II

105TH CONGRESS

2D SESSION S. 1789

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, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 17, 1998

Mr. MOYNIHAN (for himself, Mr. KENNEDY, Mr. DASCHLE, Mrs. BOXER, Mr.

DODD, Mr. DURBIN, Mr. GLENN, Mr. HARKIN, Mr. KERRY, Mr. LAUTENBERG, Ms. MOSELEY-BRAUN, Mr. ROCKEFELLER, and Mr.

TORRICELLI) 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, 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 Act of 1998’’.
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1 (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.
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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 mean25 ing given the term ‘COBRA continuation provi-
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1 sion’ in section 2791(d)(4) of the Public Health

2 Service Act and includes a comparable State

3 program, as determined by the Secretary.

4 ‘‘(B) FEDERAL HEALTH INSURANCE PRO5 GRAM DEFINED.—The term ‘Federal health in6 surance program’ means any of the following:

7 ‘‘(i) MEDICARE.—Part A or part B of

8 this title (other than by reason of this

9 part).

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

11 title XIX.

12 ‘‘(iii) FEHBP.—The Federal employ13 ees health benefit program under chapter

14 89 of title 5, United States Code.

15 ‘‘(iv) TRICARE.—The TRICARE

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

17 title 10, United States Code).

18 ‘‘(v) ACTIVE DUTY MILITARY.—Health

19 benefits under title 10, United States

20 Code, to an individual as a member of the

21 uniformed services of the United States.

22 ‘‘(C) GROUP HEALTH PLAN.—The term

23 ‘group health plan’ has the meaning given such

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

25 Service Act.
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1 ‘‘(b) ELIGIBILITY OF INDIVIDUALS AGE 62-TO-65

2 YEARS OF AGE.—

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

4 an individual who meets the following requirements

5 with respect to a month is eligible to enroll under

6 this part with respect to such month:

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

8 month, the individual has attained 62 years of

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

10 ‘‘(B) MEDICARE ELIGIBILITY (BUT FOR

11 AGE).—The individual would be eligible for ben12 efits under part A or part B for the month if

13 the individual were 65 years of age.

14 ‘‘(C) NOT ELIGIBLE FOR COVERAGE

15 UNDER GROUP HEALTH PLANS OR FEDERAL

16 HEALTH INSURANCE PROGRAMS.—The individ17 ual is not eligible for benefits or coverage under

18 a Federal health insurance program (as defined

19 in subsection (a)(2)(B)) or under a group

20 health plan (other than such eligibility merely

21 through a Federal or State COBRA continu22 ation provision) as of the last day of the month

23 involved.

24 ‘‘(2) LIMITATION ON ELIGIBILITY IF TERMI25 NATED ENROLLMENT.—If an individual described in
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1 paragraph (1) enrolls under this part and coverage

2 of the individual is terminated under section

3 1859A(d) (other than because of age), the individual

4 is not again eligible to enroll under this subsection

5 unless the following requirements are met:

6 ‘‘(A) NEW COVERAGE UNDER GROUP

7 HEALTH PLAN OR FEDERAL HEALTH INSUR8 ANCE PROGRAM.—After the date of termination

9 of coverage under such section, the individual

10 obtains coverage under a group health plan or

11 under a Federal health insurance program.

12 ‘‘(B) SUBSEQUENT LOSS OF NEW COV13 ERAGE.—The individual subsequently loses eli14 gibility for the coverage described in subpara15 graph (A) and exhausts any eligibility the indi16 vidual may subsequently have for coverage

17 under a Federal or State COBRA continuation

18 provision.

19 ‘‘(3) CHANGE IN HEALTH PLAN ELIGIBILITY

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

21 individual who is eligible for and enrolls under this

22 part under this subsection, the individual’s continued

23 entitlement to benefits under this part shall not be

24 affected by the individual’s subsequent eligibility for
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1 benefits or coverage described in paragraph (1)(C),

2 or entitlement to such benefits or coverage.

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

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

5 program established under this part only in such manner

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

7 during an enrollment period prescribed by the Secretary

8 consistent with the provisions of this section. Such regula9 tions shall provide a process under which—

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

11 are permitted to pre-enroll during a prior month

12 within an enrollment period described in subsection

13 (b); and

14 ‘‘(2) each individual seeking to enroll under sec15 tion 1859(b) is notified, before enrolling, of the de16 ferred monthly premium amount the individual will

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

18 65 years of age as determined under section

19 1859B(c)(3).

20 ‘‘(b) ENROLLMENT PERIODS.—

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

22 the case of individuals eligible to enroll under this

23 part under section 1859(b)—

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

25 the individual is eligible to enroll under such
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1 section for July 1999, the enrollment period

2 shall begin on May 1, 1999, and shall end on

3 August 31, 1999. Any such enrollment before

4 July 1, 1999, is conditioned upon compliance

5 with the conditions of eligibility for July 1999.

6 ‘‘(B) SUBSEQUENT PERIODS.—If the indi7 vidual is eligible to enroll under such section for

8 a month after July 1999, the enrollment period

9 shall begin on the first day of the second month

10 before the month in which the individual first is

11 eligible to so enroll and shall end four months

12 later. Any such enrollment before the first day

13 of the third month of such enrollment period is

14 conditioned upon compliance with the condi15 tions of eligibility for such third month.

16 ‘‘(2) AUTHORITY TO CORRECT FOR GOVERN17 MENT ERRORS.—The provisions of section 1837(h)

18 apply with respect to enrollment under this part in

19 the same manner as they apply to enrollment under

20 part B.

21 ‘‘(c) DATE COVERAGE BEGINS.—

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

23 an individual is entitled to benefits under this part

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

25 July 1, 1999:
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1 ‘‘(A) In the case of an individual who en2 rolls (including pre-enrolls) before the month in

3 which the individual satisfies eligibility for en4 rollment under section 1859, the first day of

5 such month of eligibility.

6 ‘‘(B) In the case of an individual who en7 rolls during or after the month in which the in8 dividual first satisfies eligibility for enrollment

9 under such section, the first day of the follow10 ing month.

11 ‘‘(2) AUTHORITY TO PROVIDE FOR PARTIAL

12 MONTHS OF COVERAGE.—Under regulations, the

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

14 for coverage periods that include portions of a

15 month in order to avoid lapses of coverage.

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

17 may be made under this title with respect to the ex18 penses of an individual enrolled under this part un19 less such expenses were incurred by such individual

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

21 is a coverage period under this section.

22 ‘‘(d) TERMINATION OF COVERAGE.—

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

24 period under this part shall continue until the indi-
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1 vidual’s enrollment has been terminated at the earli2 est of the following:

3 ‘‘(A) GENERAL PROVISIONS.—

4 ‘‘(i) NOTICE.—The individual files no5 tice (in a form and manner prescribed by

6 the Secretary) that the individual no

7 longer wishes to participate in the insur8 ance program under this part.

9 ‘‘(ii) NONPAYMENT OF PREMIUMS.—

10 The individual fails to make payment of

11 premiums required for enrollment under

12 this part.

13 ‘‘(iii) MEDICARE ELIGIBILITY.—The

14 individual becomes entitled to benefits

15 under part A or enrolled under part B

16 (other than by reason of this part).

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

18 individual attains 65 years of age.

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

20 ‘‘(A) NOTICE.—The termination of a cov21 erage period under paragraph (1)(A)(i) shall

22 take effect at the close of the month following

23 for which the notice is filed.

24 ‘‘(B) NONPAYMENT OF PREMIUM.—The

25 termination of a coverage period under para-
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1 graph (1)(A)(ii) shall take effect on a date de2 termined under regulations, which may be de3 termined so as to provide a grace period in

4 which overdue premiums may be paid and cov5 erage continued. The grace period determined

6 under the preceding sentence shall not exceed

7 60 days; except that it may be extended for an

8 additional 30 days in any case where the Sec9 retary determines that there was good cause for

10 failure to pay the overdue premiums within

11 such 60-day period.

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

13 The termination of a coverage period under

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

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

16 individual attains 65 years of age or becomes

17 entitled to benefits under part A or enrolled for

18 benefits under part B (other than by reason of

19 this part).

20 ‘‘SEC. 1859B. PREMIUMS.

21 ‘‘(a) AMOUNT OF MONTHLY PREMIUMS.—

22 ‘‘(1) BASE MONTHLY PREMIUMS.—The Sec23 retary shall, during September of each year (begin24 ning with 1998), determine the following premium

25 rates which shall apply with respect to coverage pro-
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1 vided under this title for any month in the succeed2 ing year:

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

5 monthly premium for individuals 62 years of

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

7 premium rate computed under subsection (b)

8 for each premium area.

9 ‘‘(2) DEFERRED MONTHLY PREMIUMS FOR IN10 DIVIDUALS 62 YEARS OF AGE OR OLDER.—The Sec11 retary shall, during September of each year (begin12 ning with 1998), determine under subsection (c) the

13 amount of deferred monthly premiums that shall

14 apply with respect to individuals who first obtain

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

16 the succeeding year.

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

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

19 means such an area as the Secretary shall specify to

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

21 may change the boundaries of such premium areas.

22 The Secretary shall seek to minimize the number of

23 such areas specified under this paragraph.

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

25 YEARS OF AGE OR OLDER.—
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1 ‘‘(1) NATIONAL, PER CAPITA AVERAGE.—The

2 Secretary shall estimate the average, annual per

3 capita amount that would be payable under this title

4 with respect to individuals residing in the United

5 States who meet the requirement of section

6 1859(b)(1)(A) as if all such individuals were eligible

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

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

9 did not apply).

10 ‘‘(2) GEOGRAPHIC ADJUSTMENT.—The Sec11 retary shall adjust the amount determined under

12 paragraph (1) for each premium area (specified

13 under subsection (a)(3)) in order to take into ac14 count such factors as the Secretary deems appro15 priate and shall limit the maximum premium under

16 this paragraph in a premium area to assure partici17 pation in all areas throughout the United States.

18 ‘‘(3) BASE ANNUAL PREMIUM.—The base an19 nual premium under this subsection for months in a

20 year for individuals 62 years of age or older residing

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

22 per capita amount estimated under paragraph (1)

23 for the year, adjusted for such area under paragraph

24 (2).
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1 ‘‘(c) DEFERRED PREMIUM RATE FOR INDIVIDUALS

2 62 YEARS OF AGE OR OLDER.—The deferred premium

3 rate for individuals with a group of individuals who obtain

4 coverage under section 1859(b) in a year shall be com5 puted by the Secretary as follows:

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

7 ANNUAL AVERAGE EXPENDITURES FOR ENROLL8 MENT GROUP.—The Secretary shall estimate the av9 erage, per capita annual amount that will be paid

10 under this part for individuals in such group during

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

12 making such estimate for coverage beginning in a

13 year before 2003, the Secretary may base such esti14 mate on the average, per capita amount that would

15 be payable if the program had been in operation over

16 a previous period of at least 4 years.

17 ‘‘(2) DIFFERENCE BETWEEN ESTIMATED EX18 PENDITURES AND ESTIMATED PREMIUMS.—Based

19 on the characteristics of individuals in such group,

20 the Secretary shall estimate during the period of

21 coverage of the group under this part under section

22 1859(b) the amount by which—

23 ‘‘(A) the amount estimated under para24 graph (1); exceeds
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1 ‘‘(B) the average, annual per capita

2 amount of premiums that will be payable for

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

4 for individuals in such group (including pre5 miums that would be payable if there were no

6 terminations in enrollment under clause (i) or

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

8 ‘‘(3) ACTUARIAL COMPUTATION OF DEFERRED

9 MONTHLY PREMIUM RATES.—The Secretary shall

10 determine deferred monthly premium rates for indi11 viduals in such group in a manner so that—

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

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

14 equal to

15 ‘‘(B) the estimated actuarial present value

16 of the differences described in paragraph (2).

17 Such rate shall be computed for each individual in

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

19 the number of months between the first month of

20 coverage based on enrollment under section 1859(b)

21 and the month in which the individual attains 65

22 years of age.

23 ‘‘(4) DETERMINANTS OF ACTUARIAL PRESENT

24 VALUES.—The actuarial present values described in

25 paragraph (3) shall reflect—
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1 ‘‘(A) the estimated probabilities of survival

2 at ages 62 through 84 for individuals enrolled

3 during the year; and

4 ‘‘(B) the estimated effective average inter5 est rates that would be earned on investments

6 held in the trust funds under this title during

7 the period in question.

8 ‘‘SEC. 1859C. PAYMENT OF PREMIUMS.

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

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

11 for payment and collection of the base monthly pre12 mium, determined under section 1859B(a)(1) for the

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

14 involved and the premium area in which the individ15 ual principally resides, in the same manner as for

16 payment of monthly premiums under section 1840,

17 except that, for purposes of applying this section,

18 any reference in such section to the Federal Supple19 mentary Medical Insurance Trust Fund is deemed a

20 reference to the Trust Fund established under sec21 tion 1859D.

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

23 individual who participates in the program estab24 lished by this title, the base monthly premium shall

25 be payable for the period commencing with the first
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1 month of the individual’s coverage period and ending

2 with the month in which the individual’s coverage

3 under this title terminates.

4 ‘‘(b) PAYMENT OF DEFERRED PREMIUM FOR INDI5 VIDUALS COVERED AFTER ATTAINING AGE 62.—

6 ‘‘(1) RATE OF PAYMENT.—

7 ‘‘(A) IN GENERAL.—In the case of an indi8 vidual who is covered under this part for a

9 month pursuant to an enrollment under section

10 1859(b), subject to subparagraph (B), the indi11 vidual is liable for payment of a deferred pre12 mium in each month during the period de13 scribed in paragraph (2) in an amount equal to

14 the full deferred monthly premium rate deter15 mined for the individual under section

16 1859B(c).

17 ‘‘(B) SPECIAL RULES FOR THOSE WHO

18 DISENROLL EARLY.—

19 ‘‘(i) IN GENERAL.—If such an individ20 ual’s enrollment under such section is ter21 minated under clause (i) or (ii) of section

22 1859A(d)(1)(A), subject to clause (ii), the

23 amount of the deferred premium otherwise

24 established under this paragraph shall be

25 pro-rated to reflect the number of months
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1 of coverage under this part under such en2 rollment compared to the maximum num3 ber of months of coverage that the individ4 ual would have had if the enrollment were

5 not so terminated.

6 ‘‘(ii) ROUNDING TO 12-MONTH MINI7 MUM COVERAGE PERIODS.—In applying

8 clause (i), the number of months of cov9 erage (if not a multiple of 12) shall be

10 rounded to the next highest multiple of 12

11 months, except that in no case shall this

12 clause result in a number of months of

13 coverage exceeding the maximum number

14 of months of coverage that the individual

15 would have had if the enrollment were not

16 so terminated.

17 ‘‘(2) PERIOD OF PAYMENT.—The period de18 scribed in this paragraph for an individual is the pe19 riod beginning with the first month in which the in20 dividual has attained 65 years of age and ending

21 with the month before the month in which the indi22 vidual attains 85 years of age.

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

24 who is liable for a premium under this subsection,

25 the amount of the premium shall be collected in the
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1 same manner as the premium for enrollment under

2 such part is collected under section 1840, except

3 that any reference in such section to the Federal

4 Supplementary Medical Insurance Trust Fund is

5 deemed to be a reference to the Medicare Early Ac6 cess Trust Fund established under section 1859D.

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

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

9 shall apply to premiums collected under this section in the

10 same manner as they apply to premiums collected under

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

12 Federal Supplementary Medical Insurance Trust Fund is

13 deemed a reference to the Trust Fund established under

14 section 1859D.

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

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

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

18 the books of the Treasury of the United States a

19 trust fund to be known as the ‘Medicare Early Ac20 cess Trust Fund’ (in this section referred to as the

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

22 gifts and bequests as may be made as provided in

23 section 201(i)(1) and such amounts as may be de24 posited in, or appropriated to, such fund as provided

25 in this title.
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1 ‘‘(2) PREMIUMS.—Premiums collected under

2 section 1859B shall be transferred to the Trust

3 Fund.

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

5 AND ABUSE INITIATIVES.—

6 ‘‘(A) IN GENERAL.—There is hereby trans7 ferred to the Trust Fund from the Federal

8 Hospital Insurance Trust Fund and from the

9 Federal Supplementary Medical Insurance

10 Trust Fund amounts equivalent to the amounts

11 (specified under subparagraph (B)) of the re12 ductions in expenditures under such respective

13 trust fund as may be attributable to the enact14 ment of the Medicare Fraud and Overpayment

15 Act of 1998.

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

17 fiscal year during the 10-fiscal-year period be18 ginning with fiscal year 1999, the amounts

19 under subparagraph (A) shall be the amounts

20 described in such subparagraph as determined

21 by the Congressional Budget Office at the time

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

23 Medicare Early Access Act of 1998. For subse24 quent fiscal years, the amounts under subpara25 graph (A) shall be the amount determined
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1 under this subparagraph for the previous fiscal

2 year increased by the same percentage as the

3 percentage increase in aggregate expenditures

4 under this title from the second previous fiscal

5 year to the previous fiscal year.

6 ‘‘(b) INCORPORATION OF PROVISIONS.—

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

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

9 apply with respect to the Trust Fund and this title

10 in the same manner as they apply with respect to

11 the Federal Supplementary Medical Insurance Trust

12 Fund and part B, respectively.

13 ‘‘(2) MISCELLANEOUS REFERENCES.—In apply14 ing provisions of section 1841 under paragraph

15 (1)—

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

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

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

19 section 1840(d) and in section 1841(i) to sec20 tions 1840(b)(1) and 1842(g) are deemed ref21 erences to comparable authority exercised under

22 this part; and

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

24 1841(g) to the Trust Funds under sections

25 1817 and 1841 as reimbursement to such funds
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1 for payments they made for benefits provided

2 under this part.

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

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

5 The Board of Trustees of the Medicare Early Access

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

7 annual basis to Congress concerning the status of the

8 Trust Fund and the need for adjustments in the program

9 under this part to maintain financial solvency of the pro10 gram under this part.

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

12 General of the United States shall periodically submit to

13 Congress reports on the adequacy of the financing of cov14 erage provided under this part. The Comptroller General

15 shall include in such report such recommendations for ad16 justments in such financing and coverage as the Comptrol17 ler General deems appropriate in order to maintain finan18 cial solvency of the program under this part.

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

20 ‘‘(a) TREATMENT FOR PURPOSES OF TITLE.—Ex21 cept as otherwise provided in this part—

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

23 be treated for purposes of this title as though the in24 dividual were entitled to benefits under part A and

25 enrolled under part B; and
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1 ‘‘(2) benefits described in section 1859 shall be

2 payable under this title to such individuals in the

3 same manner as if such individuals were so entitled

4 and enrolled.

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

6 PURPOSES OF MEDICAID PROGRAM.—For purposes of ap7 plying title XIX (including the provision of medicare cost8 sharing assistance under such title), an individual who is

9 enrolled under this part shall not be treated as being enti10 tled to benefits under this title.

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

12 PURPOSES OF COBRA CONTINUATION PROVISIONS.—In

13 applying a COBRA continuation provision (as defined in

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

15 reference to an entitlement to benefits under this title

16 shall not be construed to include entitlement to benefits

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

18 (b) CONFORMING AMENDMENTS TO SOCIAL SECU19 RITY ACT PROVISIONS.—

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

21 (42 U.S.C. 401(i)(1)) is amended by striking ‘‘or the

22 Federal Supplementary Medical Insurance Trust

23 Fund’’ and inserting ‘‘the Federal Supplementary

24 Medical Insurance Trust Fund, and the Medicare

25 Early Access Trust Fund’’.
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1 (2) Section 201(g)(1)(A) of such Act (42

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

3 the Federal Supplementary Medical Insurance Trust

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

5 the Federal Supplementary Medical Insurance Trust

6 Fund, and the Medicare Early Access Trust Fund

7 established by title XVIII’’.

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

9 1395i–4(i)) is amended by striking ‘‘part D’’ and in10 serting ‘‘part E’’.

11 (4) Part C of title XVIII of such Act is amend12 ed—

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

14 1395w–21(a)(2)(B)), by striking ‘‘ 1859(b)(3)’’

15 and inserting ‘‘1858(b)(3);

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

17 1395w–21(a)(2)(C)), by striking ‘‘1859(b)(2)’’

18 and inserting ‘‘1858(b)(2)’’;

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

20 1395w–22(a)(1)), by striking ‘‘ 1859(b)(3)’’

21 and inserting ‘‘1858(b)(3);

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

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

24 ‘‘1859(b)(2)(B)’’ and inserting

25 ‘‘1858(b)(2)(B)’’;
25

•S 1789 IS

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

2 1395w–23(a)(1)(A)), by striking ‘‘1859(e)(4)’’

3 and inserting ‘‘1858(e)(4)’’; and

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

5 1395w–23(a)(3)(D)), by striking ‘‘1859(e)(4)’’

6 and inserting ‘‘1858(e)(4)’’.

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

8 1395w–23(c)) is amended—

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

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

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

12 ‘‘(8) ADJUSTMENT FOR EARLY ACCESS.—In ap13 plying this subsection with respect to individuals en14 titled to benefits under part D, the Secretary shall

15 provide for an appropriate adjustment in the

16 Medicare+Choice capitation rate as may be appro17 priate to reflect differences between the population

18 served under such part and the population under

19 parts A and B.’’.

20 (c) OTHER CONFORMING AMENDMENTS.—

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

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

23 and inserting ‘‘1858(b)(3)’’.

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

25 Retirement Income Security Act of 1974 (29 U.S.C.
26

•S 1789 IS

1 1162(2)) is amended by inserting ‘‘(not including an

2 individual who is so entitled pursuant to enrollment

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

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

5 Service Act (42 U.S.C. 300bb–2(2)(D)(ii)) is amend6 ed by inserting ‘‘(not including an individual who is

7 so entitled pursuant to enrollment under section

8 1859A)’’ after ‘‘Social Security Act’’.

9 (C) Section 4980B(f)(2)(B)(i)(V) of the Inter10 nal Revenue Code of 1986 is amended by inserting

11 ‘‘(not including an individual who is so entitled pur12 suant to enrollment under section 1859A)’’ after

13 ‘‘Social Security Act’’.

14 TITLE II—ACCESS TO MEDICARE

15 BENEFITS FOR DISPLACED

16 WORKERS 55-TO-62 YEARS OF

17 AGE

18 SEC. 201. ACCESS TO MEDICARE BENEFITS FOR DISPLACED

19 WORKERS 55-TO-62 YEARS OF AGE.

20 (a) ELIGIBILITY.—Section 1859 of the Social Secu21 rity Act, as inserted by section 101(a)(2), is amended by

22 adding at the end the following new subsection:

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

24 ‘‘(1) DISPLACED WORKERS.—Subject to para25 graph (3), an individual who meets the following re-
27

•S 1789 IS

1 quirements with respect to a month is eligible to en2 roll under this part with respect to such month:

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

4 month, the individual has attained 55 years of

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

6 ‘‘(B) MEDICARE ELIGIBILITY (BUT FOR

7 AGE).—The individual would be eligible for ben8 efits under part A or part B for the month if

9 the individual were 65 years of age.

10 ‘‘(C) LOSS OF EMPLOYMENT-BASED COV11 ERAGE.—

12 ‘‘(i) ELIGIBLE FOR UNEMPLOYMENT

13 COMPENSATION.—The individual meets the

14 requirements relating to period of covered

15 employment and conditions of separation

16 from employment to be eligible for unem17 ployment compensation (as defined in sec18 tion 85(b) of the Internal Revenue Code of

19 1986), based on a separation from employ20 ment occurring on or after January 1,

21 1998. The previous sentence shall not be

22 construed as requiring the individual to be

23 receiving such unemployment compensa24 tion.
28

•S 1789 IS

1 ‘‘(ii) LOSS OF EMPLOYMENT-BASED

2 COVERAGE.—Immediately before the time

3 of such separation of employment, the indi4 vidual was covered under a group health

5 plan on the basis of such employment, and,

6 because of such loss, is no longer eligible

7 for coverage under such plan (including

8 such eligibility based on the application of

9 a Federal or State COBRA continuation

10 provision) as of the last day of the month

11 involved.

12 ‘‘(iii) PREVIOUS CREDITABLE COV13 ERAGE FOR AT LEAST 1 YEAR.—As of the

14 date on which the individual loses coverage

15 described in clause (ii), the aggregate of

16 the periods of creditable coverage (as de17 termined under section 2701(c) of the

18 Public Health Service Act) is 12 months or

19 longer.

20 ‘‘(D) EXHAUSTION OF AVAILABLE COBRA

21 CONTINUATION BENEFITS.—

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

23 individual described in clause (ii) for a

24 month described in clause (iii)—
29

•S 1789 IS

1 ‘‘(I) the individual (or spouse)

2 elected coverage described in clause

3 (ii); and

4 ‘‘(II) the individual (or spouse)

5 has continued such coverage for all

6 months described in clause (iii) in

7 which the individual (or spouse) is eli8 gible for such coverage.

9 ‘‘(ii) INDIVIDUALS TO WHOM COBRA

10 CONTINUATION COVERAGE MADE AVAIL11 ABLE.—An individual described in this

12 clause is an individual—

13 ‘‘(I) who was offered coverage

14 under a Federal or State COBRA

15 continuation provision at the time of

16 loss of coverage eligibility described in

17 subparagraph (C)(ii); or

18 ‘‘(II) whose spouse was offered

19 such coverage in a manner that per20 mitted coverage of the individual at

21 such time.

22 ‘‘(iii) MONTHS OF POSSIBLE COBRA

23 CONTINUATION COVERAGE.—A month de24 scribed in this clause is a month for which

25 an individual described in clause (ii) could
30

•S 1789 IS

1 have had coverage described in such clause

2 as of the last day of the month if the indi3 vidual (or the spouse of the individual, as

4 the case may be) had elected such coverage

5 on a timely basis.

6 ‘‘(E) NOT ELIGIBLE FOR COVERAGE

7 UNDER FEDERAL HEALTH INSURANCE PRO8 GRAM OR GROUP HEALTH PLANS.—The individ9 ual is not eligible for benefits or coverage under

10 a Federal health insurance program or under a

11 group health plan (whether on the basis of the

12 individual’s employment or employment of the

13 individual’s spouse) as of the last day of the

14 month involved.

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

16 to paragraph (3), an individual who meets the fol17 lowing requirements with respect to a month is eligi18 ble to enroll under this part with respect to such

19 month:

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

21 month, the individual has not attained 62 years

22 of age.

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

24 The individual is the spouse of an individual at

25 the time the individual enrolls under this part
31

•S 1789 IS

1 under paragraph (1) and loses coverage de2 scribed in paragraph (1)(C)(ii) because the in3 dividual’s spouse lost such coverage.

4 ‘‘(C) MEDICARE ELIGIBILITY (BUT FOR

5 AGE); EXHAUSTION OF ANY COBRA CONTINU6 ATION COVERAGE; AND NOT ELIGIBLE FOR COV7 ERAGE UNDER FEDERAL HEALTH INSURANCE

8 PROGRAM OR GROUP HEALTH PLAN.—The indi9 vidual meets the requirements of subparagraphs

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

11 ‘‘(3) CHANGE IN HEALTH PLAN ELIGIBILITY

12 AFFECTS CONTINUED ELIGIBILITY.—For provision

13 that terminates enrollment under this section in the

14 case of an individual who becomes eligible for cov15 erage under a group health plan or under a Federal

16 health insurance program, see section

17 1859A(d)(1)(C).

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

19 this subsection shall be construed as preventing an

20 individual who, after enrolling under this subsection,

21 terminates such enrollment from subsequently re22 enrolling under this subsection if the individual is el23 igible to enroll under this subsection at that time.’’.

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

25 so inserted, is amended—
32

•S 1789 IS

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

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

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

4 adding at the end the following new paragraph:

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

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

7 are provided notice and an opportunity to continue

8 enrollment in accordance with section

9 1859E(c)(1).’’;

10 (2) in subsection (b), by inserting after Not11 withstanding any other provision of law, (1) the fol12 lowing:

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

14 the case of individuals eligible to enroll under this

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

16 apply:

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

18 the individual is first eligible to enroll under

19 such section for July 1999, the enrollment pe20 riod shall begin on May 1, 1999, and shall end

21 on August 31, 1999. Any such enrollment be22 fore July 1, 1999, is conditioned upon compli23 ance with the conditions of eligibility for July

24 1999.
33

•S 1789 IS

1 ‘‘(B) SUBSEQUENT PERIODS.—If the indi2 vidual is eligible to enroll under such section for

3 a month after July 1999, the enrollment period

4 based on such eligibility shall begin on the first

5 day of the second month before the month in

6 which the individual first is eligible to so enroll

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

8 (3) in subsection (d)(1), by amending subpara9 graph (B) to read as follows:

10 ‘‘(B) TERMINATION BASED ON AGE.—

11 ‘‘(i) AT AGE 65.—Subject to clause

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

13 ‘‘(ii) AT AGE 62 FOR DISPLACED

14 WORKERS AND SPOUSES.—In the case of

15 an individual enrolled under this part pur16 suant to section 1859(c), subject to sub17 section (a)(1), the individual attains 62

18 years of age.’’;

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

20 the following new subparagraph:

21 ‘‘(C) OBTAINING ACCESS TO EMPLOYMENT22 BASED COVERAGE OR FEDERAL HEALTH INSUR23 ANCE PROGRAM FOR INDIVIDUALS UNDER 62

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

25 who has not attained 62 years of age, the indi-
34

•S 1789 IS

1 vidual is covered (or eligible for coverage) as a

2 participant or beneficiary under a group health

3 plan or under a Federal health insurance pro4 gram.’’;

5 (5) in subsection (d)(2), by amending subpara6 graph (C) to read as follows:

7 ‘‘(C) AGE OR MEDICARE ELIGIBILITY.—

8 ‘‘(i) IN GENERAL.—The termination

9 of a coverage period under paragraph

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

11 of the first day of the month in which the

12 individual attains 65 years of age or be13 comes entitled to benefits under part A or

14 enrolled for benefits under part B.

15 ‘‘(ii) DISPLACED WORKERS.—The ter16 mination of a coverage period under para17 graph (1)(B)(ii) shall take effect as of the

18 first day of the month in which the individ19 ual attains 62 years of age, unless the in20 dividual has enrolled under this part pur21 suant to section 1859(b) and section

22 1859E(c)(1).’’; and

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

24 the following new subparagraph:
35

•S 1789 IS

1 ‘‘(D) ACCESS TO COVERAGE.—The termi2 nation of a coverage period under paragraph

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

4 the individual is eligible to begin a period of

5 creditable coverage (as defined in section

6 2701(c) of the Public Health Service Act)

7 under a group health plan or under a Federal

8 health insurance program.’’.

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

10 inserted, is amended—

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

12 the following:

13 ‘‘(B) BASE MONTHLY PREMIUM FOR INDI14 VIDUALS UNDER 62 YEARS OF AGE.—A base

15 monthly premium for individuals under 62

years of age, equal to 1 16 ⁄12 of the base annual

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

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

19 (2) by adding at the end the following new sub20 section:

21 ‘‘(d) BASE MONTHLY PREMIUM FOR INDIVIDUALS

22 UNDER 62 YEARS OF AGE.—

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

24 GROUPS.—
36

•S 1789 IS

1 ‘‘(A) ESTIMATE OF AMOUNT.—The Sec2 retary shall estimate the average, annual per

3 capita amount that would be payable under this

4 title with respect to individuals residing in the

5 United States who meet the requirement of sec6 tion 1859(c)(1)(A) within each of the age co7 horts established under subparagraph (B) as if

8 all such individuals within such cohort were eli9 gible for (and enrolled) under this title during

10 the entire year (and assuming that section

11 1862(b)(2)(A)(i) did not apply).

12 ‘‘(B) AGE COHORTS.—For purposes of

13 subparagraph (A), the Secretary shall establish

14 separate age cohorts in 5 year age increments

15 for individuals who have not attained 60 years

16 of age and a separate cohort for individuals who

17 have attained 60 years of age.

18 ‘‘(2) GEOGRAPHIC ADJUSTMENT.—The Sec19 retary shall adjust the amount determined under

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

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

22 the same extent as the Secretary provides for adjust23 ments under subsection (b)(2).

24 ‘‘(3) BASE ANNUAL PREMIUM.—The base an25 nual premium under this subsection for months in a
37

•S 1789 IS

1 year for individuals in an age cohort under para2 graph (1)(B) in a premium area is equal to 165 per3 cent of the average, annual per capita amount esti4 mated under paragraph (1) for the age cohort and

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

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

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

8 Secretary provides for coverage of portions of a

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

10 shall pro-rate the premiums attributable to such cov11 erage under this section to reflect the portion of the

12 month so covered.’’.

13 (d) ADMINISTRATIVE PROVISIONS.—Section 1859F

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

15 end the following:

16 ‘‘(d) ADDITIONAL ADMINISTRATIVE PROVISIONS.—

17 ‘‘(1) PROCESS FOR CONTINUED ENROLLMENT

18 OF DISPLACED WORKERS WHO ATTAIN 62 YEARS OF

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

20 continuation of enrollment of individuals whose en21 rollment under section 1859(c) would be terminated

22 upon attaining 62 years of age. Under such process

23 such individuals shall be provided appropriate and

24 timely notice before the date of such termination

25 and of the requirement to enroll under this part pur-
38

•S 1789 IS

1 suant to section 1859(b) in order to continue entitle2 ment to benefits under this title after attaining 62

3 years of age.

4 ‘‘(2) ARRANGEMENTS WITH STATES FOR DE5 TERMINATIONS RELATING TO UNEMPLOYMENT COM6 PENSATION ELIGIBILITY.—The Secretary may pro7 vide for appropriate arrangements with States for

8 the determination of whether individuals in the State

9 meet or would meet the requirements of section

10 1859(c)(1)(C)(i).’’.‘‘

11 (e) CONFORMING AMENDMENT TO HEADING TO

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

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

14 and inserting ‘‘55’’.

15 TITLE III—COBRA PROTECTION

16 FOR EARLY RETIREES

17 Subtitle A—Amendments to the

18 Employee Retirement Income

19 Security Act of 1974

20 SEC. 301. COBRA CONTINUATION BENEFITS FOR CERTAIN

21 RETIRED WORKERS WHO LOSE RETIREE

22 HEALTH COVERAGE.

23 (a) ESTABLISHMENT OF NEW QUALIFYING

24 EVENT.—
39

•S 1789 IS

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

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

3 1163) is amended by inserting after paragraph (6)

4 the following new paragraph:

5 ‘‘(7) The termination or substantial reduction

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

7 health plan coverage as a result of plan changes or

8 termination in the case of a covered employee who

9 is a qualified retiree.’’.

10 (2) QUALIFIED RETIREE; QUALIFIED BENE11 FICIARY; AND SUBSTANTIAL REDUCTION DE12 FINED.—Section 607 of such Act (29 U.S.C. 1167)

13 is amended—

14 (A) in paragraph (3)—

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

16 ‘‘except as otherwise provided in this para17 graph,’’ after ‘‘means,’’; and

18 (ii) by adding at the end the following

19 new subparagraph:

20 ‘‘(D) SPECIAL RULE FOR QUALIFYING RE21 TIREES AND DEPENDENTS.—In the case of a

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

23 term ‘qualified beneficiary’ means a qualified

24 retiree and any other individual who, on the day

25 before such qualifying event, is a beneficiary
40

•S 1789 IS

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

2 relationship to such qualified retiree.’’; and

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

4 paragraphs:

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

6 retiree’ means, with respect to a qualifying event de7 scribed in section 603(7), a covered employee who,

8 at the time of the event—

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

10 ‘‘(B) was receiving group health coverage

11 under the plan by reason of the retirement of

12 the covered employee.

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

14 ‘substantial reduction’—

15 ‘‘(A) means, as determined under regula16 tions of the Secretary and with respect to a

17 qualified beneficiary, a reduction in the average

18 actuarial value of benefits under the plan

19 (through reduction or elimination of benefits,

20 an increase in premiums, deductibles, copay21 ments, and coinsurance, or any combination

22 thereof), since the date of commencement of

23 coverage of the beneficiary by reason of the re24 tirement of the covered employee (or, if later,

25 January 6, 1998), in an amount equal to at
41

•S 1789 IS

1 least 50 percent of the total average actuarial

2 value of the benefits under the plan as of such

3 date (taking into account an appropriate ad4 justment to permit comparison of values over

5 time); and

6 ‘‘(B) includes an increase in premiums re7 quired to an amount that exceeds the premium

8 level described in the fourth sentence of section

9 602(3).

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

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

12 amended—

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

14 ‘‘603(6)’’;

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

16 inserting ‘‘, 603(6), or 603(7)’’;

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

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

19 and by moving such clause to immediately follow

20 clause (iii); and

21 (5) by inserting after such clause (iv) the fol22 lowing new clause:

23 ‘‘(v) SPECIAL RULE FOR CERTAIN DE24 PENDENTS IN CASE OF TERMINATION OR

25 SUBSTANTIAL REDUCTION OF RETIREE
42

•S 1789 IS

1 HEALTH COVERAGE.—In the case of a

2 qualifying event described in section

3 603(7), in the case of a qualified bene4 ficiary described in section 607(3)(D) who

5 is not the qualified retiree or spouse of

6 such retiree, the later of—

7 ‘‘(I) the date that is 36 months

8 after the earlier of the date the quali9 fied retiree becomes entitled to bene10 fits under title XVIII of the Social Se11 curity Act, or the date of the death of

12 the qualified retiree; or

13 ‘‘(II) the date that is 36 months

14 after the date of the qualifying

15 event.’’.

16 (c) TYPE OF COVERAGE IN CASE OF TERMINATION

17 OR SUBSTANTIAL REDUCTION OF RETIREE HEALTH COV18 ERAGE.—Section 602(1) of such Act (29 U.S.C. 1162(1))

19 is amended—

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

21 the following:

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

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

24 (2) by adding at the end the following:
43

•S 1789 IS

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

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

3 in applying the first sentence of subparagraph

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

5 the coverage offered that is the most prevalent

6 coverage option (as determined under regula7 tions of the Secretary) continued under the

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

9 prevalent other plan offered by the same plan

10 sponsor) shall be treated as the coverage de11 scribed in such sentence, or (at the option of

12 the plan and qualified beneficiary) such other

13 coverage option as may be offered and elected

14 by the qualified beneficiary involved.’’.

15 (d) INCREASED LEVEL OF PREMIUMS PERMITTED.—

16 Section 602(3) of such Act (29 U.S.C. 1162(3)) is amend17 ed by adding at the end the following new sentence: ‘‘In

18 the case of an individual provided continuation coverage

19 by reason of a qualifying event described in section

20 603(7), any reference in subparagraph (A) of this para21 graph to ‘102 percent of the applicable premium’ is

22 deemed a reference to ‘125 percent of the applicable pre23 mium for employed individuals (and their dependents, if

24 applicable) for the coverage option referred to in para25 graph (1)(B)’.’’.
44

•S 1789 IS

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

2 1166) is amended—

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

4 and inserting ‘‘(6), or (7)’’; and

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

6 ‘‘The notice under paragraph (4) in the case of a qualify7 ing event described in section 603(7) shall be provided at

8 least 90 days before the date of the qualifying event.’’.

9 (f) EFFECTIVE DATES.—

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

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

12 apply to qualifying events occurring on or after Jan13 uary 6, 1998. In the case of a qualifying event oc14 curring on or after such date and before the date of

15 the enactment of this Act, such event shall be

16 deemed (for purposes of such amendments) to have

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

18 (2) ADVANCE NOTICE OF TERMINATIONS AND

19 REDUCTIONS.—The amendment made by subsection

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

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

22 that in no case shall notice be required under such

23 amendment before such date.
45

•S 1789 IS

1 Subtitle B—Amendments to the

2 Public Health Service Act

3 SEC. 311. COBRA CONTINUATION BENEFITS FOR CERTAIN

4 RETIRED WORKERS WHO LOSE RETIREE

5 HEALTH COVERAGE.

6 (a) ESTABLISHMENT OF NEW QUALIFYING

7 EVENT.—

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

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

10 by inserting after paragraph (5) the following new

11 paragraph:

12 ‘‘(6) The termination or substantial reduction

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

14 health plan coverage as a result of plan changes or

15 termination in the case of a covered employee who

16 is a qualified retiree.’’.

17 (2) QUALIFIED RETIREE; QUALIFIED BENE18 FICIARY; AND SUBSTANTIAL REDUCTION DE19 FINED.—Section 2208 of such Act (42 U.S.C.

20 300bb–8) is amended—

21 (A) in paragraph (3)—

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

23 ‘‘except as otherwise provided in this para24 graph,’’ after ‘‘means,’’; and
46

•S 1789 IS

1 (ii) by adding at the end the following

2 new subparagraph:

3 ‘‘(C) SPECIAL RULE FOR QUALIFYING RE4 TIREES AND DEPENDENTS.—In the case of a

5 qualifying event described in section 2203(6),

6 the term ‘qualified beneficiary’ means a quali7 fied retiree and any other individual who, on

8 the day before such qualifying event, is a bene9 ficiary under the plan on the basis of the indi10 vidual’s relationship to such qualified retiree.’’;

11 and

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

13 paragraphs:

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

15 retiree’ means, with respect to a qualifying event de16 scribed in section 2203(6), a covered employee who,

17 at the time of the event—

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

19 ‘‘(B) was receiving group health coverage

20 under the plan by reason of the retirement of

21 the covered employee.

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

23 ‘substantial reduction’—

24 ‘‘(A) means, as determined under regula25 tions of the Secretary of Labor and with respect
47

•S 1789 IS

1 to a qualified beneficiary, a reduction in the av2 erage actuarial value of benefits under the plan

3 (through reduction or elimination of benefits,

4 an increase in premiums, deductibles, copay5 ments, and coinsurance, or any combination

6 thereof), since the date of commencement of

7 coverage of the beneficiary by reason of the re8 tirement of the covered employee (or, if later,

9 January 6, 1998), in an amount equal to at

10 least 50 percent of the total average actuarial

11 value of the benefits under the plan as of such

12 date (taking into account an appropriate ad13 justment to permit comparison of values over

14 time); and

15 ‘‘(B) includes an increase in premiums re16 quired to an amount that exceeds the premium

17 level described in the fourth sentence of section

18 2202(3).

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

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

21 2(2)(A)) is amended—

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

23 and

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

25 new clause:
48

•S 1789 IS

1 ‘‘(iii) SPECIAL RULE FOR CERTAIN

2 DEPENDENTS IN CASE OF TERMINATION

3 OR SUBSTANTIAL REDUCTION OF RETIREE

4 HEALTH COVERAGE.—In the case of a

5 qualifying event described in section

6 2203(6), in the case of a qualified bene7 ficiary described in section 2208(3)(C) who

8 is not the qualified retiree or spouse of

9 such retiree, the later of—

10 ‘‘(I) the date that is 36 months

11 after the earlier of the date the quali12 fied retiree becomes entitled to bene13 fits under title XVIII of the Social Se14 curity Act, or the date of the death of

15 the qualified retiree; or

16 ‘‘(II) the date that is 36 months

17 after the date of the qualifying

18 event.’’.

19 (c) TYPE OF COVERAGE IN CASE OF TERMINATION

20 OR SUBSTANTIAL REDUCTION OF RETIREE HEALTH COV21 ERAGE.—Section 2202(1) of such Act (42 U.S.C. 300bb–

22 2(1)) is amended—

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

24 the following:
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1 ‘‘(A) IN GENERAL.—Except as provided in

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

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

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

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

6 in applying the first sentence of subparagraph

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

8 the coverage offered that is the most prevalent

9 coverage option (as determined under regula10 tions of the Secretary of Labor) continued

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

12 the most prevalent other plan offered by the

13 same plan sponsor) shall be treated as the cov14 erage described in such sentence, or (at the op15 tion of the plan and qualified beneficiary) such

16 other coverage option as may be offered and

17 elected by the qualified beneficiary involved.’’.

18 (d) INCREASED LEVEL OF PREMIUMS PERMITTED.—

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

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

21 ‘‘In the case of an individual provided continuation cov22 erage by reason of a qualifying event described in section

23 2203(6), any reference in subparagraph (A) of this para24 graph to ‘102 percent of the applicable premium’ is

25 deemed a reference to ‘125 percent of the applicable pre-
50

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1 mium for employed individuals (and their dependents, if

2 applicable) for the coverage option referred to in para3 graph (1)(B)’.’’.

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

5 300bb–6(a)) is amended—

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

7 and inserting ‘‘(4), or (6)’’; and

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

9 ‘‘The notice under paragraph (4) in the case of a qualify10 ing event described in section 2203(6) shall be provided

11 at least 90 days before the date of the qualifying 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, 1998. 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 Subtitle C—Amendments to the

4 Internal Revenue Code of 1986

5 SEC. 321. COBRA CONTINUATION BENEFITS FOR CERTAIN

6 RETIRED WORKERS WHO LOSE RETIREE

7 HEALTH COVERAGE.

8 (a) ESTABLISHMENT OF NEW QUALIFYING

9 EVENT.—

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

11 Internal Revenue Code of 1986 is amended by in12 serting after subparagraph (F) the following new

13 subparagraph:

14 ‘‘(G) The termination or substantial reduc15 tion in benefits (as defined in subsection (g)(6))

16 of group health plan coverage as a result of

17 plan changes or termination in the case of a

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

19 (2) QUALIFIED RETIREE; QUALIFIED BENE20 FICIARY; AND SUBSTANTIAL REDUCTION DE21 FINED.—Section 4980B(g) of such Code is amend22 ed—

23 (A) in paragraph (1)—
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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 ‘‘(E) SPECIAL RULE FOR QUALIFYING RE7 TIREES AND DEPENDENTS.—In the case of a

8 qualifying event described in subsection

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

10 a qualified retiree and any other individual who,

11 on the day before such qualifying event, is a

12 beneficiary under the plan on the basis of the

13 individual’s relationship to such qualified re14 tiree.’’; and

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

16 paragraphs:

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

18 retiree’ means, with respect to a qualifying event de19 scribed in subsection (f)(3)(G), a covered employee

20 who, at the time of the event—

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

22 ‘‘(B) was receiving group health coverage

23 under the plan by reason of the retirement of

24 the covered employee.
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1 ‘‘(6) SUBSTANTIAL REDUCTION.—The term

2 ‘substantial reduction’—

3 ‘‘(A) means, as determined under regula4 tions of the Secretary of Labor and with respect

5 to a qualified beneficiary, a reduction in the av6 erage actuarial value of benefits under the plan

7 (through reduction or elimination of benefits,

8 an increase in premiums, deductibles, copay9 ments, and coinsurance, or any combination

10 thereof), since the date of commencement of

11 coverage of the beneficiary by reason of the re12 tirement of the covered employee (or, if later,

13 January 6, 1998), in an amount equal to at

14 least 50 percent of the total average actuarial

15 value of the benefits under the plan as of such

16 date (taking into account an appropriate ad17 justment to permit comparison of values over

18 time); and

19 ‘‘(B) includes an increase in premiums re20 quired to an amount that exceeds the premium

21 level described in the fourth sentence of sub22 section (f)(2)(C).’’.

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

24 Section 4980B(f)(2)(B)(i) of such Code is amended—
54

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

2 after ‘‘(3)(F)’’;

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

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

5 (3) by redesignating subclause (IV) as sub6 clause (VI);

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

8 (IV) and by moving such clause to immediately fol9 low subclause (III); and

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

11 following new subclause:

12 ‘‘(V) SPECIAL RULE FOR CER13 TAIN DEPENDENTS IN CASE OF TER14 MINATION OR SUBSTANTIAL REDUC15 TION OF RETIREE HEALTH COV16 ERAGE.—In the case of a qualifying

17 event described in paragraph (3)(G),

18 in the case of a qualified beneficiary

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

20 is not the qualified retiree or spouse

21 of such retiree, the later of—

22 ‘‘(a) the date that is 36

23 months after the earlier of the

24 date the qualified retiree becomes

25 entitled to benefits under title
55

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1 XVIII of the Social Security Act,

2 or the date of the death of the

3 qualified retiree; or

4 ‘‘(b) the date that is 36

5 months after the date of the

6 qualifying event.’’.

7 (c) TYPE OF COVERAGE IN CASE OF TERMINATION

8 OR SUBSTANTIAL REDUCTION OF RETIREE HEALTH COV9 ERAGE.—Section 4980B(f)(2)(A) of such Code is amend10 ed—

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

12 the following:

13 ‘‘(i) IN GENERAL.—Except as pro14 vided in clause (ii), the coverage’’; and

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

16 ‘‘(ii) CERTAIN RETIREES.—In the

17 case of a qualifying event described in

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

19 sentence of clause (i) and the fourth sen20 tence of subparagraph (C), the coverage

21 offered that is the most prevalent coverage

22 option (as determined under regulations of

23 the Secretary of Labor) continued under

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

25 the most prevalent other plan offered by
56

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1 the same plan sponsor) shall be treated as

2 the coverage described in such sentence, or

3 (at the option of the plan and qualified

4 beneficiary) such other coverage option as

5 may be offered and elected by the qualified

6 beneficiary involved.’’.

7 (d) INCREASED LEVEL OF PREMIUMS PERMITTED.—

8 Section 4980B(f)(2)(C) of such Code is amended by add9 ing at the end the following new sentence: ‘‘In the case

10 of an individual provided continuation coverage by reason

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

12 reference in clause (i) of this subparagraph to ‘102 per13 cent of the applicable premium’ is deemed a reference to

14 ‘125 percent of the applicable premium for employed indi15 viduals (and their dependents, if applicable) for the cov16 erage option referred to in subparagraph (A)(ii)’.’’.

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

18 amended—

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

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

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

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

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

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

25 event.’’.
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1 (f) EFFECTIVE DATES.—

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

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

4 apply to qualifying events occurring on or after Jan5 uary 6, 1998. In the case of a qualifying event oc6 curring on or after such date and before the date of

7 the enactment of this Act, such event shall be

8 deemed (for purposes of such amendments) to have

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

10 (2) ADVANCE NOTICE OF TERMINATIONS AND

11 REDUCTIONS.—The amendment made by subsection

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

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

14 that in no case shall notice be required under such

15 amendment before such date.

16 TITLE IV—FINANCING

17 SEC. 401. REFERENCE TO FINANCING PROVISIONS.

18 Any increase in payments under the medicare pro19 gram under title XVIII of the Social Security Act that

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

21 reductions in payments under such program pursuant to

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

23 of the Medicare Fraud and Overpayment Act of 1998.

Æ