II 

110TH CONGRESS 

1ST SESSION S. 173 

To amend title XVIII of the Social Security Act to establish Medicare Health 

Savings Accounts. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 4, 2007 

Mr. INHOFE (for himself and Mr. DEMINT) 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 to establish 

Medicare Health Savings Accounts. 

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. 

4 This Act may be cited as the ‘‘Medicare Health Sav5 ings Accounts Act of 2007’’. 

6 SEC. 2. ESTABLISHMENT OF MEDICARE HEALTH SAVINGS 

7 ACCOUNTS. 

8 (a) ESTABLISHMENT.— 

9 (1) IN GENERAL.—Title XVIII of the Social Se10 curity Act (42 U.S.C. 1395 et seq.) is amended— 


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1 (A) by redesignating part E as part F; and 

2 (B) by inserting after part D the following 

3 new part: 

4 ‘‘PART E—MEDICARE HEALTH SAVINGS ACCOUNTS

5 ‘‘ENTITLEMENT TO ELECT TO RECEIVE BENEFITS UNDER

6 MEDICARE HEALTH SAVINGS ACCOUNTS

7 ‘‘SEC. 1860E–1. (a) IN GENERAL.—The Secretary 

8 shall establish procedures under which each eligible bene9 ficiary (as defined in subsection (b)) shall be entitled to 

10 elect to receive benefits under a Medicare Health Savings 

11 Account under this part instead of benefits under parts 

12 A, B, or D. 

13 ‘‘(b) ELIGIBLE BENEFICIARY DESCRIBED.—An eligi14 ble beneficiary described in this subsection is an individual 

15 who— 

16 ‘‘(1) is entitled to benefits under part A or en17 rolled under part B; 

18 ‘‘(2) has a health savings account (as defined in 

19 subsection (d) of section 223 of the Internal Rev20 enue Code of 1986), or certifies that they will use 

21 funds provided under this part to establish such an 

22 account; and 

23 ‘‘(3) is enrolled under a high deductible health 

24 plan (as defined in subsection (c)(2) of such section, 

25 except that section 223(c)(2)(A)(ii)(I) of such Code 


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1 shall be applied by substituting ‘the amount in effect 

2 under clause (i)(I)’ for ‘$5,000’). 

3 ‘‘(c) BENEFITS TO BE AVAILABLE IN 2008.—The 

4 Secretary shall establish the procedures under subsection 

5 (a) in a manner such that Medicare Health Savings Ac6 counts are available for years beginning on or after Janu7 ary 1, 2008. 

8 ‘‘(d) PRESERVATION OF ORIGINAL MEDICARE FEE9 FOR-SERVICE BENEFITS.—Nothing in this part shall be 

10 construed to limit the right of an individual who is entitled 

11 to benefits under part A or enrolled under part B to re12 ceive benefits under such part (or under part C or D) if 

13 an election to receive benefits under Medicare Health Sav14 ings Accounts under this part is not in effect with respect 

15 to such individual. 

16 ‘‘(e) RULE OF CONSTRUCTION.—Nothing in this part 

17 shall be construed as preventing an individual from depos18 iting personal funds (subject to the contribution limita19 tions under section 223 of the Internal Revenue Code of 

20 1986) into a Medicare Health Savings Account. 

21 ‘‘MEDICARE HEALTH SAVINGS ACCOUNTS PROGRAM

22 ‘‘SEC. 1860E–2. (a) IN GENERAL.—The Secretary 

23 shall establish a program to be known as the Medicare 

24 Health Savings Accounts program (in this part referred 

25 to as the ‘Medicare HSA program’). 

26 ‘‘(b) AMOUNT PROVIDED TO ENROLLEES.— 


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1 ‘‘(1) AMOUNT.—The Secretary shall establish 

2 procedures to ensure that, for each plan year an in3 dividual is enrolled in the Medicare HSA program, 

4 the Secretary shall provide to such individual an 

5 amount that is equal to 95 percent of the annual 

6 MA capitation rate (as calculated under section 

7 1853(c)(1)) with respect to that individual for the 

8 Medicare Advantage payment area the individual is 

9 in. 

10 ‘‘(2) PERMISSIBLE USE OF AMOUNT.—The Sec11 retary shall establish procedures to ensure that the 

12 amount provided under paragraph (1) is used only 

13 for the following purposes: 

14 ‘‘(A) As a contribution into a health sav15 ings account established by such individual, as 

16 described in paragraph (2) of section 1860E– 

17 1(b). 

18 ‘‘(B) For payment of premiums for enroll19 ment of such individual under a high deductible 

20 health plan described in paragraph (3) of such 

21 section. 

22 ‘‘(3) NOTIFICATION OF AMOUNT PROVIDED.— 

23 The Secretary shall ensure that, not later than the 

24 date that is 90 days before the date on which pay25 ment of the amount provided under paragraph (1) 


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1 is made to an individual enrolled in the Medicare 

2 HSA program, such individual receives notification 

3 of such amount. Such information shall be made 

4 available on the website of the Centers for Medicare 

5 & Medicaid Services (based on the age and geo6 graphic location of the beneficiary) and through 1– 

7 800–MEDICARE. 

8 ‘‘(4) PAYMENT.—Payment of the amount pro9 vided under paragraph (1) shall be made from the 

10 Federal Hospital Insurance Trust Fund and the 

11 Federal Supplementary Medical Insurance Trust 

12 Fund (including the Medicare Prescription Drug Ac13 count within such Trust Fund) in such proportion 

14 as the Secretary determines appropriate. 

15 ‘‘(5) RECOVERY OF AMOUNT PROVIDED IN CASE

16 OF TERMINATION.— 

17 ‘‘(A) IN GENERAL.—In the case of a termi18 nation of an election to receive benefits under 

19 this part as of a month before the end of a plan 

20 year, the Secretary shall provide for a proce21 dure for the recovery of amounts provided at22 tributable to the remaining months in such 

23 year. 

24 ‘‘(B) PENALTY.— 


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1 ‘‘(i) IN GENERAL.—In addition to the 

2 amount recovered under subparagraph (A), 

3 if the Secretary determines there was 

4 fraud involved in such termination, the 

5 Secretary may apply a civil money penalty 

6 of not more than 25 percent of the amount 

7 recovered. 

8 ‘‘(ii) CIVIL MONEY PENALTY.—The 

9 provisions of section 1128A (other than 

10 subsections (a) and (b)) shall apply to a 

11 civil money penalty under this subpara12 graph in the same manner as they apply to 

13 a civil money penalty or proceeding under 

14 section 1128A(a). 

15 ‘‘(c) PAYMENT FOR ITEMS AND SERVICES.—The Sec16 retary shall establish procedures under which providers of 

17 services and suppliers (as defined in sections 1861(u) and 

18 1861(d), respectively) are required to accept as payment 

19 for items and services provided to an individual enrolled 

20 in the Medicare HSA program under this part the amount 

21 that would otherwise be paid under the original Medicare 

22 fee-for-service program under parts A and B. 

23 ‘‘ELECTION OF BENEFITS UNDER MEDICARE HSA

24 PROGRAM; TERMINATION OF ELECTION

25 ‘‘SEC. 1860E–3. The Secretary shall establish proce26 dures for the election of benefits, and the termination of 


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1 such election, as appropriate, under the Medicare HSA 

2 program.’’. 

3 (2) CONFORMING REFERENCES TO PREVIOUS

4 PART E.—Any reference in law (in effect before the 

5 date of the enactment of this Act) to part E of title 

6 XVIII of the Social Security Act is deemed a ref7 erence to part F of such title (as in effect after such 

8 date). 

9 (b) AMENDMENT OF INTERNAL REVENUE CODE OF

10 1986.— 

11 (1) IN GENERAL.—Paragraph (7) of section 

12 223(b) of the Internal Revenue Code of 1986 (relat13 ing to medicare eligible individuals) is amended to 

14 read as follows: 

15 ‘‘(7) MEDICARE ELIGIBLE INDIVIDUALS.—The 

16 limitation under this subsection for any month with 

17 respect to an individual shall be zero for any month 

18 such individual is entitled to benefits under part A, 

19 B, or D of title XVIII of the Social Security Act.’’. 

20 (2) EFFECTIVE DATE.—The amendment made 

21 by this subsection shall apply to taxable years begin22 ning on or after January 1, 2008. 

23 (c) SUNSET OF MSA PROVISIONS.—Section 

24 1851(a)(2)(B) of the Social Security Act (42 U.S.C. 

25 1395w–21(a)(2)(B)) is amended— 


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1 (1) by striking ‘‘MSA.— An MSA plan,’’ and 

2 inserting the following: ‘‘MSA.— 

3 ‘‘(i) Subject to clause (ii), an MSA 

4 plan,’’; and 

5 (2) by inserting after clause (i), as added by 

6 paragraph (1), the following new clause: 

7 ‘‘(ii) Beginning on January 1, 2008, 

8 the plan described in clause (i) shall not be 

9 available as a Medicare Advantage plan 

10 under this part.’’. 

Æ 


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