II

106TH CONGRESS

1ST SESSION S. 202

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, and for other

purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 19, 1999

Mr. MOYNIHAN (for himself, Mr. KENNEDY, and Mr. DASCHLE) 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, 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 1999’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:
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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.

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—
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1 (1) by redesignating section 1859 and part D

2 as section 1858 and part E, respectively; and

3 (2) by inserting after such section the following

4 new part:

5 ‘‘PART D—PURCHASE OF MEDICARE BENEFITS BY

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

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

8 ‘‘(a) ENTITLEMENT TO MEDICARE BENEFITS FOR

9 ENROLLED INDIVIDUALS.—

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

11 under this part is entitled to the same benefits

12 under this title as an individual entitled to benefits

13 under part A and enrolled under part B.

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

15 ‘‘(A) FEDERAL OR STATE COBRA CONTINU16 ATION PROVISION.—The term ‘Federal or State

17 COBRA continuation provision’ has the mean18 ing given the term ‘COBRA continuation provi19 sion’ in section 2791(d)(4) of the Public Health

20 Service Act and includes a comparable State

21 program, as determined by the Secretary.

22 ‘‘(B) FEDERAL HEALTH INSURANCE PRO23 GRAM DEFINED.—The term ‘Federal health in24 surance program’ means any of the following:
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1 ‘‘(i) MEDICARE.—Part A or part B of

2 this title (other than by reason of this

3 part).

4 ‘‘(ii) MEDICAID.—A State plan under

5 title XIX.

6 ‘‘(iii) FEHBP.—The Federal employ7 ees health benefit program under chapter

8 89 of title 5, United States Code.

9 ‘‘(iv) TRICARE.—The TRICARE

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

11 title 10, United States Code).

12 ‘‘(v) ACTIVE DUTY MILITARY.—Health

13 benefits under title 10, United States

14 Code, to an individual as a member of the

15 uniformed services of the United States.

16 ‘‘(C) GROUP HEALTH PLAN.—The term

17 ‘group health plan’ has the meaning given such

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

19 Service Act.

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

21 YEARS OF AGE.—

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

23 an individual who meets the following requirements

24 with respect to a month is eligible to enroll under

25 this part with respect to such month:
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1 ‘‘(A) AGE.—As of the last day of the

2 month, the individual has attained 62 years of

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

4 ‘‘(B) MEDICARE ELIGIBILITY (BUT FOR

5 AGE).—The individual would be eligible for ben6 efits under part A or part B for the month if

7 the individual were 65 years of age.

8 ‘‘(C) NOT ELIGIBLE FOR COVERAGE

9 UNDER GROUP HEALTH PLANS OR FEDERAL

10 HEALTH INSURANCE PROGRAMS.—The individ11 ual is not eligible for benefits or coverage under

12 a Federal health insurance program (as defined

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

14 health plan (other than such eligibility merely

15 through a Federal or State COBRA continu16 ation provision) as of the last day of the month

17 involved.

18 ‘‘(2) LIMITATION ON ELIGIBILITY IF TERMI19 NATED ENROLLMENT.—If an individual described in

20 paragraph (1) enrolls under this part and coverage

21 of the individual is terminated under section

22 1859A(d) (other than because of age), the individual

23 is not again eligible to enroll under this subsection

24 unless the following requirements are met:
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1 ‘‘(A) NEW COVERAGE UNDER GROUP

2 HEALTH PLAN OR FEDERAL HEALTH INSUR3 ANCE PROGRAM.—After the date of termination

4 of coverage under such section, the individual

5 obtains coverage under a group health plan or

6 under a Federal health insurance program.

7 ‘‘(B) SUBSEQUENT LOSS OF NEW COV8 ERAGE.—The individual subsequently loses eli9 gibility for the coverage described in subpara10 graph (A) and exhausts any eligibility the indi11 vidual may subsequently have for coverage

12 under a Federal or State COBRA continuation

13 provision.

14 ‘‘(3) CHANGE IN HEALTH PLAN ELIGIBILITY

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

16 individual who is eligible for and enrolls under this

17 part under this subsection, the individual’s continued

18 entitlement to benefits under this part shall not be

19 affected by the individual’s subsequent eligibility for

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

21 or entitlement to such benefits or coverage.

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

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

24 program established under this part only in such manner

25 and form as may be prescribed by regulations, and only
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1 during an enrollment period prescribed by the Secretary

2 consistent with the provisions of this section. Such regula3 tions shall provide a process under which—

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

5 are permitted to pre-enroll during a prior month

6 within an enrollment period described in subsection

7 (b); and

8 ‘‘(2) each individual seeking to enroll under sec9 tion 1859(b) is notified, before enrolling, of the de10 ferred monthly premium amount the individual will

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

12 65 years of age as determined under section

13 1859B(c)(3).

14 ‘‘(b) ENROLLMENT PERIODS.—

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

16 the case of individuals eligible to enroll under this

17 part under section 1859(b)—

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

19 the individual is eligible to enroll under such

20 section for July 2000, the enrollment period

21 shall begin on May 1, 2000, and shall end on

22 August 31, 2000. Any such enrollment before

23 July 1, 2000, is conditioned upon compliance

24 with the conditions of eligibility for July 2000.
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1 ‘‘(B) SUBSEQUENT PERIODS.—If the indi2 vidual is eligible to enroll under such section for

3 a month after July 2000, the enrollment period

4 shall begin on the first day of the second month

5 before the month in which the individual first is

6 eligible to so enroll and shall end 4 months

7 later. Any such enrollment before the first day

8 of the third month of such enrollment period is

9 conditioned upon compliance with the condi10 tions of eligibility for such third month.

11 ‘‘(2) AUTHORITY TO CORRECT FOR GOVERN12 MENT ERRORS.—The provisions of section 1837(h)

13 apply with respect to enrollment under this part in

14 the same manner as they apply to enrollment under

15 part B.

16 ‘‘(c) DATE COVERAGE BEGINS.—

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

18 an individual is entitled to benefits under this part

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

20 July 1, 2000:

21 ‘‘(A) In the case of an individual who en22 rolls (including pre-enrolls) before the month in

23 which the individual satisfies eligibility for en24 rollment under section 1859, the first day of

25 such month of eligibility.
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1 ‘‘(B) In the case of an individual who en2 rolls during or after the month in which the in3 dividual first satisfies eligibility for enrollment

4 under such section, the first day of the follow5 ing month.

6 ‘‘(2) AUTHORITY TO PROVIDE FOR PARTIAL

7 MONTHS OF COVERAGE.—Under regulations, the

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

9 for coverage periods that include portions of a

10 month in order to avoid lapses of coverage.

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

12 may be made under this title with respect to the ex13 penses of an individual enrolled under this part un14 less such expenses were incurred by such individual

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

16 is a coverage period under this section.

17 ‘‘(d) TERMINATION OF COVERAGE.—

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

19 period under this part shall continue until the indi20 vidual’s enrollment has been terminated at the earli21 est of the following:

22 ‘‘(A) GENERAL PROVISIONS.—

23 ‘‘(i) NOTICE.—The individual files no24 tice (in a form and manner prescribed by

25 the Secretary) that the individual no
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1 longer wishes to participate in the insur2 ance program under this part.

3 ‘‘(ii) NONPAYMENT OF PREMIUMS.—

4 The individual fails to make payment of

5 premiums required for enrollment under

6 this part.

7 ‘‘(iii) MEDICARE ELIGIBILITY.—The

8 individual becomes entitled to benefits

9 under part A or enrolled under part B

10 (other than by reason of this part).

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

12 individual attains 65 years of age.

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

14 ‘‘(A) NOTICE.—The termination of a cov15 erage period under paragraph (1)(A)(i) shall

16 take effect at the close of the month following

17 for which the notice is filed.

18 ‘‘(B) NONPAYMENT OF PREMIUM.—The

19 termination of a coverage period under para20 graph (1)(A)(ii) shall take effect on a date de21 termined under regulations, which may be de22 termined so as to provide a grace period in

23 which overdue premiums may be paid and cov24 erage continued. The grace period determined

25 under the preceding sentence shall not exceed
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1 60 days; except that it may be extended for an

2 additional 30 days in any case where the Sec3 retary determines that there was good cause for

4 failure to pay the overdue premiums within

5 such 60-day period.

6 ‘‘(C) AGE OR MEDICARE ELIGIBILITY.—

7 The termination of a coverage period under

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

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

10 individual attains 65 years of age or becomes

11 entitled to benefits under part A or enrolled for

12 benefits under part B (other than by reason of

13 this part).

14 ‘‘SEC. 1859B. PREMIUMS.

15 ‘‘(a) AMOUNT OF MONTHLY PREMIUMS.—

16 ‘‘(1) BASE MONTHLY PREMIUMS.—The Sec17 retary shall, during September of each year (begin18 ning with 1999), determine the following premium

19 rates which shall apply with respect to coverage pro20 vided under this title for any month in the succeed21 ing year:

22 ‘‘(A) BASE MONTHLY PREMIUM FOR INDI23 VIDUALS 62 YEARS OF AGE OR OLDER.—A base

24 monthly premium for individuals 62 years of

age or older is equal to 1 25 ⁄12 of the base annual
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1 premium rate computed under subsection (b)

2 for each premium area.

3 ‘‘(B) DEFERRED MONTHLY PREMIUMS FOR

4 INDIVIDUALS 62 YEARS OF AGE OR OLDER.—

5 The Secretary shall, during September of each

6 year (beginning with 1999), determine under

7 subsection (c) the amount of deferred monthly

8 premiums that shall apply with respect to indi9 viduals who first obtain coverage under this

10 part under section 1859(b) in the succeeding

11 year.

12 ‘‘(2) ESTABLISHMENT OF PREMIUM AREAS.—

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

14 means such an area as the Secretary shall specify to

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

16 may change the boundaries of such premium areas.

17 The Secretary shall seek to minimize the number of

18 such areas specified under this paragraph.

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

20 YEARS OF AGE OR OLDER.—

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

22 Secretary shall estimate the average, annual per

23 capita amount that would be payable under this title

24 with respect to individuals residing in the United

25 States who meet the requirement of section
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1 1859(b)(1)(A) as if all such individuals were eligible

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

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

4 did not apply).

5 ‘‘(2) GEOGRAPHIC ADJUSTMENT.—The Sec6 retary shall reduce, as determined appropriate, the

7 amount determined under paragraph (1) for a pre8 mium area (specified under subsection (a)(3)) that

9 has costs below the national average, in order to as10 sure participation in all areas throughout the United

11 States.

12 ‘‘(3) BASE ANNUAL PREMIUM.—The base an13 nual premium under this subsection for months in a

14 year for individuals 62 years of age or older residing

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

16 per capita amount estimated under paragraph (1)

17 for the year, adjusted for such area under paragraph

18 (2).

19 ‘‘(c) DEFERRED PREMIUM RATE FOR INDIVIDUALS

20 62 YEARS OF AGE OR OLDER.—The deferred premium

21 rate for individuals with a group of individuals who obtain

22 coverage under section 1859(b) in a year shall be com23 puted by the Secretary as follows:

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

25 ANNUAL AVERAGE EXPENDITURES FOR ENROLL-
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1 MENT GROUP.—The Secretary shall estimate the av2 erage, per capita annual amount that will be paid

3 under this part for individuals in such group during

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

5 making such estimate for coverage beginning in a

6 year before 2004, the Secretary may base such esti7 mate on the average, per capita amount that would

8 be payable if the program had been in operation over

9 a previous period of at least 4 years.

10 ‘‘(2) DIFFERENCE BETWEEN ESTIMATED EX11 PENDITURES AND ESTIMATED PREMIUMS.—Based

12 on the characteristics of individuals in such group,

13 the Secretary shall estimate during the period of

14 coverage of the group under this part under section

15 1859(b) the amount by which—

16 ‘‘(A) the amount estimated under para17 graph (1); exceeds

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

19 amount of premiums that will be payable for

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

21 for individuals in such group (including pre22 miums that would be payable if there were no

23 terminations in enrollment under clause (i) or

24 (ii) of section 1859A(d)(1)(A)).
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1 ‘‘(3) ACTUARIAL COMPUTATION OF DEFERRED

2 MONTHLY PREMIUM RATES.—The Secretary shall

3 determine deferred monthly premium rates for indi4 viduals in such group in a manner so that—

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

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

7 equal to

8 ‘‘(B) the estimated actuarial present value

9 of the differences described in paragraph (2).

10 Such rate shall be computed for each individual in

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

12 the number of months between the first month of

13 coverage based on enrollment under section 1859(b)

14 and the month in which the individual attains 65

15 years of age.

16 ‘‘(4) DETERMINANTS OF ACTUARIAL PRESENT

17 VALUES.—The actuarial present values described in

18 paragraph (3) shall reflect—

19 ‘‘(A) the estimated probabilities of survival

20 at ages 62 through 84 for individuals enrolled

21 during the year; and

22 ‘‘(B) the estimated effective average inter23 est rates that would be earned on investments

24 held in the trust funds under this title during

25 the period in question.
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1 ‘‘SEC. 1859C. PAYMENT OF PREMIUMS.

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

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

4 for payment and collection of the base monthly pre5 mium, determined under section 1859B(a)(1) for the

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

7 involved and the premium area in which the individ8 ual principally resides, in the same manner as for

9 payment of monthly premiums under section 1840,

10 except that, for purposes of applying this section,

11 any reference in such section to the Federal Supple12 mentary Medical Insurance Trust Fund is deemed a

13 reference to the Trust Fund established under sec14 tion 1859D.

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

16 individual who participates in the program estab17 lished by this title, the base monthly premium shall

18 be payable for the period commencing with the first

19 month of the individual’s coverage period and ending

20 with the month in which the individual’s coverage

21 under this title terminates.

22 ‘‘(b) PAYMENT OF DEFERRED PREMIUM FOR INDI23 VIDUALS COVERED AFTER ATTAINING AGE 62.—

24 ‘‘(1) RATE OF PAYMENT.—

25 ‘‘(A) IN GENERAL.—In the case of an indi26 vidual who is covered under this part for a
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1 month pursuant to an enrollment under section

2 1859(b), subject to subparagraph (B), the indi3 vidual is liable for payment of a deferred pre4 mium in each month during the period de5 scribed in paragraph (2) in an amount equal to

6 the full deferred monthly premium rate deter7 mined for the individual under section

8 1859B(c).

9 ‘‘(B) SPECIAL RULES FOR THOSE WHO

10 DISENROLL EARLY.—

11 ‘‘(i) IN GENERAL.—If such an individ12 ual’s enrollment under such section is ter13 minated under clause (i) or (ii) of section

14 1859A(d)(1)(A), subject to clause (ii), the

15 amount of the deferred premium otherwise

16 established under this paragraph shall be

17 pro-rated to reflect the number of months

18 of coverage under this part under such en19 rollment compared to the maximum num20 ber of months of coverage that the individ21 ual would have had if the enrollment were

22 not so terminated.

23 ‘‘(ii) ROUNDING TO 12-MONTH MINI24 MUM COVERAGE PERIODS.—In applying

25 clause (i), the number of months of cov-
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1 erage (if not a multiple of 12) shall be

2 rounded to the next highest multiple of 12

3 months, except that in no case shall this

4 clause result in a number of months of

5 coverage exceeding the maximum number

6 of months of coverage that the individual

7 would have had if the enrollment were not

8 so terminated.

9 ‘‘(2) PERIOD OF PAYMENT.—The period de10 scribed in this paragraph for an individual is the pe11 riod beginning with the first month in which the in12 dividual has attained 65 years of age and ending

13 with the month before the month in which the indi14 vidual attains 85 years of age.

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

16 who is liable for a premium under this subsection,

17 the amount of the premium shall be collected in the

18 same manner as the premium for enrollment under

19 such part is collected under section 1840, except

20 that any reference in such section to the Federal

21 Supplementary Medical Insurance Trust Fund is

22 deemed to be a reference to the Medicare Early Ac23 cess Trust Fund established under section 1859D.

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

25 provisions of section 1840 (other than subsection (h))
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1 shall apply to premiums collected under this section in the

2 same manner as they apply to premiums collected under

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

4 Federal Supplementary Medical Insurance Trust Fund is

5 deemed a reference to the Trust Fund established under

6 section 1859D.

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

8 ‘‘(a) ESTABLISHMENT OF TRUST FUND.—

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

10 the books of the Treasury of the United States a

11 trust fund to be known as the ‘Medicare Early Ac12 cess Trust Fund’ (in this section referred to as the

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

14 gifts and bequests as may be made as provided in

15 section 201(i)(1) and such amounts as may be de16 posited in, or appropriated to, such fund as provided

17 in this title.

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

19 section 1859B shall be transferred to the Trust

20 Fund.

21 ‘‘(b) INCORPORATION OF PROVISIONS.—

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

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

24 apply with respect to the Trust Fund and this title

25 in the same manner as they apply with respect to
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1 the Federal Supplementary Medical Insurance Trust

2 Fund and part B, respectively.

3 ‘‘(2) MISCELLANEOUS REFERENCES.—In apply4 ing provisions of section 1841 under paragraph

5 (1)—

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

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

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

9 section 1840(d) and in section 1841(i) to sec10 tions 1840(b)(1) and 1842(g) are deemed ref11 erences to comparable authority exercised under

12 this part; and

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

14 1841(g) to the trust funds under sections 1817

15 and 1841 as reimbursement to such funds for

16 payments they made for benefits provided

17 under this part.

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

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

20 The Board of Trustees of the Medicare Early Access

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

22 annual basis to Congress concerning the status of the

23 Trust Fund and the need for adjustments in the program

24 under this part to maintain financial solvency of the pro25 gram under this part.
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1 ‘‘(b) PERIODIC GAO REPORTS.—The Comptroller

2 General of the United States shall periodically submit to

3 Congress reports on the adequacy of the financing of cov4 erage provided under this part. The Comptroller General

5 shall include in such report such recommendations for ad6 justments in such financing and coverage as the Comptrol7 ler General deems appropriate in order to maintain finan8 cial solvency of the program under this part.

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

10 ‘‘(a) TREATMENT FOR PURPOSES OF THIS TITLE.—

11 Except as otherwise provided in this part—

12 ‘‘(1) an individual enrolled under this part shall

13 be treated for purposes of this title as though the in14 dividual was entitled to benefits under part A and

15 enrolled under part B; and

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

17 payable under this title to such an individual in the

18 same manner as if such individual was so entitled

19 and enrolled.

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

21 PURPOSES OF MEDICAID PROGRAM.—For purposes of ap22 plying title XIX (including the provision of medicare cost23 sharing assistance under such title), an individual who is

24 enrolled under this part shall not be treated as being enti25 tled to benefits under this title.
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1 ‘‘(c) NOT TREATED AS MEDICARE PROGRAM FOR

2 PURPOSES OF COBRA CONTINUATION PROVISIONS.—In

3 applying a COBRA continuation provision (as defined in

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

5 reference to an entitlement to benefits under this title

6 shall not be construed to include entitlement to benefits

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

8 (b) CONFORMING AMENDMENTS TO SOCIAL SECU9 RITY ACT PROVISIONS.—

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

11 (42 U.S.C. 401(i)(1)) is amended by striking ‘‘or the

12 Federal Supplementary Medical Insurance Trust

13 Fund’’ and inserting ‘‘the Federal Supplementary

14 Medical Insurance Trust Fund, and the Medicare

15 Early Access Trust Fund’’.

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

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

18 the Federal Supplementary Medical Insurance Trust

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

20 the Federal Supplementary Medical Insurance Trust

21 Fund, and the Medicare Early Access Trust Fund

22 established by title XVIII’’.

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

24 1395i–4(i)) is amended by striking ‘‘part D’’ and in25 serting ‘‘part E’’.
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1 (4) Part C of title XVIII of such Act is

2 amended—

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

4 1395w–21(a)(2)(B)), by striking ‘‘1859(b)(3)’’

5 and inserting ‘‘1858(b)(3);

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

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

8 and inserting ‘‘1858(b)(2)’’;

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

10 1395w–22(a)(1)), by striking ‘‘1859(b)(3)’’ and

11 inserting ‘‘1858(b)(3);

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

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

14 ‘‘1859(b)(2)(B)’’ and inserting

15 ‘‘1858(b)(2)(B)’’;

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

17 1395w–23(a)(1)(A)), by striking ‘‘1859(e)(4)’’

18 and inserting ‘‘1858(e)(4)’’; and

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

20 1395w–23(a)(3)(D)), by striking ‘‘1859(e)(4)’’

21 and inserting ‘‘1858(e)(4)’’.

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

23 1395w–23(c)) is amended—

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

25 and inserting ‘‘, (7), or (8)’’, and
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1 (B) by adding at the end the following:

2 ‘‘(8) ADJUSTMENT FOR EARLY ACCESS.—In ap3 plying this subsection with respect to individuals en4 titled to benefits under part D, the Secretary shall

5 provide for an appropriate adjustment in the

6 Medicare+Choice capitation rate as may be appro7 priate to reflect differences between the population

8 served under such part and the population under

9 parts A and B.’’.

10 (c) OTHER CONFORMING AMENDMENTS.—

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

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

13 and inserting ‘‘1858(b)(3)’’.

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

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

16 1162(2)) is amended by inserting ‘‘(not including an

17 individual who is so entitled pursuant to enrollment

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

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

20 Service Act (42 U.S.C. 300bb–2(2)(D)(ii)) is amend21 ed by inserting ‘‘(not including an individual who is

22 so entitled pursuant to enrollment under section

23 1859A)’’ after ‘‘Social Security Act’’.

24 (C) Section 4980B(f)(2)(B)(i)(V) of the Inter25 nal Revenue Code of 1986 is amended by inserting
25

•S 202 IS

1 ‘‘(not including an individual who is so entitled pur2 suant to enrollment under section 1859A)’’ after

3 ‘‘Social Security Act’’.

4 TITLE II—ACCESS TO MEDICARE

5 BENEFITS FOR DISPLACED

6 WORKERS 55-TO-62 YEARS OF

7 AGE

8 SEC. 201. ACCESS TO MEDICARE BENEFITS FOR DISPLACED

9 WORKERS 55-TO-62 YEARS OF AGE.

10 (a) ELIGIBILITY.—Section 1859 of the Social Secu11 rity Act, as inserted by section 101(a)(2), is amended by

12 adding at the end the following new subsection:

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

14 ‘‘(1) DISPLACED WORKERS.—Subject to para15 graph (3), an individual who meets the following re16 quirements with respect to a month is eligible to en17 roll under this part with respect to such month:

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

19 month, the individual has attained 55 years of

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

21 ‘‘(B) MEDICARE ELIGIBILITY (BUT FOR

22 AGE).—The individual would be eligible for ben23 efits under part A or B for the month if the in24 dividual were 65 years of age.
26

•S 202 IS

1 ‘‘(C) LOSS OF EMPLOYMENT-BASED COV2 ERAGE.—

3 ‘‘(i) ELIGIBLE FOR UNEMPLOYMENT

4 COMPENSATION.—The individual meets the

5 requirements relating to period of covered

6 employment and conditions of separation

7 from employment to be eligible for unem8 ployment compensation (as defined in sec9 tion 85(b) of the Internal Revenue Code of

10 1986), based on a separation from employ11 ment occurring on or after January 1,

12 1999. The previous sentence shall not be

13 construed as requiring the individual to be

14 receiving such unemployment compensa15 tion.

16 ‘‘(ii) LOSS OF EMPLOYMENT-BASED

17 COVERAGE.—Immediately before the time

18 of such separation of employment, the indi19 vidual was covered under a group health

20 plan on the basis of such employment, and,

21 because of such loss, is no longer eligible

22 for coverage under such plan (including

23 such eligibility based on the application of

24 a Federal or State COBRA continuation
27

•S 202 IS

1 provision) as of the last day of the month

2 involved.

3 ‘‘(iii) PREVIOUS CREDITABLE COV4 ERAGE FOR AT LEAST 1 YEAR.—As of the

5 date on which the individual loses coverage

6 described in clause (ii), the aggregate of

7 the periods of creditable coverage (as de8 termined under section 2701(c) of the

9 Public Health Service Act) is 12 months or

10 longer.

11 ‘‘(D) EXHAUSTION OF AVAILABLE COBRA

12 CONTINUATION BENEFITS.—

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

14 individual described in clause (ii) for a

15 month described in clause (iii)—

16 ‘‘(I) the individual (or spouse)

17 elected coverage described in clause

18 (ii); and

19 ‘‘(II) the individual (or spouse)

20 has continued such coverage for all

21 months described in clause (iii) in

22 which the individual (or spouse) is eli23 gible for such coverage.

24 ‘‘(ii) INDIVIDUALS TO WHOM COBRA

25 CONTINUATION COVERAGE MADE AVAIL-
28

•S 202 IS

1 ABLE.—An individual described in this

2 clause is an individual—

3 ‘‘(I) who was offered coverage

4 under a Federal or State COBRA

5 continuation provision at the time of

6 loss of coverage eligibility described in

7 subparagraph (C)(ii); or

8 ‘‘(II) whose spouse was offered

9 such coverage in a manner that per10 mitted coverage of the individual at

11 such time.

12 ‘‘(iii) MONTHS OF POSSIBLE COBRA

13 CONTINUATION COVERAGE.—A month de14 scribed in this clause is a month for which

15 an individual described in clause (ii) could

16 have had coverage described in such clause

17 as of the last day of the month if the indi18 vidual (or the spouse of the individual, as

19 the case may be) had elected such coverage

20 on a timely basis.

21 ‘‘(E) NOT ELIGIBLE FOR COVERAGE

22 UNDER FEDERAL HEALTH INSURANCE PRO23 GRAM OR GROUP HEALTH PLANS.—The individ24 ual is not eligible for benefits or coverage under

25 a Federal health insurance program or under a
29

•S 202 IS

1 group health plan (whether on the basis of the

2 individual’s employment or employment of the

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

4 month involved.

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

6 to paragraph (3), an individual who meets the fol7 lowing requirements with respect to a month is eligi8 ble to enroll under this part with respect to such

9 month:

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

11 month, the individual has not attained 62 years

12 of age.

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

14 The individual is the spouse of an individual at

15 the time the individual enrolls under this part

16 under paragraph (1) and loses coverage de17 scribed in paragraph (1)(C)(ii) because the in18 dividual’s spouse lost such coverage.

19 ‘‘(C) MEDICARE ELIGIBILITY (BUT FOR

20 AGE); EXHAUSTION OF ANY COBRA CONTINU21 ATION COVERAGE; AND NOT ELIGIBLE FOR COV22 ERAGE UNDER FEDERAL HEALTH INSURANCE

23 PROGRAM OR GROUP HEALTH PLAN.—The indi24 vidual meets the requirements of subparagraphs

25 (B), (D), and (E) of paragraph (1).
30

•S 202 IS

1 ‘‘(3) CHANGE IN HEALTH PLAN ELIGIBILITY

2 AFFECTS CONTINUED ELIGIBILITY.—For provision

3 that terminates enrollment under this section in the

4 case of an individual who becomes eligible for cov5 erage under a group health plan or under a Federal

6 health insurance program, see section

7 1859A(d)(1)(C).

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

9 this subsection shall be construed as preventing an

10 individual who, after enrolling under this subsection,

11 terminates such enrollment from subsequently re12 enrolling under this subsection if the individual is el13 igible to enroll under this subsection at that time.’’.

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

15 so inserted, is amended—

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

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

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

19 adding at the end the following new paragraph:

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

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

22 are provided notice and an opportunity to continue

23 enrollment in accordance with section

24 1859E(c)(1).’’;
31

•S 202 IS

1 (2) in subsection (b), by inserting after Not2 withstanding any other provision of law, (1) the fol3 lowing:

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

5 the case of individuals eligible to enroll under this

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

7 apply:

8 ‘‘(A) INITIAL ENROLLMENT PERIOD.—If

9 the individual is first eligible to enroll under

10 such section for July 2000, the enrollment pe11 riod shall begin on May 1, 2000, and shall end

12 on August 31, 2000. Any such enrollment be13 fore July 1, 2000, is conditioned upon compli14 ance with the conditions of eligibility for July

15 2000.

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

18 a month after July 2000, the enrollment period

19 based on such eligibility shall begin on the first

20 day of the second month before the month in

21 which the individual first is eligible to so enroll

22 (or reenroll) and shall end 4 months later.’’;

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

25 ‘‘(B) TERMINATION BASED ON AGE.—
32

•S 202 IS

1 ‘‘(i) AT AGE 65.—Subject to clause

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

3 ‘‘(ii) AT AGE 62 FOR DISPLACED

4 WORKERS AND SPOUSES.—In the case of

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

8 years of age.’’;

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

10 the following new subparagraph:

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

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

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

17 participant or beneficiary under a group health

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

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

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

23 ‘‘(i) IN GENERAL.—The termination

24 of a coverage period under paragraph

25 (1)(A)(iii) or (1)(B)(i) shall take effect as
33

•S 202 IS

1 of the first day of the month in which the

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

4 enrolled for benefits under part B.

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

8 first day of the month in which the individ9 ual attains 62 years of age, unless the in10 dividual has enrolled under this part pur11 suant to section 1859(b) and section

12 1859E(c)(1).’’; and

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

14 the following new subparagraph:

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

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

18 the individual is eligible to begin a period of

19 creditable coverage (as defined in section

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

21 under a group health plan or under a Federal

22 health insurance program.’’.

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

24 inserted, is amended—
34

•S 202 IS

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

2 the following:

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

5 monthly premium for individuals under 62

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

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

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

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

11 ‘‘(d) BASE MONTHLY PREMIUM FOR INDIVIDUALS

12 UNDER 62 YEARS OF AGE.—

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

14 GROUPS.—

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

17 capita amount that would be payable under this

18 title with respect to individuals residing in the

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

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

24 the entire year (and assuming that section

25 1862(b)(2)(A)(i) did not apply).
35

•S 202 IS

1 ‘‘(B) AGE COHORTS.—For purposes of

2 subparagraph (A), the Secretary shall establish

3 separate age cohorts in 5-year age increments

4 for individuals who have not attained 60 years

5 of age and a separate cohort for individuals who

6 have attained 60 years of age.

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

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

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

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

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

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

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

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

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

22 Secretary provides for coverage of portions of a

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

24 shall pro-rate the premiums attributable to such cov-
36

•S 202 IS

1 erage under this section to reflect the portion of the

2 month so covered.’’.

3 (d) ADMINISTRATIVE PROVISIONS.—Section 1859F

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

5 end the following:

6 ‘‘(d) ADDITIONAL ADMINISTRATIVE PROVISIONS.—

7 ‘‘(1) PROCESS FOR CONTINUED ENROLLMENT

8 OF DISPLACED WORKERS WHO ATTAIN 62 YEARS OF

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

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

12 upon attaining 62 years of age. Under such process

13 such individuals shall be provided appropriate and

14 timely notice before the date of such termination

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

18 years of age.

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

23 the determination of whether individuals in the State

24 meet or would meet the requirements of section

25 1859(c)(1)(C)(i).’’.
37

•S 202 IS

1 (e) CONFORMING AMENDMENT TO HEADING TO

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

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

4 and inserting ‘‘55’’.

5 TITLE III—COBRA PROTECTION

6 FOR EARLY RETIREES

7 Subtitle A—Amendments to the

8 Employee Retirement Income

9 Security Act of 1974

10 SEC. 301. COBRA CONTINUATION BENEFITS FOR CERTAIN

11 RETIRED WORKERS WHO LOSE RETIREE

12 HEALTH COVERAGE.

13 (a) ESTABLISHMENT OF NEW QUALIFYING

14 EVENT.—

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

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

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

18 the following new paragraph:

19 ‘‘(7) The termination or substantial reduction

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

21 health plan coverage as a result of plan changes or

22 termination in the case of a covered employee who

23 is a qualified retiree.’’.

24 (2) QUALIFIED RETIREE; QUALIFIED BENE25 FICIARY; AND SUBSTANTIAL REDUCTION DE-
38

•S 202 IS

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

2 is amended—

3 (A) in paragraph (3)—

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

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

7 (ii) by adding at the end the following

8 new subparagraph:

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

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

12 term ‘qualified beneficiary’ means a qualified

13 retiree and any other individual who, on the day

14 before such qualifying event, is a beneficiary

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

16 relationship to such qualified retiree.’’; and

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

18 paragraphs:

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

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

22 at the time of the event—

23 ‘‘(A) has attained 55 years of age; and
39

•S 202 IS

1 ‘‘(B) was receiving group health coverage

2 under the plan by reason of the retirement of

3 the covered employee.

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

5 ‘substantial reduction’—

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

8 qualified beneficiary, a reduction in the average

9 actuarial value of benefits under the plan

10 (through reduction or elimination of benefits,

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

13 thereof), since the date of commencement of

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

16 January 6, 1999), in an amount equal to at

17 least 50 percent of the total average actuarial

18 value of the benefits under the plan as of such

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

21 time); and

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

24 level described in the fourth sentence of section

25 602(3).’’.
40

•S 202 IS

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

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

3 amended—

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

5 ‘‘603(6)’’;

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

7 inserting ‘‘, 603(6), or 603(7)’’;

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

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

10 and by moving such clause to immediately follow

11 clause (iii); and

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

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

16 SUBSTANTIAL REDUCTION OF RETIREE

17 HEALTH COVERAGE.—In the case of a

18 qualifying event described in section

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

21 is not the qualified retiree or spouse of

22 such retiree, the later of—

23 ‘‘(I) the date that is 36 months

24 after the earlier of the date the quali25 fied retiree becomes entitled to bene-
41

•S 202 IS

1 fits under title XVIII of the Social Se2 curity Act, or the date of the death of

3 the qualified retiree; or

4 ‘‘(II) the date that is 36 months

5 after the date of the qualifying

6 event.’’.

7 (c) TYPE OF COVERAGE IN CASE OF TERMINATION

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

10 is amended—

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

12 the following:

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

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

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

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

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

18 in applying the first sentence of subparagraph

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

20 the coverage offered that is the most prevalent

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

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

24 prevalent other plan offered by the same plan

25 sponsor) shall be treated as the coverage de-
42

•S 202 IS

1 scribed in such sentence, or (at the option of

2 the plan and qualified beneficiary) such other

3 coverage option as may be offered and elected

4 by the qualified beneficiary involved.’’.

5 (d) INCREASED LEVEL OF PREMIUMS PERMITTED.—

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

8 the case of an individual provided continuation coverage

9 by reason of a qualifying event described in section

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

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

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

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

17 1166) is amended—

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

19 and inserting ‘‘(6), or (7)’’; and

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

21 ‘‘The notice under paragraph (4) in the case of a qualify22 ing event described in section 603(7) shall be provided at

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

24 (f) EFFECTIVE DATES.—
43

•S 202 IS

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

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

3 apply to qualifying events occurring on or after Jan4 uary 6, 1999. In the case of a qualifying event oc5 curring on or after such date and before the date of

6 the enactment of this Act, such event shall be

7 deemed (for purposes of such amendments) to have

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

9 (2) ADVANCE NOTICE OF TERMINATIONS AND

10 REDUCTIONS.—The amendment made by subsection

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

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

13 that in no case shall notice be required under such

14 amendment before such date.

15 Subtitle B—Amendments to the

16 Public Health Service Act

17 SEC. 311. COBRA CONTINUATION BENEFITS FOR CERTAIN

18 RETIRED WORKERS WHO LOSE RETIREE

19 HEALTH COVERAGE.

20 (a) ESTABLISHMENT OF NEW QUALIFYING

21 EVENT.—

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

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

24 by inserting after paragraph (5) the following new

25 paragraph:
44

•S 202 IS

1 ‘‘(6) The termination or substantial reduction

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

3 health plan coverage as a result of plan changes or

4 termination in the case of a covered employee who

5 is a qualified retiree.’’.

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

9 300bb–8) is amended—

10 (A) in paragraph (3)—

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

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

14 (ii) by adding at the end the following

15 new subparagraph:

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

18 qualifying event described in section 2203(6),

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

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

24 and
45

•S 202 IS

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

2 paragraphs:

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

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

6 at the time of the event—

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

8 ‘‘(B) was receiving group health coverage

9 under the plan by reason of the retirement of

10 the covered employee.

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

12 ‘substantial reduction’—

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

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

17 (through reduction or elimination of benefits,

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

20 thereof), since the date of commencement of

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

23 January 6, 1999), in an amount equal to at

24 least 50 percent of the total average actuarial

25 value of the benefits under the plan as of such
46

•S 202 IS

1 date (taking into account an appropriate ad2 justment to permit comparison of values over

3 time); and

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

6 level described in the fourth sentence of section

7 2202(3).’’.

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

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

10 2(2)(A)) is amended—

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

12 and

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

14 new clause:

15 ‘‘(iii) SPECIAL RULE FOR CERTAIN

16 DEPENDENTS IN CASE OF TERMINATION

17 OR SUBSTANTIAL REDUCTION OF RETIREE

18 HEALTH COVERAGE.—In the case of a

19 qualifying event described in section

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

22 is not the qualified retiree or spouse of

23 such retiree, the later of—

24 ‘‘(I) the date that is 36 months

25 after the earlier of the date the quali-
47

•S 202 IS

1 fied retiree becomes entitled to bene2 fits under title XVIII of the Social

3 Security Act, or the date of the death

4 of the qualified retiree; or

5 ‘‘(II) the date that is 36 months

6 after the date of the qualifying

7 event.’’.

8 (c) TYPE OF COVERAGE IN CASE OF TERMINATION

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

11 2(1)) is amended—

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

13 the following:

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

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

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

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

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

19 in applying the first sentence of subparagraph

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

21 the coverage offered that is the most prevalent

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

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

25 the most prevalent other plan offered by the
48

•S 202 IS

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

4 other coverage option as may be offered and

5 elected by the qualified beneficiary involved.’’.

6 (d) INCREASED LEVEL OF PREMIUMS PERMITTED.—

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

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

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

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

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

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

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

18 300bb–6(a)) is amended—

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

20 and inserting ‘‘(4), or (6)’’; and

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

22 ‘‘The notice under paragraph (4) in the case of a qualify23 ing event described in section 2203(6) shall be provided

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

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

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

3 apply to qualifying events occurring on or after Jan4 uary 6, 1999. In the case of a qualifying event oc5 curring on or after such date and before the date of

6 the enactment of this Act, such event shall be

7 deemed (for purposes of such amendments) to have

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

9 (2) ADVANCE NOTICE OF TERMINATIONS AND

10 REDUCTIONS.—The amendment made by subsection

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

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

13 that in no case shall notice be required under such

14 amendment before such date.

15 Subtitle C—Amendments to the

16 Internal Revenue Code of 1986

17 SEC. 321. COBRA CONTINUATION BENEFITS FOR CERTAIN

18 RETIRED WORKERS WHO LOSE RETIREE

19 HEALTH COVERAGE.

20 (a) ESTABLISHMENT OF NEW QUALIFYING

21 EVENT.—

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

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

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

3 of group health plan coverage as a result of

4 plan changes or termination in the case of a

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

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

9 amended—

10 (A) in paragraph (1)—

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

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

14 (ii) by adding at the end the following

15 new subparagraph:

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

18 qualifying event described in subsection

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

20 a qualified retiree and any other individual who,

21 on the day before such qualifying event, is a

22 beneficiary under the plan on the basis of the

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

2 paragraphs:

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

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

6 who, at the time of the event—

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

8 ‘‘(B) was receiving group health coverage

9 under the plan by reason of the retirement of

10 the covered employee.

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

12 ‘substantial reduction’—

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

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

17 (through reduction or elimination of benefits,

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

20 thereof), since the date of commencement of

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

23 January 6, 1999), in an amount equal to at

24 least 50 percent of the total average actuarial

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

3 time); and

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

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

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

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

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

11 after ‘‘(3)(F)’’;

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

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

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

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

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

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

20 following new subclause:

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

2 in the case of a qualified beneficiary

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

4 is not the qualified retiree or spouse

5 of such retiree, the later of—

6 ‘‘(a) the date that is 36

7 months after the earlier of the

8 date the qualified retiree becomes

9 entitled to benefits under title

10 XVIII of the Social Security Act,

11 or the date of the death of the

12 qualified retiree; or

13 ‘‘(b) the date that is 36

14 months after the date of the

15 qualifying event.’’.

16 (c) TYPE OF COVERAGE IN CASE OF TERMINATION

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

19 amended—

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

21 the following:

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

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

2 case of a qualifying event described in

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

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

6 offered that is the most prevalent coverage

7 option (as determined under regulations of

8 the Secretary of Labor) continued under

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

10 the most prevalent other plan offered by

11 the same plan sponsor) shall be treated as

12 the coverage described in such sentence, or

13 (at the option of the plan and qualified

14 beneficiary) such other coverage option as

15 may be offered and elected by the qualified

16 beneficiary involved.’’.

17 (d) INCREASED LEVEL OF PREMIUMS PERMITTED.—

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

20 of an individual provided continuation coverage by reason

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

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

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

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

4 amended—

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

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

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

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

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

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

11 event.’’.

12 (f) EFFECTIVE DATES.—

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

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

15 apply to qualifying events occurring on or after Jan16 uary 6, 1999. 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.

Æ