12 for each premium area.

13 ‘‘(2) DEFERRED MONTHLY PREMIUMS FOR IN14 DIVIDUALS 62 YEARS OF AGE OR OLDER.—The Sec15 retary shall, during September of each year (begin16 ning with 1998), determine under subsection (c) the

17 amount of deferred monthly premiums that shall

18 apply with respect to individuals who first obtain

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

20 the succeeding year.

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

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

23 means such an area as the Secretary shall specify to

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

25 may change the boundaries of such premium areas.
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1 The Secretary shall seek to minimize the number of

2 such areas specified under this paragraph.

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

4 YEARS OF AGE OR OLDER.—

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

6 Secretary shall estimate the average, annual per

7 capita amount that would be payable under this title

8 with respect to individuals residing in the United

9 States who meet the requirement of section

10 1859(b)(1)(A) as if all such individuals were eligible

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

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

13 did not apply).

14 ‘‘(2) GEOGRAPHIC ADJUSTMENT.—The Sec15 retary shall adjust the amount determined under

16 paragraph (1) for each premium area (specified

17 under subsection (a)(3)) in order to take into ac18 count such factors as the Secretary deems appro19 priate and shall limit the maximum premium under

20 this paragraph in a premium area to assure partici21 pation in all areas throughout the United States.

22 ‘‘(3) BASE ANNUAL PREMIUM.—The base an23 nual premium under this subsection for months in a

24 year for individuals 62 years of age or older residing

25 in a premium area is equal to the average, annual
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1 per capita amount estimated under paragraph (1)

2 for the year, adjusted for such area under paragraph

3 (2).

4 ‘‘(c) DEFERRED PREMIUM RATE FOR INDIVIDUALS

5 62 YEARS OF AGE OR OLDER.—The deferred premium

6 rate for individuals with a group of individuals who obtain

7 coverage under section 1859(b) in a year shall be com8 puted by the Secretary as follows:

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

10 ANNUAL AVERAGE EXPENDITURES FOR ENROLL11 MENT GROUP.—The Secretary shall estimate the av12 erage, per capita annual amount that will be paid

13 under this part for individuals in such group during

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

15 making such estimate for coverage beginning in a

16 year before 2004, the Secretary may base such esti17 mate on the average, per capita amount that would

18 be payable if the program had been in operation over

19 a previous period of at least 4 years.

20 ‘‘(2) DIFFERENCE BETWEEN ESTIMATED EX21 PENDITURES AND ESTIMATED PREMIUMS.—Based

22 on the characteristics of individuals in such group,

23 the Secretary shall estimate during the period of

24 coverage of the group under this part under section

25 1859(b) the amount by which—
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1 ‘‘(A) the amount estimated under para2 graph (1); exceeds

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

4 amount of premiums that will be payable for

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

6 for individuals in such group (including pre7 miums that would be payable if there were no

8 terminations in enrollment under clause (i) or

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

10 ‘‘(3) ACTUARIAL COMPUTATION OF DEFERRED

11 MONTHLY PREMIUM RATES.—The Secretary shall

12 determine deferred monthly premium rates for indi13 viduals in such group in a manner so that—

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

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

16 equal to

17 ‘‘(B) the estimated actuarial present value

18 of the differences described in paragraph (2).

19 Such rate shall be computed for each individual in

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

21 the number of months between the first month of

22 coverage based on enrollment under section 1859(b)

23 and the month in which the individual attains 65

24 years of age.
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1 ‘‘(4) DETERMINANTS OF ACTUARIAL PRESENT

2 VALUES.—The actuarial present values described in

3 paragraph (3) shall reflect—

4 ‘‘(A) the estimated probabilities of survival

5 at ages 62 through 84 for individuals enrolled

6 during the year; and

7 ‘‘(B) the estimated effective average inter8 est rates that would be earned on investments

9 held in the trust funds under this title during

10 the period in question.

11 ‘‘SEC. 1859C. PAYMENT OF PREMIUMS.

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

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

14 for payment and collection of the base monthly pre15 mium, determined under section 1859B(a)(1) for the

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

17 involved and the premium area in which the indi18 vidual principally resides, in the same manner as for

19 payment of monthly premiums under section 1840,

20 except that, for purposes of applying this section,

21 any reference in such section to the Federal Supple22 mentary Medical Insurance Trust Fund is deemed a

23 reference to the Trust Fund established under sec24 tion 1859D.
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1 ‘‘(2) PERIOD OF PAYMENT.—In the case of an

2 individual who participates in the program estab3 lished by this title, the base monthly premium shall

4 be payable for the period commencing with the first

5 month of the individual’s coverage period and ending

6 with the month in which the individual’s coverage

7 under this title terminates.

8 ‘‘(b) PAYMENT OF DEFERRED PREMIUM FOR INDI9 VIDUALS COVERED AFTER ATTAINING AGE 62.—

10 ‘‘(1) RATE OF PAYMENT.—

11 ‘‘(A) IN GENERAL.—In the case of an indi12 vidual who is covered under this part for a

13 month pursuant to an enrollment under section

14 1859(b), subject to subparagraph (B), the indi15 vidual is liable for payment of a deferred pre16 mium in each month during the period de17 scribed in paragraph (2) in an amount equal to

18 the full deferred monthly premium rate deter19 mined for the individual under section

20 1859B(c).

21 ‘‘(B) SPECIAL RULES FOR THOSE WHO

22 DISENROLL EARLY.—

23 ‘‘(i) IN GENERAL.—If such an individ24 ual’s enrollment under such section is ter25 minated under clause (i) or (ii) of section
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1 1859A(d)(1)(A), subject to clause (ii), the

2 amount of the deferred premium otherwise

3 established under this paragraph shall be

4 pro-rated to reflect the number of months

5 of coverage under this part under such en6 rollment compared to the maximum num7 ber of months of coverage that the indi8 vidual would have had if the enrollment

9 were not so terminated.

10 ‘‘(ii) ROUNDING TO 12-MONTH MIN11 IMUM COVERAGE PERIODS.—In applying

12 clause (i), the number of months of cov13 erage (if not a multiple of 12) shall be

14 rounded to the next highest multiple of 12

15 months, except that in no case shall this

16 clause result in a number of months of

17 coverage exceeding the maximum number

18 of months of coverage that the individual

19 would have had if the enrollment were not

20 so terminated.

21 ‘‘(2) PERIOD OF PAYMENT.—The period de22 scribed in this paragraph for an individual is the pe23 riod beginning with the first month in which the in24 dividual has attained 65 years of age and ending
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1 with the month before the month in which the indi2 vidual attains 85 years of age.

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

4 who is liable for a premium under this subsection,

5 the amount of the premium shall be collected in the

6 same manner as the premium for enrollment under

7 such part is collected under section 1840, except

8 that any reference in such section to the Federal

9 Supplementary Medical Insurance Trust Fund is

10 deemed to be a reference to the Medicare Early Ac11 cess Trust Fund established under section 1859D.

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

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

14 shall apply to premiums collected under this section in the

15 same manner as they apply to premiums collected under

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

17 Federal Supplementary Medical Insurance Trust Fund is

18 deemed a reference to the Trust Fund established under

19 section 1859D.

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

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

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

23 the books of the Treasury of the United States a

24 trust fund to be known as the ‘Medicare Early Ac25 cess Trust Fund’ (in this section referred to as the
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1 ‘Trust Fund’). The Trust Fund shall consist of such

2 gifts and bequests as may be made as provided in

3 section 201(i)(1) and such amounts as may be de4 posited in, or appropriated to, such fund as provided

5 in this title.

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

7 section 1859B shall be transferred to the Trust

8 Fund.

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

10 AND ABUSE INITIATIVES.—

11 ‘‘(A) IN GENERAL.—There is hereby trans12 ferred to the Trust Fund from the Federal

13 Hospital Insurance Trust Fund and from the

14 Federal Supplementary Medical Insurance

15 Trust Fund amounts equivalent to the amounts

16 (specified under subparagraph (B)) of the re17 ductions in expenditures under such respective

18 trust fund as may be attributable to the enact19 ment of the Medicare Fraud and Reimburse20 ment Reform Act of 1999 (H.R. 2229).

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

22 fiscal year during the 10-fiscal-year period be23 ginning with fiscal year 2001, the amounts

24 under subparagraph (A) shall be the amounts

25 described in such subparagraph as determined
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1 by the Congressional Budget Office at the time

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

3 Medicare Early Access and Tax Credit Act of

4 2000. For subsequent fiscal years, the amounts

5 under subparagraph (A) shall be the amount

6 determined under this subparagraph for the

7 previous fiscal year increased by the same per8 centage as the percentage increase in aggregate

9 expenditures under this title from the second

10 previous fiscal year to the previous fiscal year.

11 ‘‘(b) INCORPORATION OF PROVISIONS.—

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

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

14 apply with respect to the Trust Fund and this title

15 in the same manner as they apply with respect to

16 the Federal Supplementary Medical Insurance Trust

17 Fund and part B, respectively.

18 ‘‘(2) MISCELLANEOUS REFERENCES.—In apply19 ing provisions of section 1841 under paragraph

20 (1)—

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

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

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

24 section 1840(d) and in section 1841(i) to sec25 tions 1840(b)(1) and 1842(g) are deemed ref-
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1 erences to comparable authority exercised under

2 this part; and

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

4 1841(g) to the Trust Funds under sections

5 1817 and 1841 as reimbursement to such funds

6 for payments they made for benefits provided

7 under this part.

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

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

10 The Board of Trustees of the Medicare Early Access

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

12 annual basis to Congress concerning the status of the

13 Trust Fund and the need for adjustments in the program

14 under this part to maintain financial solvency of the pro15 gram under this part.

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

17 General of the United States shall periodically submit to

18 Congress reports on the adequacy of the financing of cov19 erage provided under this part. The Comptroller General

20 shall include in such report such recommendations for ad21 justments in such financing and coverage as the Comp22 troller General deems appropriate in order to maintain fi23 nancial solvency of the program under this part.
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1 ‘‘SEC. 1859F. ADMINISTRATION AND MISCELLANEOUS.

2 ‘‘(a) TREATMENT FOR PURPOSES OF TITLE.—Ex3 cept as otherwise provided in this part—

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

5 be treated for purposes of this title as though the in6 dividual were entitled to benefits under part A and

7 enrolled under part B; and

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

9 payable under this title to such individuals in the

10 same manner as if such individuals were so entitled

11 and enrolled.

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

13 PURPOSES OF MEDICAID PROGRAM.—For purposes of ap14 plying title XIX (including the provision of medicare cost15 sharing assistance under such title), an individual who is

16 enrolled under this part shall not be treated as being enti17 tled to benefits under this title.

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

19 PURPOSES OF COBRA CONTINUATION PROVISIONS.—In

20 applying a COBRA continuation provision (as defined in

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

22 reference to an entitlement to benefits under this title

23 shall not be construed to include entitlement to benefits

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

25 (b) CONFORMING AMENDMENTS TO SOCIAL SECU26 RITY ACT PROVISIONS.—
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1 (1) Section 201(i)(1) of the Social Security Act

2 (42 U.S.C. 401(i)(1)) is amended by striking ‘‘or the

3 Federal Supplementary Medical Insurance Trust

4 Fund’’ and inserting ‘‘the Federal Supplementary

5 Medical Insurance Trust Fund, and the Medicare

6 Early Access Trust Fund’’.

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

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

9 the Federal Supplementary Medical Insurance Trust

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

11 the Federal Supplementary Medical Insurance Trust

12 Fund, and the Medicare Early Access Trust Fund

13 established by title XVIII’’.

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

15 1395i–4(i)) is amended by striking ‘‘part D’’ and in16 serting ‘‘part E’’.

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

18 amended—

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

20 1395w–21(a)(2)(B)), by striking ‘‘1859(b)(3)’’

21 and inserting ‘‘1858(b)(3)’’;

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

23 1395w–21(a)(2)(C)), by striking ‘‘1859(b)(2)’’

24 and inserting ‘‘1858(b)(2)’’;
25

•S 2918 IS

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

2 1395w–22(a)(1)), by striking ‘‘1859(b)(3)’’ and

3 inserting ‘‘1858(b)(3)’’;

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

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

6 ‘‘1859(b)(2)(B)’’ and inserting

7 ‘‘1858(b)(2)(B)’’;

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

9 1395w–23(a)(1)(A)), by striking ‘‘1859(e)(4)’’

10 and inserting ‘‘1858(e)(4)’’; and

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

12 1395w–23(a)(3)(D)), by striking ‘‘1859(e)(4)’’

13 and inserting ‘‘1858(e)(4)’’.

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

15 1395w–23(c)) is amended—

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

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

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

19 ‘‘(8) ADJUSTMENT FOR EARLY ACCESS.—In ap20 plying this subsection with respect to individuals en21 titled to benefits under part D, the Secretary shall

22 provide for an appropriate adjustment in the

23 Medicare+Choice capitation rate as may be appro24 priate to reflect differences between the population
26

•S 2918 IS

1 served under such part and the population under

2 parts A and B.’’.

3 (c) OTHER CONFORMING AMENDMENTS.—

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

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

6 and inserting ‘‘1858(b)(3)’’.

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

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

9 1162(2)) is amended by inserting ‘‘(not including an

10 individual who is so entitled pursuant to enrollment

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

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

13 Service Act (42 U.S.C. 300bb–2(2)(D)(ii)) is amend14 ed by inserting ‘‘(not including an individual who is

15 so entitled pursuant to enrollment under section

16 1859A)’’ after ‘‘Social Security Act’’.

17 (C) Section 4980B(f)(2)(B)(i)(V) of the Inter18 nal Revenue Code of 1986 is amended by inserting

19 ‘‘(not including an individual who is so entitled pur20 suant to enrollment under section 1859A)’’ after

21 ‘‘Social Security Act’’.
27

•S 2918 IS

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
28

•S 2918 IS

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 July 1, 2000.

8 The previous sentence shall not be con9 strued as requiring the individual to be re10 ceiving such unemployment compensation.

11 ‘‘(ii) LOSS OF EMPLOYMENT-BASED

12 COVERAGE.—Immediately before the time

13 of such separation of employment, the indi14 vidual was covered under a group health

15 plan on the basis of such employment, and,

16 because of such loss, is no longer eligible

17 for coverage under such plan (including

18 such eligibility based on the application of

19 a Federal or State COBRA continuation

20 provision) as of the last day of the month

21 involved.

22 ‘‘(iii) PREVIOUS CREDITABLE COV23 ERAGE FOR AT LEAST 1 YEAR.—As of the

24 date on which the individual loses coverage

25 described in clause (ii), the aggregate of
29

•S 2918 IS

1 the periods of creditable coverage (as de2 termined under section 2701(c) of the

3 Public Health Service Act) is 12 months or

4 longer.

5 ‘‘(D) EXHAUSTION OF AVAILABLE COBRA

6 CONTINUATION BENEFITS.—

7 ‘‘(i) IN GENERAL.—In the case of an

8 individual described in clause (ii) for a

9 month described in clause (iii)—

10 ‘‘(I) the individual (or spouse)

11 elected coverage described in clause

12 (ii); and

13 ‘‘(II) the individual (or spouse)

14 has continued such coverage for all

15 months described in clause (iii) in

16 which the individual (or spouse) is eli17 gible for such coverage.

18 ‘‘(ii) INDIVIDUALS TO WHOM COBRA

19 CONTINUATION COVERAGE MADE AVAIL20 ABLE.—An individual described in this

21 clause is an individual—

22 ‘‘(I) who was offered coverage

23 under a Federal or State COBRA

24 continuation provision at the time of
30

•S 2918 IS

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.
31

•S 2918 IS

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-
32

•S 2918 IS

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), by striking ‘‘and’’ at the

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

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

15 adding at the end the following new paragraph:

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

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

18 are provided notice and an opportunity to continue

19 enrollment in accordance with section

20 1859E(c)(1).’’;

21 (2) in subsection (b), by inserting after Not22 withstanding any other provision of law, (1) the fol23 lowing:

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

25 the case of individuals eligible to enroll under this
33

•S 2918 IS

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

2 apply:

3 ‘‘(A) INITIAL ENROLLMENT PERIOD.—If

4 the individual is first eligible to enroll under

5 such section for January 2001, the enrollment

6 period shall begin on November 1, 2000, and

7 shall end on February 28, 2001. Any such en8 rollment before January 1, 2001, is conditioned

9 upon compliance with the conditions of eligi10 bility for January 2001.

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

13 a month after January 2001, the enrollment pe14 riod based on such eligibility shall begin on the

15 first day of the second month before the month

16 in which the individual first is eligible to so en17 roll (or reenroll) and shall end four months

18 later.’’;

19 (3) in subsection (d)(1), by amending subpara20 graph (B) to read as follows:

21 ‘‘(B) TERMINATION BASED ON AGE.—

22 ‘‘(i) AT AGE 65.—Subject to clause

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

24 ‘‘(ii) AT AGE 62 FOR DISPLACED

25 WORKERS AND SPOUSES.—In the case of
34

•S 2918 IS

1 an individual enrolled under this part pur2 suant to section 1859(c), subject to sub3 section (a)(1), the individual attains 62

4 years of age.’’;

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

6 the following new subparagraph:

7 ‘‘(C) OBTAINING ACCESS TO EMPLOYMENT8 BASED COVERAGE OR FEDERAL HEALTH INSUR9 ANCE PROGRAM FOR INDIVIDUALS UNDER 62

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

11 who has not attained 62 years of age, the indi12 vidual is covered (or eligible for coverage) as a

13 participant or beneficiary under a group health

14 plan or under a Federal health insurance pro15 gram.’’;

16 (5) in subsection (d)(2), by amending subpara17 graph (C) to read as follows:

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

19 ‘‘(i) IN GENERAL.—The termination

20 of a coverage period under paragraph

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

22 of the first day of the month in which the

23 individual attains 65 years of age or be24 comes entitled to benefits under part A or

25 enrolled for benefits under part B.
35

•S 2918 IS

1 ‘‘(ii) DISPLACED WORKERS.—The ter2 mination of a coverage period under para3 graph (1)(B)(ii) shall take effect as of the

4 first day of the month in which the indi5 vidual attains 62 years of age, unless the

6 individual has enrolled under this part pur7 suant to section 1859(b) and section

8 1859E(c)(1).’’; and

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

10 the following new subparagraph:

11 ‘‘(D) ACCESS TO COVERAGE.—The termi12 nation of a coverage period under paragraph

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

14 the individual is eligible to begin a period of

15 creditable coverage (as defined in section

16 2701(c) of the Public Health Service Act)

17 under a group health plan or under a Federal

18 health insurance program.’’.

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

20 inserted, is amended—

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

22 the following:

23 ‘‘(B) BASE MONTHLY PREMIUM FOR INDI24 VIDUALS UNDER 62 YEARS OF AGE.—A base

25 monthly premium for individuals under 62
36

•S 2918 IS

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

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

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

4 (2) by adding at the end the following new sub5 section:

6 ‘‘(d) BASE MONTHLY PREMIUM FOR INDIVIDUALS

7 UNDER 62 YEARS OF AGE.—

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

9 GROUPS.—

10 ‘‘(A) ESTIMATE OF AMOUNT.—The Sec11 retary shall estimate the average, annual per

12 capita amount that would be payable under this

13 title with respect to individuals residing in the

14 United States who meet the requirement of sec15 tion 1859(c)(1)(A) within each of the age co16 horts established under subparagraph (B) as if

17 all such individuals within such cohort were eli18 gible for (and enrolled) under this title during

19 the entire year (and assuming that section

20 1862(b)(2)(A)(i) did not apply).

21 ‘‘(B) AGE COHORTS.—For purposes of

22 subparagraph (A), the Secretary shall establish

23 separate age cohorts in 5 year age increments

24 for individuals who have not attained 60 years
37

•S 2918 IS

1 of ages and a separate cohort for individuals

2 who have attained 60 years of age.

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

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

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

7 the same extent as the Secretary provides for adjust8 ments under subsection (b)(2).

9 ‘‘(3) BASE ANNUAL PREMIUM.—The base an10 nual premium under this subsection for months in a

11 year for individuals in an age cohort under para12 graph (1)(B) in a premium area is equal to 165 per13 cent of the average, annual per capita amount esti14 mated under paragraph (1) for the age cohort and

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

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

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

18 Secretary provides for coverage of portions of a

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

20 shall pro-rate the premiums attributable to such cov21 erage under this section to reflect the portion of the

22 month so covered.’’.

23 (d) ADMINISTRATIVE PROVISIONS.—Section 1859F

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

25 end the following:
38

•S 2918 IS

1 ‘‘(d) ADDITIONAL ADMINISTRATIVE PROVISIONS.—

2 ‘‘(1) PROCESS FOR CONTINUED ENROLLMENT

3 OF DISPLACED WORKERS WHO ATTAIN 62 YEARS OF

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

5 continuation of enrollment of individuals whose en6 rollment under section 1859(c) would be terminated

7 upon attaining 62 years of age. Under such process

8 such individuals shall be provided appropriate and

9 timely notice before the date of such termination

10 and of the requirement to enroll under this part pur11 suant to section 1859(b) in order to continue entitle12 ment to benefits under this title after attaining 62

13 years of age.

14 ‘‘(2) ARRANGEMENTS WITH STATES FOR DE15 TERMINATIONS RELATING TO UNEMPLOYMENT COM16 PENSATION ELIGIBILITY.—The Secretary may pro17 vide for appropriate arrangements with States for

18 the determination of whether individuals in the State

19 meet or would meet the requirements of section

20 1859(c)(1)(C)(i).’’.

21 (e) CONFORMING AMENDMENT TO HEADING TO

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

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

24 and inserting ‘‘55’’.
39

•S 2918 IS

1 TITLE III—COBRA PROTECTION

2 FOR EARLY RETIREES

3 Subtitle A—Amendments to the

4 Employee Retirement Income

5 Security Act of 1974

6 SEC. 301. COBRA CONTINUATION BENEFITS FOR CERTAIN

7 RETIRED WORKERS WHO LOSE RETIREE

8 HEALTH COVERAGE.

9 (a) ESTABLISHMENT OF NEW QUALIFYING

10 EVENT.—

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

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

13 1163) is amended by inserting after paragraph (6)

14 the following new paragraph:

15 ‘‘(7) The termination or substantial reduction

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

17 health plan coverage as a result of plan changes or

18 termination in the case of a covered employee who

19 is a qualified retiree.’’.

20 (2) QUALIFIED RETIREE; QUALIFIED BENE21 FICIARY; AND SUBSTANTIAL REDUCTION DE22 FINED.—Section 607 of such Act (29 U.S.C. 1167)

23 is amended—

24 (A) in paragraph (3)—
40

•S 2918 IS

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

2 ‘‘except as otherwise provided in this para3 graph,’’ after ‘‘means,’’; and

4 (ii) by adding at the end the following

5 new subparagraph:

6 ‘‘(D) SPECIAL RULE FOR QUALIFYING RE7 TIREES AND DEPENDENTS.—In the case of a

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

9 term ‘qualified beneficiary’ means a qualified

10 retiree and any other individual who, on the day

11 before such qualifying event, is a beneficiary

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

13 relationship to such qualified retiree.’’; and

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

15 paragraphs:

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

17 retiree’ means, with respect to a qualifying event de18 scribed in section 603(7), a covered employee who,

19 at the time of the event—

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

21 ‘‘(B) was receiving group health coverage

22 under the plan by reason of the retirement of

23 the covered employee.

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

25 ‘substantial reduction’—
41

•S 2918 IS

1 ‘‘(A) means, as determined under regula2 tions of the Secretary and with respect to a

3 qualified beneficiary, a reduction in the average

4 actuarial value of benefits under the plan

5 (through reduction or elimination of benefits,

6 an increase in premiums, deductibles, copay7 ments, and coinsurance, or any combination

8 thereof), since the date of commencement of

9 coverage of the beneficiary by reason of the re10 tirement of the covered employee (or, if later,

11 January 6, 2000), in an amount equal to at

12 least 50 percent of the total average actuarial

13 value of the benefits under the plan as of such

14 date (taking into account an appropriate ad15 justment to permit comparison of values over

16 time); and

17 ‘‘(B) includes an increase in premiums re18 quired to an amount that exceeds the premium

19 level described in the fourth sentence of section

20 602(3).’’.

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

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

23 amended—

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

25 ‘‘603(6)’’;
42

•S 2918 IS

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

2 inserting ‘‘, 603(6), or 603(7)’’;

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

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

5 and by moving such clause to immediately follow

6 clause (iii); and

7 (5) by inserting after such clause (iv) the fol8 lowing new clause:

9 ‘‘(v) SPECIAL RULE FOR CERTAIN DE10 PENDENTS IN CASE OF TERMINATION OR

11 SUBSTANTIAL REDUCTION OF RETIREE

12 HEALTH COVERAGE.—In the case of a

13 qualifying event described in section

14 603(7), in the case of a qualified bene15 ficiary described in section 607(3)(D) who

16 is not the qualified retiree or spouse of

17 such retiree, the later of—

18 ‘‘(I) the date that is 36 months

19 after the earlier of the date the quali20 fied retiree becomes entitled to bene21 fits under title XVIII of the Social Se22 curity Act, or the date of the death of

23 the qualified retiree; or
43

•S 2918 IS

1 ‘‘(II) the date that is 36 months

2 after the date of the qualifying

3 event.’’.

4 (c) TYPE OF COVERAGE IN CASE OF TERMINATION

5 OR SUBSTANTIAL REDUCTION OF RETIREE HEALTH COV6 ERAGE.—Section 602(1) of such Act (29 U.S.C. 1162(1))

7 is amended—

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

9 the following:

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

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

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

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

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

15 in applying the first sentence of subparagraph

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

17 the coverage offered that is the most prevalent

18 coverage option (as determined under regula19 tions of the Secretary) continued under the

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

21 prevalent other plan offered by the same plan

22 sponsor) shall be treated as the coverage de23 scribed in such sentence, or (at the option of

24 the plan and qualified beneficiary) such other
44

•S 2918 IS

1 coverage option as may be offered and elected

2 by the qualified beneficiary involved.’’.

3 (d) INCREASED LEVEL OF PREMIUMS PERMITTED.—

4 Section 602(3) of such Act (29 U.S.C. 1162(3)) is amend5 ed by adding at the end the following new sentence: ‘‘In

6 the case of an individual provided continuation coverage

7 by reason of a qualifying event described in section

8 603(7), any reference in subparagraph (A) of this para9 graph to ‘102 percent of the applicable premium’ is

10 deemed a reference to ‘125 percent of the applicable pre11 mium for employed individuals (and their dependents, if

12 applicable) for the coverage option referred to in para13 graph (1)(B)’.’’.

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

15 1166) is amended—

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

17 and inserting ‘‘(6), or (7)’’; and

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

19 ‘‘The notice under paragraph (4) in the case of a quali20 fying event described in section 603(7) shall be provided

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

22 (f) EFFECTIVE DATES.—

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

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

25 apply to qualifying events occurring on or after Jan-
45

•S 2918 IS

1 uary 6, 2000. In the case of a qualifying event oc2 curring on or after such date and before the date of

3 the enactment of this Act, such event shall be

4 deemed (for purposes of such amendments) to have

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

6 (2) ADVANCE NOTICE OF TERMINATIONS AND

7 REDUCTIONS.—The amendment made by subsection

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

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

10 that in no case shall notice be required under such

11 amendment before such date.

12 Subtitle B—Amendments to the

13 Public Health Service Act

14 SEC. 311. COBRA CONTINUATION BENEFITS FOR CERTAIN

15 RETIRED WORKERS WHO LOSE RETIREE

16 HEALTH COVERAGE.

17 (a) ESTABLISHMENT OF NEW QUALIFYING

18 EVENT.—

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

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

21 by inserting after paragraph (5) the following new

22 paragraph:

23 ‘‘(6) The termination or substantial reduction

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

25 health plan coverage as a result of plan changes or
46

•S 2918 IS

1 termination in the case of a covered employee who

2 is a qualified retiree.’’.

3 (2) QUALIFIED RETIREE; QUALIFIED BENE4 FICIARY; AND SUBSTANTIAL REDUCTION DE5 FINED.—Section 2208 of such Act (42 U.S.C.

6 300bb–8) is amended—

7 (A) in paragraph (3)—

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

9 ‘‘except as otherwise provided in this para10 graph,’’ after ‘‘means,’’; and

11 (ii) by adding at the end the following

12 new subparagraph:

13 ‘‘(C) SPECIAL RULE FOR QUALIFYING RE14 TIREES AND DEPENDENTS.—In the case of a

15 qualifying event described in section 2203(6),

16 the term ‘qualified beneficiary’ means a quali17 fied retiree and any other individual who, on

18 the day before such qualifying event, is a bene19 ficiary under the plan on the basis of the indi20 vidual’s relationship to such qualified retiree.’’;

21 and

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

23 paragraphs:

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

25 retiree’ means, with respect to a qualifying event de-
47

•S 2918 IS

1 scribed in section 2203(6), a covered employee who,

2 at the time of the event—

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

4 ‘‘(B) was receiving group health coverage

5 under the plan by reason of the retirement of

6 the covered employee.

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

8 ‘substantial reduction’—

9 ‘‘(A) means, as determined under regula10 tions of the Secretary of Labor and with respect

11 to a qualified beneficiary, a reduction in the av12 erage actuarial value of benefits under the plan

13 (through reduction or elimination of benefits,

14 an increase in premiums, deductibles, copay15 ments, and coinsurance, or any combination

16 thereof), since the date of commencement of

17 coverage of the beneficiary by reason of the re18 tirement of the covered employee (or, if later,

19 January 6, 2000), in an amount equal to at

20 least 50 percent of the total average actuarial

21 value of the benefits under the plan as of such

22 date (taking into account an appropriate ad23 justment to permit comparison of values over

24 time); and
48

•S 2918 IS

1 ‘‘(B) includes an increase in premiums re2 quired to an amount that exceeds the premium

3 level described in the fourth sentence of section

4 2202(3).’’.

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

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

7 2(2)(A)) is amended—

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

9 and

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

11 new clause:

12 ‘‘(iii) SPECIAL RULE FOR CERTAIN

13 DEPENDENTS IN CASE OF TERMINATION

14 OR SUBSTANTIAL REDUCTION OF RETIREE

15 HEALTH COVERAGE.—In the case of a

16 qualifying event described in section

17 2203(6), in the case of a qualified bene18 ficiary described in section 2208(3)(C) who

19 is not the qualified retiree or spouse of

20 such retiree, the later of—

21 ‘‘(I) the date that is 36 months

22 after the earlier of the date the quali23 fied retiree becomes entitled to bene24 fits under title XVIII of the Social Se-
49

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1 curity Act, or the date of the death of

2 the qualified retiree; or

3 ‘‘(II) the date that is 36 months

4 after the date of the qualifying

5 event.’’.

6 (c) TYPE OF COVERAGE IN CASE OF TERMINATION

7 OR SUBSTANTIAL REDUCTION OF RETIREE HEALTH COV8 ERAGE.—Section 2202(1) of such Act (42 U.S.C. 300bb–

9 2(1)) is amended—

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

11 the following:

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

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

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

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

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

17 in applying the first sentence of subparagraph

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

19 the coverage offered that is the most prevalent

20 coverage option (as determined under regula21 tions of the Secretary of Labor) continued

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

23 the most prevalent other plan offered by the

24 same plan sponsor) shall be treated as the cov25 erage described in such sentence, or (at the op-
50

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1 tion of the plan and qualified beneficiary) such

2 other coverage option as may be offered and

3 elected by the qualified beneficiary involved.’’.

4 (d) INCREASED LEVEL OF PREMIUMS PERMITTED.—

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

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

7 ‘‘In the case of an individual provided continuation cov8 erage by reason of a qualifying event described in section

9 2203(6), any reference in subparagraph (A) of this para10 graph to ‘102 percent of the applicable premium’ is

11 deemed a reference to ‘125 percent of the applicable pre12 mium for employed individuals (and their dependents, if

13 applicable) for the coverage option referred to in para14 graph (1)(B)’.’’.

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

16 300bb–6(a)) is amended—

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

18 and inserting ‘‘(4), or (6)’’; and

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

20 ‘‘The notice under paragraph (4) in the case of a quali21 fying event described in section 2203(6) shall be provided

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

23 (f) EFFECTIVE DATES.—

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

25 this section (other than subsection (e)(2)) shall
51

•S 2918 IS

1 apply to qualifying events occurring on or after Jan2 uary 6, 2000. In the case of a qualifying event oc3 curring on or after such date and before the date

4 of the enactment of this Act, such event shall be

5 deemed (for purposes of such amendments) to have

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

7 (2) ADVANCE NOTICE OF TERMINATIONS AND

8 REDUCTIONS.—The amendment made by subsection

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

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

11 that in no case shall notice be required under such

12 amendment before such date.

13 Subtitle C—Amendments to the

14 Internal Revenue Code of 1986

15 SEC. 321. COBRA CONTINUATION BENEFITS FOR CERTAIN

16 RETIRED WORKERS WHO LOSE RETIREE

17 HEALTH COVERAGE.

18 (a) ESTABLISHMENT OF NEW QUALIFYING

19 EVENT.—

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

21 Internal Revenue Code of 1986 is amended by in22 serting after subparagraph (F) the following new

23 subparagraph:

24 ‘‘(G) The termination or substantial reduc25 tion in benefits (as defined in subsection (g)(6))
52

•S 2918 IS

1 of group health plan coverage as a result of

2 plan changes or termination in the case of a

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

4 (2) QUALIFIED RETIREE; QUALIFIED BENE5 FICIARY; AND SUBSTANTIAL REDUCTION DE6 FINED.—Section 4980B(g) of such Code is

7 amended—

8 (A) in paragraph (1)—

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

10 ‘‘except as otherwise provided in this para11 graph,’’ after ‘‘means,’’; and

12 (ii) by adding at the end the following

13 new subparagraph:

14 ‘‘(E) SPECIAL RULE FOR QUALIFYING RE15 TIREES AND DEPENDENTS.—In the case of a

16 qualifying event described in subsection

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

18 a qualified retiree and any other individual who,

19 on the day before such qualifying event, is a

20 beneficiary under the plan on the basis of the

21 individual’s relationship to such qualified re22 tiree.’’; and

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

24 paragraphs:
53

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

2 retiree’ means, with respect to a qualifying event de3 scribed in subsection (f)(3)(G), a covered employee

4 who, at the time of the event—

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

6 ‘‘(B) was receiving group health coverage

7 under the plan by reason of the retirement of

8 the covered employee.

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

10 ‘substantial reduction’—

11 ‘‘(A) means, as determined under regula12 tions of the Secretary of Labor and with respect

13 to a qualified beneficiary, a reduction in the av14 erage actuarial value of benefits under the plan

15 (through reduction or elimination of benefits,

16 an increase in premiums, deductibles, copay17 ments, and coinsurance, or any combination

18 thereof), since the date of commencement of

19 coverage of the beneficiary by reason of the re20 tirement of the covered employee (or, if later,

21 January 6, 2000), in an amount equal to at

22 least 50 percent of the total average actuarial

23 value of the benefits under the plan as of such

24 date (taking into account an appropriate ad-
54

•S 2918 IS

1 justment to permit comparison of values over

2 time); and

3 ‘‘(B) includes an increase in premiums re4 quired to an amount that exceeds the premium

5 level described in the fourth sentence of sub6 section (f)(2)(C).’’.

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

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

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

10 after ‘‘(3)(F)’’;

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

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

13 (3) by redesignating subclause (IV) as sub14 clause (VI);

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

16 (IV) and by moving such clause to immediately fol17 low subclause (III); and

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

19 following new subclause:

20 ‘‘(V) SPECIAL RULE FOR CER21 TAIN DEPENDENTS IN CASE OF TER22 MINATION OR SUBSTANTIAL REDUC23 TION OF RETIREE HEALTH COV24 ERAGE.—In the case of a qualifying

25 event described in paragraph (3)(G),
55

•S 2918 IS

1 in the case of a qualified beneficiary

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

3 is not the qualified retiree or spouse

4 of such retiree, the later of—

5 ‘‘(a) the date that is 36

6 months after the earlier of the

7 date the qualified retiree becomes

8 entitled to benefits under title

9 XVIII of the Social Security Act,

10 or the date of the death of the

11 qualified retiree; or

12 ‘‘(b) the date that is 36

13 months after the date of the

14 qualifying event.’’.

15 (c) TYPE OF COVERAGE IN CASE OF TERMINATION

16 OR SUBSTANTIAL REDUCTION OF RETIREE HEALTH COV17 ERAGE.—Section 4980B(f)(2)(A) of such Code is

18 amended—

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

20 the following:

21 ‘‘(i) IN GENERAL.—Except as pro22 vided in clause (ii), the coverage’’; and

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

24 ‘‘(ii) CERTAIN RETIREES.—In the

25 case of a qualifying event described in
56

•S 2918 IS

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

2 sentence of clause (i) and the fourth sen3 tence of subparagraph (C), the coverage

4 offered that is the most prevalent coverage

5 option (as determined under regulations of

6 the Secretary of Labor) continued under

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

8 the most prevalent other plan offered by

9 the same plan sponsor) shall be treated as

10 the coverage described in such sentence, or

11 (at the option of the plan and qualified

12 beneficiary) such other coverage option as

13 may be offered and elected by the qualified

14 beneficiary involved.’’.

15 (d) INCREASED LEVEL OF PREMIUMS PERMITTED.—

16 Section 4980B(f)(2)(C) of such Code is amended by add17 ing at the end the following new sentence: ‘‘In the case

18 of an individual provided continuation coverage by reason

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

20 reference in clause (i) of this subparagraph to ‘102 per21 cent of the applicable premium’ is deemed a reference to

22 ‘125 percent of the applicable premium for employed indi23 viduals (and their dependents, if applicable) for the cov24 erage option referred to in subparagraph (A)(ii)’.’’.
57

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

2 amended—

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

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

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

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

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

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

9 event.’’.

10 (f) EFFECTIVE DATES.—

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

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

13 apply to qualifying events occurring on or after Jan14 uary 6, 2000. In the case of a qualifying event oc15 curring on or after such date and before the date of

16 the enactment of this Act, such event shall be

17 deemed (for purposes of such amendments) to have

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

19 (2) ADVANCE NOTICE OF TERMINATIONS AND

20 REDUCTIONS.—The amendment made by subsection

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

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

23 that in no case shall notice be required under such

24 amendment before such date.
58

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1 TITLE IV—FINANCING

2 SEC. 401. REFERENCE TO FINANCING PROVISIONS.

3 Any increase in payments under the medicare pro4 gram under title XVIII of the Social Security Act that

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

6 reductions in payments under such program pursuant to

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

8 of the Medicare Fraud and Reimbursement Reform Act

9 of 1999 (H.R. 2229).

10 TITLE V—CREDIT AGAINST IN11 COME TAX FOR MEDICARE

12 BUY-IN PREMIUMS AND FOR

13 CERTAIN COBRA CONTINU14 ATION COVERAGE PREMIUMS

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

16 FOR CERTAIN COBRA CONTINUATION COV17 ERAGE PREMIUMS.

18 (a) IN GENERAL.—Subpart A of part IV of sub19 chapter A of chapter 1 of the Internal Revenue Code of

20 1986 (relating to nonrefundable personal credits) is

21 amended by inserting after section 25A the following new

22 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.’’
60

•S 2918 IS

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