II 

108TH CONGRESS 

1ST SESSION S. 1935

To amend the Public Health Service Act to require employers to offer health 

care coverage for all employees, to amend the Social Security Act to 

guarantee comprehensive health care coverage for all children born after 

2001, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 23, 2003

Mr. CORZINE introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL

To amend the Public Health Service Act to require employers 

to offer health care coverage for all employees, to amend 

the Social Security Act to guarantee comprehensive 

health care coverage for all children born after 2001, 

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; FINDINGS. 

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

5 ‘‘Universal Secure Access to Health Care Act of 2003’’. 

6 (b) FINDINGS.—
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1 (1) In 2002, 43,600,000 Americans, nearly 

2 17.2 percent of the total nonelderly population, were 

3 uninsured. 

4 (2) The number of uninsured has grown by 

5 nearly 10,000,000 over the past decade. 

6 (3) While 61 percent of Americans receive 

7 health insurance coverage through their employers, 

8 millions of Americans lack access to such coverage 

9 either because their employer does not offer such 

10 coverage or the employer cannot afford to pay for 

11 such coverage. 

12 (4) Today, fewer Americans have health insur13 ance through their employment to cover themselves 

14 and their dependents than 10 years ago. 

15 (5) Eighty-two percent of the individuals that 

16 are uninsured in the United States are in working 

17 families. 

18 (6) Low-wage workers have more difficulty ob19 taining affordable health care coverage since such 

20 workers are less likely than high-wage workers to 

21 have such coverage offered as a benefit by an em22 ployer, and prohibitive premiums for individually 

23 purchased coverage often prevents such workers 

24 from purchasing such coverage independently. 
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1 (7) The consequences of our nation’s significant 

2 uninsured population are devastating. 

3 (8) The uninsured are significantly more likely 

4 to delay or forego needed health care. 

5 (9) The uninsured are less likely to receive pre6 ventive health care. 

7 (10) Delaying or foregoing health care treat8 ment when such treatment is needed can produce 

9 unnecessarily dire and expensive results. More severe 

10 health care conditions may arise and more expensive 

11 health care treatments, such as costly hospitaliza12 tions, may be necessary even though such conditions 

13 or treatments could have been avoided by the initial 

14 provision of adequate and timely health care. The 

15 uninsured, for example, are more likely to be hos16 pitalized for conditions that could have been avoided, 

17 such as pneumonia and uncontrolled diabetes, than 

18 the insured. The uninsured with various forms of 

19 cancer are also more likely to be diagnosed with late 

20 stage cancer than the insured. 

21 SEC. 2. AMENDMENT TO THE PUBLIC HEALTH SERVICE 

22 ACT. 

23 The Public Health Service Act (42 U.S.C. 201 et 

24 seq.) is amended by adding at the end the following: 
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1 ‘‘TITLE XXVIII—UNIVERSAL 

2 HEALTH INSURANCE COVERAGE 

3 ‘‘Subtitle A—Employer Mandated 

4 Health Insurance Coverage 

5 ‘‘SEC. 2801. EMPLOYER MANDATED HEALTH INSURANCE 

6 COVERAGE. 

7 ‘‘(a) IN GENERAL.—Each employer shall offer to en8 roll each of its employees and their families in a standard 

9 health benefit plan. 

10 ‘‘(b) STANDARD HEALTH BENEFIT PLAN.—For pur11 poses of this title, the term ‘standard health benefit plan’ 

12 means a plan that provides benefits for health care items 

13 and services that are actuarily equivalent or greater in 

14 value than the benefits offered as of January 1, 2000, 

15 under the Blue Cross/Blue Shield Standard Option Plan 

16 provided under the Federal Employees Health Benefit 

17 Program under chapter 89 of title 5, United States Code. 

18 ‘‘(c) PART-TIME EMPLOYEES.—Subsection (a) shall 

19 apply to part-time employees. 

20 ‘‘SEC. 2802. TYPE OF COVERAGE. 

21 ‘‘(a) IN GENERAL.—Each standard health benefit 

22 plan offered by an employer under section 2801(a) shall 

23 conform to the requirements of this section. 

24 ‘‘(b) PROHIBITION AGAINST DISCRIMINATION.—A 

25 standard health benefit plan offered by an employer under 
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1 section 2801(a) shall not establish rules for eligibility of 

2 any individual to enroll under the plan or exclude or other3 wise limit any individual from coverage under the plan 

4 based on—

5 ‘‘(1) medical history; 

6 ‘‘(2) health status; 

7 ‘‘(3) a preexisting medical condition, disease, or 

8 disorder; or 

9 ‘‘(4) genetic information. 

10 ‘‘(c) OPEN ENROLLMENT.—A standard health ben11 efit plan offered by an employer under section 2801(a) 

12 shall offer an annual open enrollment period during which 

13 an individual may change enrollment from such plan to 

14 another standard health benefit plan offered by such em15 ployer. 

16 ‘‘(d) MEDICALLY NECESSARY SERVICES.—A stand17 ard health benefit plan offered by an employer under sec18 tion 2801(a) shall, if such plan provides coverage for a 

19 certain health care item or service, provide coverage for 

20 such item or service if a doctor determines that such item 

21 or service is medically necessary. 

22 ‘‘(e) DATE OF INITIAL COVERAGE.—In the case of 

23 an employee enrolled in a standard health benefit plan 

24 provided by an employer under section 2801(a), the cov25 erage under such plan shall commence not later than 5 
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1 days after the day on which the employee first performs 

2 an hour of service as an employee of that employer. No 

3 waiting period beyond this initial 5-day period may be im4 posed regarding such coverage. 

5 ‘‘SEC. 2803. PREMIUMS. 

6 ‘‘(a) IN GENERAL.—Each employer shall—

7 ‘‘(1) contribute to the cost of any standard 

8 health benefit plan that an employee has enrolled in 

9 in accordance with this section; and 

10 ‘‘(2) withhold from wages of an employee, the 

11 employee share of the premium assessed for cov12 erage under the standard health benefit plan. 

13 ‘‘(b) CONTRIBUTION.—

14 ‘‘(1) EMPLOYER SHARE.—

15 ‘‘(A) FULL-TIME EMPLOYEES.—Each em16 ployer who has enrolled an employee in a stand17 ard health benefit plan shall contribute not less 

18 than 72 percent of the monthly premium for 

19 such employee. 

20 ‘‘(B) PART-TIME EMPLOYEES.—

21 ‘‘(i) PRO-RATED PORTION PAID.—

22 Each employer who has enrolled a part23 time employee in a standard health benefit 

24 plan shall pay a portion of the monthly 

25 premium for such employee that is pro-
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1 rated to correspond with the number of 

2 hours of work that such employee has pro3 vided during the past month. 

4 ‘‘(ii) EXCEPTION.—No employer con5 tribution is required under this section 

6 with respect to an employee who works less 

7 than 10 hours per week. 

8 ‘‘(2) EMPLOYEE SHARE.—

9 ‘‘(A) IN GENERAL.—Each employee en10 rolled in a standard health benefit plan under 

11 section 2801(a) shall pay the remaining portion 

12 of the monthly premium after payment by the 

13 employer as required under subsection (a). 

14 ‘‘(B) PART-TIME EMPLOYEES.—An em15 ployee who is enrolled in a standard health ben16 efit plan under section 2801(a) and works for 

17 such employer for not more than 30 hours and 

18 not less than 10 hours per week shall be eligible 

19 for a subsidy to aid such employee in paying his 

20 or her portion of the monthly premium. 

21 ‘‘(3) LOW-INCOME EMPLOYEES.—An employee 

22 who is enrolled in a standard health benefit plan 

23 under section 2801(a) whose family income does not 

24 exceed 250 percent of the poverty line (as defined by 

25 the Office of Management and Budget, and revised 
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1 annually in accordance with section 673(2) of the 

2 Community Services Block Grant Act (42 U.S.C. 

3 9902(2)) as applicable to a family of the size in4 volved, shall be eligible to receive a subsidy from the 

5 State as described in subtitle B to aid in payment 

6 of premiums. 

7 ‘‘SEC. 2804. ENFORCEMENT. 

8 ‘‘(a) STATE INELIGIBILITY FOR PUBLIC HEALTH

9 SERVICE ACT FUNDS.—An employer that is a State or 

10 political subdivision of a State or an agency or instrumen11 tality of a State or political subdivision that does not com12 ply with the requirements of this title shall not be eligible 

13 to receive a grant, contract, cooperative agreement, loan, 

14 or loan guarantee under this Act. 

15 ‘‘(b) CIVIL PENALTY FOR PRIVATE EMPLOYERS.—

16 ‘‘(1) IN GENERAL.—Any nongovernmental em17 ployer that does not comply with this title shall be 

18 subject to a civil penalty of not more than 10 per19 cent of the total amount of the employer’s expendi20 tures for wages for employees in that year. 

21 ‘‘(2) ASSESSMENT PROCEDURE.—A civil money 

22 penalty under this section shall be assessed by the 

23 Secretary and collected in a civil action brought by 

24 the United States in a United States district court. 

25 The Secretary shall not assess such a penalty on an 
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1 employer until the employer has been given notice 

2 and an opportunity to present its views on such 

3 charge. 

4 ‘‘(3) AMOUNT OF PENALTY.—In determining 

5 the amount of the penalty, or the amount agreed to 

6 in compromise, the Secretary shall consider the 

7 gravity of the noncompliance and the demonstrated 

8 good faith of the employer charged in attempting to 

9 achieve rapid compliance after notification of a viola10 tion of this title. 

11 ‘‘SEC. 2805. DEFINITIONS. 

12 ‘‘In this title: 

13 ‘‘(1) EMPLOYER.—The term ‘employer’ means, 

14 with respect to a calendar year and plan year, an 

15 employer that employed an average of at least 50 

16 full-time employees on business days during the pre17 ceding calendar year and employs not less than 50 

18 employees on the first day of the plan year. 

19 ‘‘(2) PART-TIME EMPLOYEE.—The term ‘part20 time employee’ means any individual employed by an 

21 employer who works less than 40 hours a week. 

22 ‘‘(3) WAITING PERIOD.—The term ‘waiting pe23 riod’ means, with respect to a plan and an individual 

24 who is a potential beneficiary or participant in the 

25 plan, the period that must pass with respect to the 
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1 individual before the individual is eligible to be cov2 ered for benefits under the terms of the 

3 plan.noncompliance by the Secretary. 

4 ‘‘SEC. 2806. EFFECTIVE DATE. 

5 ‘‘This title shall take effect 2 years after the date of 

6 enactment of the Universal Secure Access to Health Care 

7 Act of 2003. 

8 ‘‘Subtitle B—Individual and 

9 Employer Subsidies 

10 ‘‘SEC. 2811. SUBSIDY PROGRAM. 

11 ‘‘(a) IN GENERAL.—The Secretary shall establish a 

12 Federal program to award grants to States for State pre13 mium assistance programs. 

14 ‘‘(b) FEDERAL PROGRAM.—

15 ‘‘(1) IN GENERAL.—The Secretary shall estab16 lish a Federal program that shall set all standards 

17 for administration of State programs, receive appli18 cations from States for the establishment of such 

19 programs, and receive reports from States regarding 

20 the developments of such programs. 

21 ‘‘(2) REGULATIONS.—The Secretary shall pro22 mulgate regulations specifying requirements for 

23 State programs under this subtitle, including—

24 ‘‘(A) standards for determining eligibility 

25 for premium assistance;
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1 ‘‘(B) standards for States operating pro2 grams under this subtitle which ensure that 

3 such programs are operated in a uniform man4 ner with respect to application procedures, data 

5 processing systems, and such other administra6 tive activities as the Secretary determines to be 

7 necessary; and 

8 ‘‘(C) standards for accepting reports re9 garding developments of such programs. 

10 ‘‘(3) CONTENT.—The regulations described in 

11 paragraph (2) shall require that a State program—

12 ‘‘(A) enable an individual to file an appli13 cation for assistance with an agency designated 

14 by the State at any time, in person, by mail, or 

15 online; 

16 ‘‘(B) provide for the use of an application 

17 form developed by the Secretary; 

18 ‘‘(C) make applications accessible at loca19 tions where individuals are most likely to obtain 

20 the applications; 

21 ‘‘(D) require individuals to submit revised 

22 applications to reflect changes in estimated 

23 family incomes, including changes in employ24 ment status of family members, during the 

25 year, and the State shall revise the amount of 
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1 any premium assistance based on such a revised 

2 application; and 

3 ‘‘(E) provide for verification of the infor4 mation supplied in applications under this sub5 title, including examining return information 

6 disclosed to the State. 

7 ‘‘(4) APPLICATION.—The Secretary shall de8 velop an application form for assistance to be used 

9 by a State which shall— 

10 ‘‘(A) be simple in form and understandable 

11 to the average individual; 

12 ‘‘(B) require the provision of information 

13 necessary to make a determination as to wheth14 er an individual is eligible for assistance, includ15 ing a declaration of estimated income by the in16 dividual based, at the election of the indi17 vidual—

18 ‘‘(I) on multiplying by a factor of 4 

19 the individual’s family income for the 3-

20 month period immediately preceding the 

21 month in which the application is made; or 

22 ‘‘(II) on estimated income for the en23 tire year for which the application is sub24 mitted; and 
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1 ‘‘(C) require attachment of such docu2 mentation as deemed necessary by the Sec3 retary in order to ensure eligibility for assist4 ance. 

5 ‘‘(c) STATE ADMINISTRATION.—

6 ‘‘(1) IN GENERAL.—A State shall have in effect 

7 a program for furnishing premium assistance in ac8 cordance with this subtitle. 

9 ‘‘(2) DESIGNATION OF STATE AGENCY.—A 

10 State may designate any appropriate State agency to 

11 administer the program under this subtitle. 

12 ‘‘(3) EFFECTIVENESS OF ELIGIBILITY.—A de13 termination by a State that an individual is eligible 

14 for premium assistance shall be effective for the cal15 endar year for which such determination is made un16 less a revised application indicates that an individual 

17 is no longer eligible for assistance. 

18 ‘‘SEC. 2812. SUBSIDIES FOR LOW-INCOME WORKERS. 

19 ‘‘(a) IN GENERAL.—A low-income worker shall be eli20 gible for premium assistance if such worker is eligible 

21 under subsection (b). 

22 ‘‘(b) ELIGIBILITY.—A low-income worker is eligible 

23 for premium assistance under subsection (a) if the State 

24 determines that such worker has a family income which 

25 does not exceed 250 percent of the poverty line (as defined 
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1 by the Office of Management and Budget, and revised an2 nually in accordance with section 673(2) of the Commu3 nity Services Block Grant Act (42 U.S.C. 9902(2)) as ap4 plicable to a family of the size involved. 

5 ‘‘(c) AMOUNT OF ASSISTANCE.—The amount of pre6 mium assistance for a month for a low-income worker de7 termined to be eligible under subsection (b) shall be deter8 mined by the Secretary. 

9 ‘‘(d) PAYMENTS.—The amount of the premium as10 sistance available to a low-income worker shall be paid by 

11 the State in which the individual resides directly to the 

12 standard health plan in which the individual is enrolled. 

13 Payments under the preceding sentence shall commence 

14 in the first month during which the individual is enrolled 

15 in a standard health benefit plan and determined to be 

16 eligible for premium assistance under this subtitle. 

17 ‘‘SEC. 2813. SUBSIDIES FOR SMALL BUSINESS EMPLOYERS. 

18 ‘‘(a) IN GENERAL.—A small business employer that 

19 offers to enroll its employees and their families in a stand20 ard health benefit plan shall be eligible for premium assist21 ance if the State determines that such employer qualifies 

22 for such assistance under subsection (b). 

23 ‘‘(b) ELIGIBILITY.—A small business employer is eli24 gible for premium assistance if such employer employs an 

25 average of not more than 75 full-time employees on busi-
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1 ness days during the preceding calendar year and employs 

2 not more than 75 employees on the first day of the plan 

3 year. 

4 ‘‘(c) AMOUNT OF ASSISTANCE.—The amount of pre5 mium assistance for a small business employer for a 

6 month shall be determined by the Secretary. 

7 ‘‘(d) PAYMENTS.—The amount of the premium as8 sistance available to a small business employer shall be 

9 paid by the State in which the business is located directly 

10 to the standard health benefit plan in which the employee 

11 of such business is enrolled. Payments under the preceding 

12 sentence shall commence in the first month during which 

13 the employee is enrolled in a standard health benefit plan 

14 and the employer is determined to be eligible for premium 

15 assistance under this subtitle. 

16 ‘‘Subtitle C—Election of Coverage 

17 ‘‘SEC. 2815. ELECTION OF COVERAGE. 

18 ‘‘(a) IN GENERAL.—A small business employer as de19 scribed in subsection (b) may elect to enroll its employees 

20 in—

21 ‘‘(1) a plan provided under the Federal Em22 ployees Health Benefit Program under chapter 89 of 

23 title 5, United States Code; or
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1 ‘‘(2) the medicare program under title XVIII of 

2 the Social Security Act (42 U.S.C. 1395 et seq.), if 

3 such employees are not less than 50 years of age. 

4 ‘‘(b) SMALL BUSINESS EMPLOYER.—In this section, 

5 the term ‘small business employer’ means an employer 

6 that employs an average of not more than 75 full-time 

7 employees on business days during the preceding calendar 

8 year and employs not more than 75 employees on the first 

9 day of the plan year. 

10 ‘‘Subtitle D—Community Rating 

11 ‘‘SEC. 2821. COMMUNITY RATING. 

12 ‘‘(a) IN GENERAL.—Each State shall establish com13 munity rating areas in which standard health benefit plans 

14 shall offer a standard premium in accordance with this 

15 subtitle for enrollment for all eligible individuals. 

16 ‘‘(b) COMMUNITY RATING AREAS.—

17 ‘‘(1) IN GENERAL.—In accordance with this 

18 subtitle, each State shall, subject to approval of the 

19 Secretary, provide for the division of the State into 

20 1 or more community rating areas. 

21 ‘‘(2) REVISION OF AREAS.—Each State may, 

22 subject to approval of the Secretary, redraw the 

23 boundaries of such community rating areas as de24 scribed in paragraph (1) if such revision is reason25 able or necessary. 
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1 ‘‘(3) MULTIPLE AREAS.—With respect to a 

2 community rating area—

3 ‘‘(A) no metropolitan statistical area in a 

4 State may be incorporated into more than 1 

5 such area in the State; 

6 ‘‘(B) the number of individuals residing 

7 within such an area may not be less than 

8 250,000; and 

9 ‘‘(C) no area incorporated in a community 

10 rating area may be incorporated into another 

11 such area. 

12 ‘‘(4) NONDISCRIMINATION.—In establishing 

13 boundaries for community rating areas, a State shall 

14 not directly or through contractual arrangements—

15 ‘‘(A) deny or limit access to or the avail16 ability of health care services, or otherwise dis17 criminate in connection with the provision of 

18 health care services; or 

19 ‘‘(B) limit, segregate, or classify an indi20 vidual in any way which would deprive or tend 

21 to deprive such individual of health care serv22 ices, or otherwise adversely affect his or her ac23 cess to health care services; 
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1 on the basis of race, national origin, sex, religion, 

2 language, income, age, sexual orientation, disability, 

3 health status, or anticipated need for health services. 

4 ‘‘(5) COORDINATING MULTIPLE COMMUNITY

5 RATING AREAS.—Nothing in this section shall be 

6 construed as preventing a State from coordinating 

7 the activities of 1 or more community rating areas 

8 in the State. 

9 ‘‘(6) INTERSTATE COMMUNITY RATING

10 AREAS.—Community rating areas with respect to 

11 interstate areas shall be established in accordance 

12 with rules established by the Secretary. 

13 ‘‘(7) COORDINATION IN MULTI-STATE AREAS.—

14 One or more States may coordinate their operations 

15 in contiguous community rating areas. Such coordi16 nation may include, the adoption of joint operating 

17 rules, contracting with standard health benefit plans, 

18 enforcement activities, and establishment of fee 

19 schedules for health providers. 

20 ‘‘(c) OPEN ENROLLMENT.—Each State, based on 

21 rules and procedures established by the Secretary, shall 

22 specify a uniform annual open enrollment period for each 

23 community rating area during which all eligible individuals 

24 are permitted the opportunity to change enrollment among 

25 the standard health benefit plans offered to such individ-
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1 uals in such area under this Act. The initial annual open 

2 enrollment period shall be for a period of 90 days. 

3 ‘‘(d) STANDARD PREMIUM.—Each standard health 

4 benefit plan shall establish within each community rating 

5 area in which the plan is to be offered a standard premium 

6 for enrollment of eligible individuals who seek enrollment 

7 in such plan. 

8 ‘‘(e) UNIFORM PREMIUMS WITHIN COMMUNITY RAT9 ING AREAS.—

10 ‘‘(1) IN GENERAL.—Subject to paragraphs (2) 

11 and (3), the standard premium for each group 

12 health plan to which this section applies shall be the 

13 same, but shall not include the costs of premium 

14 processing and enrollment. 

15 ‘‘(2) APPLICATION TO ENROLLEES.—

16 ‘‘(A) IN GENERAL.—The premium charged 

17 for coverage in a group health plan which cov18 ers eligible employees and eligible individuals 

19 shall be the product of—

20 ‘‘(i) the standard premium (estab21 lished under paragraph (1)); 

22 ‘‘(ii) in the case of enrollment other 

23 than individual enrollment, the family ad24 justment factor specified under subpara25 graph (B); and 
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1 ‘‘(iii) the age adjustment factor (spec2 ified under subparagraph (C)). 

3 ‘‘(B) FAMILY ADJUSTMENT FACTOR.—

4 ‘‘(i) IN GENERAL.—The Secretary 

5 shall specify family adjustment factors that 

6 reflect the relative actuarial costs of ben7 efit packages based on family classes of en8 rollment (as compared with such costs for 

9 individual enrollment). 

10 ‘‘(ii) CLASSES OF ENROLLMENT.—For 

11 purposes of this subtitle, there are 4 class12 es of enrollment: 

13 ‘‘(I) Coverage only of an indi14 vidual (referred to in this subtitle as 

15 the ‘individual’ enrollment or class of 

16 enrollment). 

17 ‘‘(II) Coverage of a married cou18 ple without children (referred to in 

19 this subtitle as the ‘couple-only’ en20 rollment or class of enrollment). 

21 ‘‘(III) Coverage of an individual 

22 and one or more children (referred to 

23 in this subtitle as the ‘single parent’ 

24 enrollment or class of enrollment).
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1 ‘‘(IV) Coverage of a married cou2 ple and one or more children (referred 

3 to in this subtitle as the ‘dual parent’ 

4 enrollment or class of enrollment). 

5 ‘‘(iii) REFERENCES TO FAMILY AND

6 COUPLE CLASSES OF ENROLLMENT.—In 

7 this subtitle: 

8 ‘‘(I) FAMILY.—The terms ‘family 

9 enrollment’ and ‘family class of enroll10 ment’ refer to enrollment in a class of 

11 enrollment described in any subclause 

12 of clause (ii) (other than subclause 

13 (I)). 

14 ‘‘(II) COUPLE.—The term ‘couple 

15 class of enrollment’ refers to enroll16 ment in a class of enrollment de17 scribed in subclause (II) or (IV) of 

18 clause (ii). 

19 ‘‘(iv) SPOUSE; MARRIED; COUPLE.—

20 ‘‘(I) IN GENERAL.—In this sub21 title, the terms ‘spouse’ and ‘married’ 

22 mean, with respect to an individual, 

23 another individual who is the spouse 

24 of, or is married to, the individual, as 
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1 determined under applicable State 

2 law. 

3 ‘‘(II) COUPLE.—The term ‘cou4 ple’ means an individual and the indi5 vidual’s spouse. 

6 ‘‘(C) AGE ADJUSTMENT FACTOR.—The 

7 Secretary shall specify uniform age categories 

8 and maximum rating increments for age adjust9 ment factors that reflect the relative actuarial 

10 costs of benefit packages among enrollees. For 

11 individuals who have attained age 18 but not 

12 age 65, the highest age adjustment factor may 

13 not exceed 3 times the lowest age adjustment 

14 factor.’’. 

15 SEC. 3. TAX DEDUCTION FOR SELF-EMPLOYED. 

16 (a) IN GENERAL.—Paragraph (1) of section 162(l) 

17 of the Internal Revenue Code of 1986 is amended to read 

18 as follows: 

19 ‘‘(l) ALLOWANCE OF DEDUCTION.—In the case 

20 of an individual who is an employee within the 

21 meaning of section 401(c)(1), there shall be allowed 

22 as a deduction under this section an amount equal 

23 to 100 percent of the amount paid during the tax24 able year for insurance which constitutes medical 
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1 care for the taxpayer, the taxpayer’s spouse, and 

2 taxpayer’s dependents.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply to taxable years beginning after 

5 December 31, 2004. 

6 SEC. 4. ACCESS TO MEDICARE BENEFITS FOR INDIVIDUALS 

7 62-TO-65 YEARS OF AGE. 

8 (a) IN GENERAL.—Title XVIII of the Social Security 

9 Act is amended—

10 (1) by redesignating section 1859 and part D 

11 as section 1858 and part E, respectively; and 

12 (2) by inserting after such section the following 

13 new part:

14 ‘‘PART D—PURCHASE OF MEDICARE BENEFITS BY

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

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

17 ‘‘(a) ENTITLEMENT TO MEDICARE BENEFITS FOR

18 ENROLLED INDIVIDUALS.—

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

20 under this part is entitled to the same benefits 

21 under this title as an individual entitled to benefits 

22 under part A and enrolled under part B. 

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

24 ‘‘(A) FEDERAL OR STATE COBRA CONTINU25 ATION PROVISION.—The term ‘Federal or State 
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1 COBRA continuation provision’ has the mean2 ing given the term ‘COBRA continuation provi3 sion’ in section 2791(d)(4) of the Public Health 

4 Service Act and includes a comparable State 

5 program, as determined by the Secretary. 

6 ‘‘(B) FEDERAL HEALTH INSURANCE PRO7 GRAM DEFINED.—The term ‘Federal health in8 surance program’ means any of the following: 

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

10 this title (other than by reason of this 

11 part). 

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

13 title XIX. 

14 ‘‘(iii) FEHBP.—The Federal employ15 ees health benefit program under chapter 

16 89 of title 5, United States Code. 

17 ‘‘(iv) TRICARE.—The TRICARE 

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

19 title 10, United States Code). 

20 ‘‘(v) ACTIVE DUTY MILITARY.—Health 

21 benefits under title 10, United States 

22 Code, to an individual as a member of the 

23 uniformed services of the United States.

24 ‘‘(C) GROUP HEALTH PLAN.—The term 

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

2 Service Act.

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

4 YEARS OF AGE.—

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

6 an individual who meets the following requirements 

7 with respect to a month is eligible to enroll under 

8 this part with respect to such month: 

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

10 month, the individual has attained 62 years of 

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

12 ‘‘(B) MEDICARE ELIGIBILITY (BUT FOR

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

15 the individual were 65 years of age. 

16 ‘‘(C) NOT ELIGIBLE FOR COVERAGE

17 UNDER GROUP HEALTH PLANS OR FEDERAL

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

20 under a Federal health insurance program (as 

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

22 group health plan (other than such eligibility 

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

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

3 paragraph (1) enrolls under this part and coverage 

4 of the individual is terminated under section 

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

6 is not again eligible to enroll under this subsection 

7 unless the following requirements are met: 

8 ‘‘(A) NEW COVERAGE UNDER GROUP

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

11 of coverage under such section, the individual 

12 obtains coverage under a group health plan or 

13 under a Federal health insurance program. 

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

19 under a Federal or State COBRA continuation 

20 provision. 

21 ‘‘(3) CHANGE IN HEALTH PLAN ELIGIBILITY

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

23 individual who is eligible for and enrolls under this 

24 part under this subsection, the individual’s continued 

25 entitlement to benefits under this part shall not be 
27

•S 1935 IS 

1 affected by the individual’s subsequent eligibility for 

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

3 or entitlement to such benefits or coverage. 

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

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

6 program established under this part only in such manner 

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

8 during an enrollment period prescribed by the Secretary 

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

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

12 are permitted to pre-enroll during a prior month 

13 within an enrollment period described in subsection 

14 (b); and 

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

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

19 65 years of age as determined under section 

20 1859B(c)(3). 

21 ‘‘(b) ENROLLMENT PERIODS.—

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

23 the case of individuals eligible to enroll under this 

24 part under section 1859(b)—
28

•S 1935 IS 

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

2 the individual is eligible to enroll under such 

3 section for July 2002, the enrollment period 

4 shall begin on May 1, 2002, and shall end on 

5 August 31, 2002. Any such enrollment before 

6 July 1, 2002, is conditioned upon compliance 

7 with the conditions of eligibility for July 2002. 

8 ‘‘(B) SUBSEQUENT PERIODS.—If the indi9 vidual is eligible to enroll under such section for 

10 a month after July 2002, the enrollment period 

11 shall begin on the first day of the second month 

12 before the month in which the individual first is 

13 eligible to so enroll and shall end 4 months 

14 later. Any such enrollment before the first day 

15 of the third month of such enrollment period is 

16 conditioned upon compliance with the condi17 tions of eligibility for such third month. 

18 ‘‘(2) AUTHORITY TO CORRECT FOR GOVERN19 MENT ERRORS.—The provisions of section 1837(h) 

20 apply with respect to enrollment under this part in 

21 the same manner as they apply to enrollment under 

22 part B.

23 ‘‘(c) DATE COVERAGE BEGINS.—

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

25 an individual is entitled to benefits under this part 
29

•S 1935 IS 

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

2 July 1, 2002:

3 ‘‘(A) In the case of an individual who en4 rolls (including pre-enrolls) before the month in 

5 which the individual satisfies eligibility for en6 rollment under section 1859, the first day of 

7 such month of eligibility. 

8 ‘‘(B) In the case of an individual who en9 rolls during or after the month in which the in10 dividual first satisfies eligibility for enrollment 

11 under such section, the first day of the fol12 lowing month. 

13 ‘‘(2) AUTHORITY TO PROVIDE FOR PARTIAL

14 MONTHS OF COVERAGE.—Under regulations, the 

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

16 for coverage periods that include portions of a 

17 month in order to avoid lapses of coverage. 

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

19 may be made under this title with respect to the ex20 penses of an individual enrolled under this part un21 less such expenses were incurred by such individual 

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

23 is a coverage period under this section. 

24 ‘‘(d) TERMINATION OF COVERAGE.—
30

•S 1935 IS 

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

2 period under this part shall continue until the indi3 vidual’s enrollment has been terminated at the ear4 liest of the following: 

5 ‘‘(A) GENERAL PROVISIONS.—

6 ‘‘(i) NOTICE.—The individual files no7 tice (in a form and manner prescribed by 

8 the Secretary) that the individual no 

9 longer wishes to participate in the insur10 ance program under this part. 

11 ‘‘(ii) NONPAYMENT OF PREMIUMS.—

12 The individual fails to make payment of 

13 premiums required for enrollment under 

14 this part. 

15 ‘‘(iii) MEDICARE ELIGIBILITY.—The 

16 individual becomes entitled to benefits 

17 under part A or enrolled under part B 

18 (other than by reason of this part). 

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

20 individual attains 65 years of age. 

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

22 ‘‘(A) NOTICE.—The termination of a cov23 erage period under paragraph (1)(A)(i) shall 

24 take effect at the close of the month following 

25 for which the notice is filed.
31

•S 1935 IS 

1 ‘‘(B) NONPAYMENT OF PREMIUM.—The 

2 termination of a coverage period under para3 graph (1)(A)(ii) shall take effect on a date de4 termined under regulations, which may be de5 termined so as to provide a grace period in 

6 which overdue premiums may be paid and cov7 erage continued. The grace period determined 

8 under the preceding sentence shall not exceed 

9 60 days; except that it may be extended for an 

10 additional 30 days in any case where the Sec11 retary determines that there was good cause for 

12 failure to pay the overdue premiums within 

13 such 60-day period. 

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

15 The termination of a coverage period under 

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

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

18 individual attains 65 years of age or becomes 

19 entitled to benefits under part A or enrolled for 

20 benefits under part B (other than by reason of 

21 this part). 

22 ‘‘SEC. 1859B. PREMIUMS. 

23 ‘‘(a) AMOUNT OF MONTHLY PREMIUMS.—

24 ‘‘(1) BASE MONTHLY PREMIUMS.—The Sec25 retary shall, during September of each year (begin-
32

•S 1935 IS 

1 ning with 2001), determine the following premium 

2 rates which shall apply with respect to coverage pro3 vided under this title for any month in the suc4 ceeding year: 

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

7 monthly premium for individuals 62 years of 

age or older is equal to 1 8 ⁄12 of the base annual 

9 premium rate computed under subsection (b) 

10 for each premium area. 

11 ‘‘(B) DEFERRED MONTHLY PREMIUMS FOR

12 INDIVIDUALS 62 YEARS OF AGE OR OLDER.—

13 The Secretary shall, during September of each 

14 year (beginning with 2001), determine under 

15 subsection (c) the amount of deferred monthly 

16 premiums that shall apply with respect to indi17 viduals who first obtain coverage under this 

18 part under section 1859(b) in the succeeding 

19 year. 

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

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

22 means such an area as the Secretary shall specify to 

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

24 may change the boundaries of such premium areas. 
33

•S 1935 IS 

1 The Secretary shall seek to minimize the number of 

2 such areas specified under this paragraph. 

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

4 YEARS OF AGE OR OLDER.—

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

6 Secretary shall estimate the average, annual per 

7 capita amount that would be payable under this title 

8 with respect to individuals residing in the United 

9 States who meet the requirement of section 

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

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

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

13 did not apply). 

14 ‘‘(2) GEOGRAPHIC ADJUSTMENT.—The Sec15 retary shall reduce, as determined appropriate, the 

16 amount determined under paragraph (1) for a pre17 mium area (specified under subsection (a)(3)) that 

18 has costs below the national average, in order to as19 sure participation in all areas throughout the United 

20 States. 

21 ‘‘(3) BASE ANNUAL PREMIUM.—The base an22 nual premium under this subsection for months in a 

23 year for individuals 62 years of age or older residing 

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

25 per capita amount estimated under paragraph (1) 
34

•S 1935 IS 

1 for the year, adjusted for such area under paragraph 

2 (2). 

3 ‘‘(c) DEFERRED PREMIUM RATE FOR INDIVIDUALS

4 62 YEARS OF AGE OR OLDER.—The deferred premium 

5 rate for individuals with a group of individuals who obtain 

6 coverage under section 1859(b) in a year shall be com7 puted by the Secretary as follows: 

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

9 ANNUAL AVERAGE EXPENDITURES FOR ENROLL10 MENT GROUP.—The Secretary shall estimate the av11 erage, per capita annual amount that will be paid 

12 under this part for individuals in such group during 

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

14 making such estimate for coverage beginning in a 

15 year before 2006, the Secretary may base such esti16 mate on the average, per capita amount that would 

17 be payable if the program had been in operation over 

18 a previous period of at least 4 years. 

19 ‘‘(2) DIFFERENCE BETWEEN ESTIMATED EX20 PENDITURES AND ESTIMATED PREMIUMS.—Based 

21 on the characteristics of individuals in such group, 

22 the Secretary shall estimate during the period of 

23 coverage of the group under this part under section 

24 1859(b) the amount by which—
35

•S 1935 IS 

1 ‘‘(A) the amount estimated under para2 graph (1); exceeds 

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

4 amount of premiums that will be payable for 

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

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

8 terminations in enrollment under clause (i) or 

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

10 ‘‘(3) ACTUARIAL COMPUTATION OF DEFERRED

11 MONTHLY PREMIUM RATES.—The Secretary shall 

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

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

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

16 equal to 

17 ‘‘(B) the estimated actuarial present value 

18 of the differences described in paragraph (2). 

19 Such rate shall be computed for each individual in 

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

21 the number of months between the first month of 

22 coverage based on enrollment under section 1859(b) 

23 and the month in which the individual attains 65 

24 years of age.
36

•S 1935 IS 

1 ‘‘(4) DETERMINANTS OF ACTUARIAL PRESENT

2 VALUES.—The actuarial present values described in 

3 paragraph (3) shall reflect—

4 ‘‘(A) the estimated probabilities of survival 

5 at ages 62 through 84 for individuals enrolled 

6 during the year; and 

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

9 held in the trust funds under this title during 

10 the period in question. 

11 ‘‘SEC. 1859C. PAYMENT OF PREMIUMS. 

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

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

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

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

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

19 payment of monthly premiums under section 1840, 

20 except that, for purposes of applying this section, 

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

23 reference to the Trust Fund established under sec24 tion 1859D. 
37

•S 1935 IS 

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

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

4 be payable for the period commencing with the first 

5 month of the individual’s coverage period and ending 

6 with the month in which the individual’s coverage 

7 under this title terminates. 

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

10 ‘‘(1) RATE OF PAYMENT.—

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

13 month pursuant to an enrollment under section 

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

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

20 1859B(c). 

21 ‘‘(B) SPECIAL RULES FOR THOSE WHO

22 DISENROLL EARLY.—

23 ‘‘(i) IN GENERAL.—If such an individ24 ual’s enrollment under such section is ter25 minated under clause (i) or (ii) of section 
38

•S 1935 IS 

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

2 amount of the deferred premium otherwise 

3 established under this paragraph shall be 

4 pro-rated to reflect the number of months 

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

9 were not so terminated. 

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

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

14 rounded to the next highest multiple of 12 

15 months, except that in no case shall this 

16 clause result in a number of months of 

17 coverage exceeding the maximum number 

18 of months of coverage that the individual 

19 would have had if the enrollment were not 

20 so terminated. 

21 ‘‘(2) PERIOD OF PAYMENT.—The period de22 scribed in this paragraph for an individual is the pe23 riod beginning with the first month in which the in24 dividual has attained 65 years of age and ending 
39

•S 1935 IS 

1 with the month before the month in which the indi2 vidual attains 85 years of age. 

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

4 who is liable for a premium under this subsection, 

5 the amount of the premium shall be collected in the 

6 same manner as the premium for enrollment under 

7 such part is collected under section 1840, except 

8 that any reference in such section to the Federal 

9 Supplementary Medical Insurance Trust Fund is 

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

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

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

14 shall apply to premiums collected under this section in the 

15 same manner as they apply to premiums collected under 

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

17 Federal Supplementary Medical Insurance Trust Fund is 

18 deemed a reference to the Trust Fund established under 

19 section 1859D. 

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

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

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

23 the books of the Treasury of the United States a 

24 trust fund to be known as the ‘Medicare Early Ac25 cess Trust Fund’ (in this section referred to as the 
40

•S 1935 IS 

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

2 gifts and bequests as may be made as provided in 

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

5 in this title. 

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

7 section 1859B shall be transferred to the Trust 

8 Fund. 

9 ‘‘(b) INCORPORATION OF PROVISIONS.—

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

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

12 apply with respect to the Trust Fund and this title 

13 in the same manner as they apply with respect to 

14 the Federal Supplementary Medical Insurance Trust 

15 Fund and part B, respectively. 

16 ‘‘(2) MISCELLANEOUS REFERENCES.—In apply17 ing provisions of section 1841 under paragraph 

18 (1)—

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

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

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

22 section 1840(d) and in section 1841(i) to sec23 tions 1840(b)(1) and 1842(g) are deemed ref24 erences to comparable authority exercised under 

25 this part; and
41

•S 1935 IS 

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

2 1841(g) to the trust funds under sections 1817 

3 and 1841 as reimbursement to such funds for 

4 payments they made for benefits provided 

5 under this part. 

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

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

8 The Board of Trustees of the Medicare Early Access 

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

10 annual basis to Congress concerning the status of the 

11 Trust Fund and the need for adjustments in the program 

12 under this part to maintain financial solvency of the pro13 gram under this part. 

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

15 General of the United States shall periodically submit to 

16 Congress reports on the adequacy of the financing of cov17 erage provided under this part. The Comptroller General 

18 shall include in such report such recommendations for ad19 justments in such financing and coverage as the Comp20 troller General deems appropriate in order to maintain fi21 nancial solvency of the program under this part.

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

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

24 Except as otherwise provided in this part—
42

•S 1935 IS 

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

2 be treated for purposes of this title as though the in3 dividual was entitled to benefits under part A and 

4 enrolled under part B; and 

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

6 payable under this title to such an individual in the 

7 same manner as if such individual was so entitled 

8 and enrolled. 

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

10 PURPOSES OF MEDICAID PROGRAM.—For purposes of ap11 plying title XIX (including the provision of medicare cost12 sharing assistance under such title), an individual who is 

13 enrolled under this part shall not be treated as being enti14 tled to benefits under this title. 

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

16 PURPOSES OF COBRA CONTINUATION PROVISIONS.—In 

17 applying a COBRA continuation provision (as defined in 

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

19 reference to an entitlement to benefits under this title 

20 shall not be construed to include entitlement to benefits 

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

22 (b) CONFORMING AMENDMENTS TO SOCIAL SECU23 RITY ACT PROVISIONS.—

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

25 (42 U.S.C. 401(i)(1)) is amended by striking ‘‘or the 
43

•S 1935 IS 

1 Federal Supplementary Medical Insurance Trust 

2 Fund’’ and inserting ‘‘the Federal Supplementary 

3 Medical Insurance Trust Fund, and the Medicare 

4 Early Access Trust Fund’’. 

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

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

7 the Federal Supplementary Medical Insurance Trust 

8 Fund established by title XVIII’’ and inserting

9 ‘‘, the Federal Supplementary Medical Insurance 

10 Trust Fund, and the Medicare Early Access Trust 

11 Fund established by title XVIII’’. 

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

13 1395i–4(i)) is amended by striking ‘‘part D’’ and in14 serting ‘‘part E’’. 

15 (4) Part C of title XVIII of such Act is amend16 ed—

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

18 1395w–21(a)(2)(B)), by striking ‘‘1859(b)(3)’’ 

19 and inserting ‘‘1858(b)(3)’’; 

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

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

22 and inserting ‘‘1858(b)(2)’’; 

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

24 1395w–22(a)(1)), by striking ‘‘1859(b)(3)’’ and 

25 inserting ‘‘1858(b)(3)’’; 
44

•S 1935 IS 

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

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

3 ‘‘1859(b)(2)(B)’’ and inserting 

4 ‘‘1858(b)(2)(B)’’;

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

6 1395w–23(a)(1)(A)), by striking ‘‘1859(e)(4)’’ 

7 and inserting ‘‘1858(e)(4)’’; and 

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

9 1395w–23(a)(3)(D)), by striking ‘‘1859(e)(4)’’ 

10 and inserting ‘‘1858(e)(4)’’. 

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

12 1395w–23(c)) is amended—

13 (A) in paragraph (1), by striking ‘‘and 

14 (7)’’ and inserting ‘‘, (7), and (8)’’, and 

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

16 ‘‘(8) ADJUSTMENT FOR EARLY ACCESS.—In ap17 plying this subsection with respect to individuals en18 titled to benefits under part D, the Secretary shall 

19 provide for an appropriate adjustment in the 

20 Medicare+Choice capitation rate as may be appro21 priate to reflect differences between the population 

22 served under such part and the population under 

23 parts A and B.’’. 

24 (c) OTHER CONFORMING AMENDMENTS.—
45

•S 1935 IS 

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

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

3 and inserting ‘‘1858(b)(3)’’. 

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

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

6 1162(2)) is amended by inserting ‘‘(not including an 

7 individual who is so entitled pursuant to enrollment 

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

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

10 Service Act (42 U.S.C. 300bb–2(2)(D)(ii)) is amend11 ed by inserting ‘‘(not including an individual who is 

12 so entitled pursuant to enrollment under section 

13 1859A)’’ after ‘‘Social Security Act’’. 

14 (C) Section 4980B(f)(2)(B)(i)(V) of the Inter15 nal Revenue Code of 1986 is amended by inserting 

16 ‘‘(not including an individual who is so entitled pur17 suant to enrollment under section 1859A)’’ after 

18 ‘‘Social Security Act’’. 

19 SEC. 5. ACCESS TO MEDICARE BENEFITS FOR DISPLACED 

20 WORKERS 55-TO-62 YEARS OF AGE. 

21 (a) ELIGIBILITY.—Section 1859 of the Social Secu22 rity Act, as inserted by section 4(a)(2), is amended by 

23 adding at the end the following new subsection: 

24 ‘‘(c) DISPLACED WORKERS AND SPOUSES.—
46

•S 1935 IS 

1 ‘‘(1) DISPLACED WORKERS.—Subject to para2 graph (3), an individual who meets the following re3 quirements with respect to a month is eligible to en4 roll under this part with respect to such month: 

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

6 month, the individual has attained 55 years of 

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

8 ‘‘(B) MEDICARE ELIGIBILITY (BUT FOR

9 AGE).—The individual would be eligible for ben10 efits under part A or B for the month if the in11 dividual were 65 years of age. 

12 ‘‘(C) LOSS OF EMPLOYMENT-BASED COV13 ERAGE.—

14 ‘‘(i) ELIGIBLE FOR UNEMPLOYMENT

15 COMPENSATION.—The individual meets the 

16 requirements relating to period of covered 

17 employment and conditions of separation 

18 from employment to be eligible for unem19 ployment compensation (as defined in sec20 tion 85(b) of the Internal Revenue Code of 

21 1986), based on a separation from employ22 ment occurring on or after January 1, 

23 2001. The previous sentence shall not be 

24 construed as requiring the individual to be 
47

•S 1935 IS 

1 receiving such unemployment compensa2 tion. 

3 ‘‘(ii) LOSS OF EMPLOYMENT-BASED

4 COVERAGE.—Immediately before the time 

5 of such separation of employment, the indi6 vidual was covered under a group health 

7 plan on the basis of such employment, and, 

8 because of such loss, is no longer eligible 

9 for coverage under such plan (including 

10 such eligibility based on the application of 

11 a Federal or State COBRA continuation 

12 provision) as of the last day of the month 

13 involved. 

14 ‘‘(iii) PREVIOUS CREDITABLE COV15 ERAGE FOR AT LEAST 1 YEAR.—As of the 

16 date on which the individual loses coverage 

17 described in clause (ii), the aggregate of 

18 the periods of creditable coverage (as de19 termined under section 2701(c) of the 

20 Public Health Service Act) is 12 months or 

21 longer. 

22 ‘‘(D) EXHAUSTION OF AVAILABLE COBRA

23 CONTINUATION BENEFITS.—
48

•S 1935 IS 

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

2 individual described in clause (ii) for a 

3 month described in clause (iii)—

4 ‘‘(I) the individual (or spouse) 

5 elected coverage described in clause 

6 (ii); and 

7 ‘‘(II) the individual (or spouse) 

8 has continued such coverage for all 

9 months described in clause (iii) in 

10 which the individual (or spouse) is eli11 gible for such coverage. 

12 ‘‘(ii) INDIVIDUALS TO WHOM COBRA

13 CONTINUATION COVERAGE MADE AVAIL14 ABLE.—An individual described in this 

15 clause is an individual—

16 ‘‘(I) who was offered coverage 

17 under a Federal or State COBRA 

18 continuation provision at the time of 

19 loss of coverage eligibility described in 

20 subparagraph (C)(ii); or 

21 ‘‘(II) whose spouse was offered 

22 such coverage in a manner that per23 mitted coverage of the individual at 

24 such time. 
49

•S 1935 IS 

1 ‘‘(iii) MONTHS OF POSSIBLE COBRA

2 CONTINUATION COVERAGE.—A month de3 scribed in this clause is a month for which 

4 an individual described in clause (ii) could 

5 have had coverage described in such clause 

6 as of the last day of the month if the indi7 vidual (or the spouse of the individual, as 

8 the case may be) had elected such coverage 

9 on a timely basis. 

10 ‘‘(E) NOT ELIGIBLE FOR COVERAGE

11 UNDER FEDERAL HEALTH INSURANCE PRO12 GRAM OR GROUP HEALTH PLANS.—The indi13 vidual is not eligible for benefits or coverage 

14 under a Federal health insurance program or 

15 under a group health plan (whether on the 

16 basis of the individual’s employment or employ17 ment of the individual’s spouse) as of the last 

18 day of the month involved.

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

20 to paragraph (3), an individual who meets the fol21 lowing requirements with respect to a month is eligi22 ble to enroll under this part with respect to such 

23 month: 
50

•S 1935 IS 

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

2 month, the individual has not attained 62 years 

3 of age. 

4 ‘‘(B) MARRIED TO DISPLACED WORKER.—

5 The individual is the spouse of an individual at 

6 the time the individual enrolls under this part 

7 under paragraph (1) and loses coverage de8 scribed in paragraph (1)(C)(ii) because the in9 dividual’s spouse lost such coverage. 

10 ‘‘(C) MEDICARE ELIGIBILITY (BUT FOR

11 AGE); EXHAUSTION OF ANY COBRA CONTINU12 ATION COVERAGE; AND NOT ELIGIBLE FOR COV13 ERAGE UNDER FEDERAL HEALTH INSURANCE

14 PROGRAM OR GROUP HEALTH PLAN.—The indi15 vidual meets the requirements of subparagraphs 

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

17 ‘‘(3) CHANGE IN HEALTH PLAN ELIGIBILITY

18 AFFECTS CONTINUED ELIGIBILITY.—For provision 

19 that terminates enrollment under this section in the 

20 case of an individual who becomes eligible for cov21 erage under a group health plan or under a Federal 

22 health insurance program, see section 

23 1859A(d)(1)(C). 

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

25 this subsection shall be construed as preventing an
51

•S 1935 IS 

1 individual who, after enrolling under this subsection, 

2 terminates such enrollment from subsequently re3 enrolling under this subsection if the individual is 

4 eligible to enroll under this subsection at that 

5 time.’’. 

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

7 so inserted, is amended—

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

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

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

11 adding at the end the following new paragraph: 

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

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

14 are provided notice and an opportunity to continue 

15 enrollment in accordance with section 

16 1859E(c)(1).’’; 

17 (2) in subsection (b), by inserting after Not18 withstanding any other provision of law, (1) the fol19 lowing: 

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

21 the case of individuals eligible to enroll under this 

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

23 apply: 

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

25 the individual is first eligible to enroll under 
52

•S 1935 IS 

1 such section for July 2005, the enrollment pe2 riod shall begin on May 1, 2002, and shall end 

3 on August 31, 2002. Any such enrollment be4 fore July 1, 2002, is conditioned upon compli5 ance with the conditions of eligibility for July 

6 2002.

7 ‘‘(B) SUBSEQUENT PERIODS.—If the indi8 vidual is eligible to enroll under such section for 

9 a month after July 2002, the enrollment period 

10 based on such eligibility shall begin on the first 

11 day of the second month before the month in 

12 which the individual first is eligible to so enroll 

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

14 (3) in subsection (d)(1), by amending subpara15 graph (B) to read as follows: 

16 ‘‘(B) TERMINATION BASED ON AGE.—

17 ‘‘(i) AT AGE 65.—Subject to clause 

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

19 ‘‘(ii) AT AGE 62 FOR DISPLACED

20 WORKERS AND SPOUSES.—In the case of 

21 an individual enrolled under this part pur22 suant to section 1859(c), subject to sub23 section (a)(1), the individual attains 62 

24 years of age.’’; 
53

•S 1935 IS 

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

2 the following new subparagraph: 

3 ‘‘(C) OBTAINING ACCESS TO EMPLOYMENT4 BASED COVERAGE OR FEDERAL HEALTH INSUR5 ANCE PROGRAM FOR INDIVIDUALS UNDER 62

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

7 who has not attained 62 years of age, the indi8 vidual is covered (or eligible for coverage) as a 

9 participant or beneficiary under a group health 

10 plan or under a Federal health insurance pro11 gram.’’; 

12 (5) in subsection (d)(2), by amending subpara13 graph (C) to read as follows: 

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

15 ‘‘(i) IN GENERAL.—The termination 

16 of a coverage period under paragraph 

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

18 of the first day of the month in which the 

19 individual attains 65 years of age or be20 comes entitled to benefits under part A or 

21 enrolled for benefits under part B.

22 ‘‘(ii) DISPLACED WORKERS.—The ter23 mination of a coverage period under para24 graph (1)(B)(ii) shall take effect as of the 

25 first day of the month in which the indi-
54

•S 1935 IS 

1 vidual attains 62 years of age, unless the 

2 individual has enrolled under this part pur3 suant to section 1859(b) and section 

4 1859E(c)(1).’’; and 

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

6 the following new subparagraph: 

7 ‘‘(D) ACCESS TO COVERAGE.—The termi8 nation of a coverage period under paragraph 

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

10 the individual is eligible to begin a period of 

11 creditable coverage (as defined in section 

12 2701(c) of the Public Health Service Act) 

13 under a group health plan or under a Federal 

14 health insurance program.’’. 

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

16 inserted, is amended—

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

18 the following: 

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

21 monthly premium for individuals under 62 

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

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

24 for each premium area and age cohort.’’; and 
55

•S 1935 IS 

1 (2) by adding at the end the following new sub2 section: 

3 ‘‘(d) BASE MONTHLY PREMIUM FOR INDIVIDUALS

4 UNDER 62 YEARS OF AGE.—

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

6 GROUPS.—

7 ‘‘(A) ESTIMATE OF AMOUNT.—The Sec8 retary shall estimate the average, annual per 

9 capita amount that would be payable under this 

10 title with respect to individuals residing in the 

11 United States who meet the requirement of sec12 tion 1859(c)(1)(A) within each of the age co13 horts established under subparagraph (B) as if 

14 all such individuals within such cohort were eli15 gible for (and enrolled) under this title during 

16 the entire year (and assuming that section 

17 1862(b)(2)(A)(i) did not apply). 

18 ‘‘(B) AGE COHORTS.—For purposes of 

19 subparagraph (A), the Secretary shall establish 

20 separate age cohorts in 5-year age increments 

21 for individuals who have not attained 60 years 

22 of age and a separate cohort for individuals who 

23 have attained 60 years of age. 

24 ‘‘(2) GEOGRAPHIC ADJUSTMENT.—The Sec25 retary shall adjust the amount determined under 
56

•S 1935 IS 

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

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

3 the same extent as the Secretary provides for adjust4 ments under subsection (b)(2). 

5 ‘‘(3) BASE ANNUAL PREMIUM.—The base an6 nual premium under this subsection for months in a 

7 year for individuals in an age cohort under para8 graph (1)(B) in a premium area is equal to 165 per9 cent of the average, annual per capita amount esti10 mated under paragraph (1) for the age cohort and 

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

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

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

14 Secretary provides for coverage of portions of a 

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

16 shall pro-rate the premiums attributable to such cov17 erage under this section to reflect the portion of the 

18 month so covered.’’. 

19 (d) ADMINISTRATIVE PROVISIONS.—Section 1859F 

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

21 end the following: 

22 ‘‘(d) ADDITIONAL ADMINISTRATIVE PROVISIONS.—

23 ‘‘(1) PROCESS FOR CONTINUED ENROLLMENT

24 OF DISPLACED WORKERS WHO ATTAIN 62 YEARS OF

25 AGE.—The Secretary shall provide a process for the 
57

•S 1935 IS 

1 continuation of enrollment of individuals whose en2 rollment under section 1859(c) would be terminated 

3 upon attaining 62 years of age. Under such process 

4 such individuals shall be provided appropriate and 

5 timely notice before the date of such termination 

6 and of the requirement to enroll under this part pur7 suant to section 1859(b) in order to continue entitle8 ment to benefits under this title after attaining 62 

9 years of age. 

10 ‘‘(2) ARRANGEMENTS WITH STATES FOR DE11 TERMINATIONS RELATING TO UNEMPLOYMENT COM12 PENSATION ELIGIBILITY.—The Secretary may pro13 vide for appropriate arrangements with States for 

14 the determination of whether individuals in the State 

15 meet or would meet the requirements of section 

16 1859(c)(1)(C)(i).’’. 

17 (e) CONFORMING AMENDMENT TO HEADING TO

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

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

20 and inserting ‘‘55’’. 

21 SEC. 6. PROVISIONS TO MAKE FEHBP COVERAGE AVAIL22 ABLE FOR THE SELF-EMPLOYED. 

23 Chapter 89 of title 5, United States Code, is amended 

24 by adding at the end the following: 
58

•S 1935 IS 

1 ‘‘§ 8915. Expanded access to coverage for the self-em2 ployed 

3 ‘‘(a) The Office of Personnel Management (referred 

4 to in this section as the ‘Office’) shall administer a health 

5 insurance program for eligible individuals who are non6 Federal employees in accordance with this section. 

7 ‘‘(b) The term ‘eligible individual’ means a self-em8 ployed individual as defined in section 401(c)(1) of the In9 ternal Revenue Code of 1986. 

10 ‘‘(c) The Office shall prescribe regulations to apply 

11 the provisions of this chapter to the greatest extent prac12 ticable to eligible individuals covered under this section. 

13 ‘‘(d) In no event shall the enactment of this section 

14 result in—

15 ‘‘(1) any increase in the level of individual or 

16 Government contributions required under this chap17 ter, including copayments or deductibles; 

18 ‘‘(2) any decrease in the types of benefits of19 fered under this chapter; or 

20 ‘‘(3) any other change that would adversely af21 fect the coverage afforded under this chapter to em22 ployees and annuitants and members of family 

23 under this chapter. 

24 ‘‘(e) The Office shall develop methods to facilitate en25 rollment under this section, including the use of the Inter26 net. 
59

•S 1935 IS 

1 ‘‘(f) The Office may enter into contracts for the per2 formance of appropriate administrative functions under 

3 this chapter. 

4 ‘‘(g) Each contract entered into under section 8902 

5 shall require a carrier to offer to eligible individuals under 

6 this chapter, throughout each term for which the contract 

7 remains effective, the same benefits (subject to the same 

8 maximums, limitations, exclusions, and other similar 

9 terms or conditions) as would be offered under such con10 tract or applicable health benefits plan to employees, an11 nuitants, and members of family. 

12 ‘‘(h)(1) The Office may waive the requirements of 

13 this section, if the Office determines, based on a petition 

14 submitted by a carrier that— 

15 ‘‘(A) the carrier is unable to offer the applicable 

16 health benefits plan because of a limitation in the 

17 capacity of the plan to deliver services or assure fi18 nancial solvency; 

19 ‘‘(B) the applicable health benefits plan is not 

20 sponsored by a carrier licensed under applicable 

21 State law; or 

22 ‘‘(C) bona fide enrollment restrictions make the 

23 application of this chapter inappropriate, including 

24 restrictions common to plans which are limited to in25 dividuals having a past or current employment rela-
60

•S 1935 IS 

1 tionship with a particular agency or other authority 

2 of the Government. 

3 ‘‘(2) The Office may require a petition under this 

4 subsection to include—

5 ‘‘(A) a description of the efforts the carrier 

6 proposes to take in order to offer the applicable 

7 health benefits plan under this chapter; and 

8 ‘‘(B) the proposed date for offering such a 

9 health benefits plan. 

10 ‘‘(3) A waiver under this section may be for any pe11 riod determined by the Office. The Office may grant sub12 sequent waivers under this section. 

13 ‘‘(i) The Office shall provide for the implementation 

14 of procedures to provide for an annual open enrollment 

15 period during which eligible individuals may enroll with 

16 a plan or contract for coverage under this section. 

17 ‘‘(j) Except as the Office may by regulation prescribe, 

18 any reference to this chapter (or any requirement of this 

19 chapter), made in any provision of law, shall not be consid20 ered to include this section (or any requirement of this 

21 section). 

22 ‘‘(k) This section shall take effect on the date of en23 actment of this section and shall apply to contracts that 

24 take effect with respect to calendar year 2002 and each 

25 calendar year thereafter.’’.
61

•S 1935 IS 

1 SEC. 7. MEDIKIDS HEALTH INSURANCE. 

2 (a) BENEFITS FOR ALL CHILDREN BORN AFTER

3 2002.—

4 (1) IN GENERAL.—The Social Security Act is 

5 amended by adding at the end the following: 

6 ‘‘TITLE XXII—MEDIKIDS PROGRAM 

7 ‘‘SEC. 2201. ELIGIBILITY. 

8 ‘‘(a) ELIGIBILITY OF INDIVIDUALS BORN AFTER DE9 CEMBER 31, 2002; ALL CHILDREN UNDER 23 YEARS OF

10 AGE IN SIXTH YEAR.—An individual who meets the fol11 lowing requirements with respect to a month is eligible to 

12 enroll under this title with respect to such month: 

13 ‘‘(1) AGE.—

14 ‘‘(A) FIRST YEAR.—During the first year 

15 in which this title is effective, the individual has 

16 not attained 6 years of age. 

17 ‘‘(B) SECOND YEAR.—During the second 

18 year in which this title is effective, the indi19 vidual has not attained 11 years of age. 

20 ‘‘(C) THIRD YEAR.—During the third year 

21 in which this title is effective, the individual has 

22 not attained 16 years of age. 

23 ‘‘(D) FOURTH YEAR.—During the fourth 

24 year in which this title is effective, the indi25 vidual has not attained 21 years of age.
62

•S 1935 IS 

1 ‘‘(E) FIFTH AND SUBSEQUENT YEARS.—

2 During the fifth year in which this title is effec3 tive and each subsequent year, the individual 

4 has not attained 23 years of age. 

5 ‘‘(2) CITIZENSHIP.—The individual is a citizen 

6 or national of the United States or is permanently 

7 residing in the United States under color of law. 

8 ‘‘(b) ENROLLMENT PROCESS.—An individual may 

9 enroll in the program established under this title only in 

10 such manner and form as may be prescribed by regula11 tions, and only during an enrollment period prescribed by 

12 the Secretary consistent with the provisions of this section. 

13 Such regulations shall provide a process under which—

14 ‘‘(1) individuals who are born in the United 

15 States after December 31, 2002, are deemed to be 

16 enrolled at the time of birth and a parent or guard17 ian of such an individual is permitted to pre-enroll 

18 in the month prior to the expected month of birth; 

19 ‘‘(2) individuals who are born outside the 

20 United States after such date and who become eligi21 ble to enroll by virtue of immigration into (or an ad22 justment of immigration status in) the United 

23 States are deemed enrolled at the time of entry or 

24 adjustment of status; 
63

•S 1935 IS 

1 ‘‘(3) eligible individuals may otherwise be en2 rolled at such other times and manner as the Sec3 retary shall specify, including the use of outstationed 

4 eligibility sites as described in section 

5 1902(a)(55)(A) and the use of presumptive eligi6 bility provisions like those described in section 

7 1920A; and 

8 ‘‘(4) at the time of automatic enrollment of a 

9 child, the Secretary provides for issuance to a parent 

10 or custodian of the individual a card evidencing cov11 erage under this title and for a description of such 

12 coverage. 

13 The provisions of section 1837(h) apply with respect to 

14 enrollment under this title in the same manner as they 

15 apply to enrollment under part B of title XVIII. 

16 ‘‘(c) DATE COVERAGE BEGINS.—

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

18 an individual is entitled to benefits under this title 

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

20 January 1, 2003: 

21 ‘‘(A) In the case of an individual who is 

22 enrolled under paragraph (1) or (2) of sub23 section (b), the date of birth or date of obtain24 ing appropriate citizenship or immigration sta25 tus, as the case may be. 
64

•S 1935 IS 

1 ‘‘(B) In the case of an another individual 

2 who enrolls (including pre-enrolls) before the 

3 month in which the individual satisfies eligi4 bility for enrollment under subsection (a), the 

5 first day of such month of eligibility. 

6 ‘‘(C) In the case of an another individual 

7 who enrolls during or after the month in which 

8 the individual first satisfies eligibility for enroll9 ment under such subsection, the first day of the 

10 following 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 title 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) EXPIRATION OF ELIGIBILITY.—An individual’s 

23 coverage period under this part shall continue until the 

24 individual’s enrollment has been terminated because the 

25 individual no longer meets the requirements of subsection 
65

•S 1935 IS 

1 (a) (whether because of age or change in immigration sta2 tus). 

3 ‘‘(e) ENTITLEMENT TO MEDIKIDS BENEFITS FOR

4 ENROLLED INDIVIDUALS.—An individual enrolled under 

5 this section is entitled to the benefits described in section 

6 2202. 

7 ‘‘(f) LOW-INCOME INFORMATION.—At the time of en8 rollment of a child under this title, the Secretary shall 

9 make an inquiry as to whether or not the family income 

10 of the family that includes the child is less than 150 per11 cent of the poverty line for a family of the size involved. 

12 If the family income is below such level, the Secretary shall 

13 encode in the identification card issued in connection with 

14 eligibility under this title a code indicating such fact. The 

15 Secretary also shall provide for a toll-free telephone line 

16 at which providers can verify whether or not such a child 

17 is in a family the income of which is below such level. 

18 ‘‘(g) CONSTRUCTION.—Nothing in this title shall be 

19 construed as requiring (or preventing) an individual who 

20 is enrolled under this section from seeking medical assist21 ance under a State medicaid plan under title XIX or child 

22 health assistance under a State child health plan under 

23 title XXI.
66

•S 1935 IS 

1 ‘‘SEC. 2202. BENEFITS. 

2 ‘‘(a) SECRETARIAL SPECIFICATION OF BENEFIT

3 PACKAGE.—

4 ‘‘(1) IN GENERAL.—The Secretary shall specify 

5 the benefits to be made available under this title 

6 consistent with the provisions of this section and in 

7 a manner designed to meet the health needs of en8 rollees. 

9 ‘‘(2) UPDATING.—The Secretary shall update 

10 the specification of benefits over time to ensure the 

11 inclusion of age-appropriate benefits to reflect the 

12 enrollee population. 

13 ‘‘(3) ANNUAL UPDATING.—The Secretary shall 

14 establish procedures for the annual review and up15 dating of such benefits to account for changes in 

16 medical practice, new information from medical re17 search, and other relevant developments in health 

18 science. 

19 ‘‘(4) INPUT.—The Secretary shall seek the 

20 input of the pediatric community in specifying and 

21 updating such benefits. 

22 ‘‘(5) LIMITATION ON UPDATING.—In no case 

23 shall updating of benefits under this subsection re24 sult in a failure to provide benefits required under 

25 subsection (b). 

26 ‘‘(b) INCLUSION OF CERTAIN BENEFITS.—
67

•S 1935 IS 

1 ‘‘(1) MEDICARE CORE BENEFITS.—Such bene2 fits shall include (to the extent consistent with other 

3 provisions of this section) at least the same benefits 

4 (including coverage, access, availability, duration, 

5 and beneficiary rights) that are available under 

6 parts A and B of title XVIII. 

7 ‘‘(2) ALL REQUIRED MEDICAID BENEFITS.—

8 Such benefits shall also include all items and serv9 ices for which medical assistance is required to be 

10 provided under section 1902(a)(10)(A) to individuals 

11 described in such section, including early and peri12 odic screening, diagnostic services, and treatment 

13 services. 

14 ‘‘(3) INCLUSION OF PRESCRIPTION DRUGS.—

15 Such benefits also shall include (as specified by the 

16 Secretary) prescription drugs and biologicals. 

17 ‘‘(4) COST-SHARING.—

18 ‘‘(A) IN GENERAL.—Subject to subpara19 graph (B), such benefits also shall include the 

20 cost-sharing (in the form of deductibles, coin21 surance, and copayments) applicable under title 

22 XVIII with respect to comparable items and 

23 services, except that no cost-sharing shall be 

24 imposed with respect to early and periodic 
68

•S 1935 IS 

1 screening and diagnostic services included 

2 under paragraph (2). 

3 ‘‘(B) NO COST-SHARING FOR LOWEST IN4 COME CHILDREN.—Such benefits shall not in5 clude any cost-sharing for children in families 

6 the income of which (as determined for pur7 poses of section 1905(p)) does not exceed 150 

8 percent of the official income poverty line (re9 ferred to in such section) applicable to a family 

10 of the size involved. 

11 ‘‘(C) REFUNDABLE CREDIT FOR COST12 SHARING FOR OTHER LOW-INCOME CHIL13 DREN.—For a refundable credit for cost-shar14 ing in the case of children in certain families, 

15 see section 35 of the Internal Revenue Code of 

16 1986. 

17 ‘‘(c) PAYMENT SCHEDULE.—The Secretary, with the 

18 assistance of the Medicare Payment Advisory Commission, 

19 shall develop and implement a payment schedule for bene20 fits covered under this title. To the extent feasible, such 

21 payment schedule shall be consistent with comparable pay22 ment schedules and reimbursement methodologies applied 

23 under parts A and B of title XVIII. 
69

•S 1935 IS 

1 ‘‘(d) INPUT.—The Secretary shall specify such bene2 fits and payment schedules only after obtaining input from 

3 appropriate child health providers and experts. 

4 ‘‘(e) ENROLLMENT IN HEALTH PLANS.—The Sec5 retary shall provide for the offering of benefits under this 

6 title through enrollment in a health benefit plan that 

7 meets the same (or similar) requirements as the require8 ments that apply to Medicare+Choice plans under part 

9 C of title XVIII. In the case of individuals enrolled under 

10 this title in such a plan, the Medicare+Choice capitation 

11 rate described in section 1853(c) shall be adjusted in an 

12 appropriate manner to reflect differences between the pop13 ulation served under this title and the population under 

14 title XVIII. 

15 ‘‘SEC. 2203. PREMIUMS. 

16 ‘‘(a) AMOUNT OF MONTHLY PREMIUMS.—

17 ‘‘(1) IN GENERAL.—The Secretary shall, during 

18 September of each year (beginning with 2002), es19 tablish a monthly MediKids premium. Subject to 

20 paragraph (2), the monthly MediKids premium for 

a year is equal to 1 21 ⁄12 of the annual premium rate 

22 computed under subsection (b). 

23 ‘‘(2) ELIMINATION OF MONTHLY PREMIUM FOR

24 DEMONSTRATION OF EQUIVALENT COVERAGE (IN25 CLUDING COVERAGE UNDER LOW-INCOME PRO-
70

•S 1935 IS 

1 GRAMS).—The amount of the monthly premium im2 posed under this section for an individual for a 

3 month shall be zero in the case of an individual who 

4 demonstrates to the satisfaction of the Secretary 

5 that the individual has basic health insurance cov6 erage for that month. For purposes of the previous 

7 sentence enrollment in a medicaid plan under title 

8 XIX, a State child health insurance plan under title 

9 XXI, or under the medicare program under title 

10 XVIII is deemed to constitute basic health insurance 

11 coverage described in such sentence. 

12 ‘‘(b) ANNUAL PREMIUM.—

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

14 Secretary shall estimate the average, annual per 

15 capita amount that would be payable under this title 

16 with respect to individuals residing in the United 

17 States who meet the requirement of section 

18 2201(a)(1) as if all such individuals were eligible for 

19 (and enrolled) under this title during the entire year 

20 (and assuming that section 1862(b)(2)(A)(i) did not 

21 apply). 

22 ‘‘(2) ANNUAL PREMIUM.—Subject to subsection 

23 (d), the annual premium under this subsection for 

24 months in a year is equal to 25 percent of the aver-
71

•S 1935 IS 

1 age, annual per capita amount estimated under 

2 paragraph (1) for the year. 

3 ‘‘(c) PAYMENT OF MONTHLY PREMIUM.—

4 ‘‘(1) PERIOD OF PAYMENT.—In the case of an 

5 individual who participates in the program estab6 lished by this title, subject to subsection (d), the 

7 monthly premium shall be payable for the period 

8 commencing with the first month of the individual’s 

9 coverage period and ending with the month in which 

10 the individual’s coverage under this title terminates. 

11 ‘‘(2) COLLECTION THROUGH TAX RETURN.—

12 For provisions providing for the payment of monthly 

13 premiums under this subsection, see section 59B of 

14 the Internal Revenue Code of 1986. 

15 ‘‘(3) PROTECTIONS AGAINST FRAUD AND

16 ABUSE.—The Secretary shall develop, in coordina17 tion with States and other health insurance issuers, 

18 administrative systems to ensure that claims which 

19 are submitted to more than one payor are coordi20 nated and duplicate payments are not made. 

21 ‘‘(d) REDUCTION IN PREMIUM FOR CERTAIN LOW22 INCOME FAMILIES.—For provisions reducing the premium 

23 under this section for certain low-income families, see sec24 tion 59B(c) of the Internal Revenue Code of 1986.
72

•S 1935 IS 

1 ‘‘SEC. 2204. MEDIKIDS TRUST FUND. 

2 ‘‘(a) ESTABLISHMENT OF TRUST FUND.—

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

4 the books of the Treasury of the United States a 

5 trust fund to be known as the ‘MediKids Trust 

6 Fund’ (in this section referred to as the ‘Trust 

7 Fund’). The Trust Fund shall consist of such gifts 

8 and bequests as may be made as provided in section 

9 201(i)(1) and such amounts as may be deposited in, 

10 or appropriated to, such fund as provided in this 

11 title. 

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

13 section 2203 shall be transferred to the Trust Fund. 

14 ‘‘(b) INCORPORATION OF PROVISIONS.—

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

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

17 apply with respect to the Trust Fund and this title 

18 in the same manner as they apply with respect to 

19 the Federal Supplementary Medical Insurance Trust 

20 Fund and part B, respectively. 

21 ‘‘(2) MISCELLANEOUS REFERENCES.—In apply22 ing provisions of section 1841 under paragraph 

23 (1)—

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

25 part’ is construed to refer to title XXII; 
73

•S 1935 IS 

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

2 section 1840(d) and in section 1841(i) to sec3 tions 1840(b)(1) and 1842(g) are deemed ref4 erences to comparable authority exercised under 

5 this title; 

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

7 1841(g) to the Trust Funds under sections 

8 1817 and 1841 as reimbursement to such funds 

9 for payments they made for benefits provided 

10 under this title; and 

11 ‘‘(D) the Board of Trustees of the 

12 MediKids Trust Fund shall be the same as the 

13 Board of Trustees of the Federal Supple14 mentary Medical Insurance Trust Fund. 

15 ‘‘SEC. 2205. OVERSIGHT AND ACCOUNTABILITY. 

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

17 The Board of Trustees of the MediKids Trust Fund under 

18 section 2204(b)(1) shall report on an annual basis to Con19 gress concerning the status of the Trust Fund and the 

20 need for adjustments in the program under this title to 

21 maintain financial solvency of the program under this 

22 title. 

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

24 General of the United States shall periodically submit to 

25 Congress reports on the adequacy of the financing of cov-
74

•S 1935 IS 

1 erage provided under this title. The Comptroller General 

2 shall include in such report such recommendations for ad3 justments in such financing and coverage as the Comp4 troller General deems appropriate in order to maintain fi5 nancial solvency of the program under this title. 

6 ‘‘SEC. 2206. INCLUSION OF CARE COORDINATION SERVICES. 

7 ‘‘(a) IN GENERAL.—

8 ‘‘(1) PROGRAM AUTHORITY.—The Secretary, 

9 beginning in 2003, may implement a care coordina10 tion services program in accordance with the provi11 sions of this section under which, in appropriate cir12 cumstances, eligible individuals may elect to have 

13 health care services covered under this title managed 

14 and coordinated by a designated care coordinator. 

15 ‘‘(2) ADMINISTRATION BY CONTRACT.—The 

16 Secretary may administer the program under this 

17 section through a contract with an appropriate pro18 gram administrator. 

19 ‘‘(3) COVERAGE.—Care coordination services 

20 furnished in accordance with this section shall be 

21 treated under this title as if they were included in 

22 the definition of medical and other health services 

23 under section 1861(s) and benefits shall be available 

24 under this title with respect to such services without 

25 the application of any deductible or coinsurance. 
75

•S 1935 IS 

1 ‘‘(b) ELIGIBILITY CRITERIA; IDENTIFICATION AND

2 NOTIFICATION OF ELIGIBLE INDIVIDUALS.—

3 ‘‘(1) INDIVIDUAL ELIGIBILITY CRITERIA.—The 

4 Secretary shall specify criteria to be used in making 

5 a determination as to whether an individual may ap6 propriately be enrolled in the care coordination serv7 ices program under this section, which shall include 

8 at least a finding by the Secretary that for cohorts 

9 of individuals with characteristics identified by the 

10 Secretary, professional management and coordina11 tion of care can reasonably be expected to improve 

12 processes or outcomes of health care and to reduce 

13 aggregate costs to the programs under this title. 

14 ‘‘(2) PROCEDURES TO FACILITATE ENROLL15 MENT.—The Secretary shall develop and implement 

16 procedures designed to facilitate enrollment of eligi17 ble individuals in the program under this section. 

18 ‘‘(c) ENROLLMENT OF INDIVIDUALS.—

19 ‘‘(1) SECRETARY’S DETERMINATION OF ELIGI20 BILITY.—The Secretary shall determine the eligi21 bility for services under this section of individuals 

22 who are enrolled in the program under this section 

23 and who make application for such services in such 

24 form and manner as the Secretary may prescribe. 

25 ‘‘(2) ENROLLMENT PERIOD.—
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1 ‘‘(A) EFFECTIVE DATE AND DURATION.—

2 Enrollment of an individual in the program 

3 under this section shall be effective as of the 

4 first day of the month following the month in 

5 which the Secretary approves the individual’s 

6 application under paragraph (1), shall remain 

7 in effect for one month (or such longer period 

8 as the Secretary may specify), and shall be 

9 automatically renewed for additional periods, 

10 unless terminated in accordance with such pro11 cedures as the Secretary shall establish by regu12 lation. Such procedures shall permit an indi13 vidual to disenroll for cause at any time and 

14 without cause at re-enrollment intervals. 

15 ‘‘(B) LIMITATION ON REENROLLMENT.—

16 The Secretary may establish limits on an indi17 vidual’s eligibility to reenroll in the program 

18 under this section if the individual has 

19 disenrolled from the program more than once 

20 during a specified time period. 

21 ‘‘(d) PROGRAM.—The care coordination services pro22 gram under this section shall include the following ele23 ments: 

24 ‘‘(1) BASIC CARE COORDINATION SERVICES.—
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1 ‘‘(A) IN GENERAL.—Subject to the cost-ef2 fectiveness criteria specified in subsection 

3 (b)(1), except as otherwise provided in this sec4 tion, enrolled individuals shall receive services 

5 described in section 1905(t)(1) and may receive 

6 additional items and services as described in 

7 subparagraph (B). 

8 ‘‘(B) ADDITIONAL BENEFITS.—The Sec9 retary may specify additional benefits for which 

10 payment would not otherwise be made under 

11 this title that may be available to individuals 

12 enrolled in the program under this section (sub13 ject to an assessment by the care coordinator of 

14 an individual’s circumstance and need for such 

15 benefits) in order to encourage enrollment in, or 

16 to improve the effectiveness of, such program. 

17 ‘‘(2) CARE COORDINATION REQUIREMENT.—

18 Notwithstanding any other provision of this title, the 

19 Secretary may provide that an individual enrolled in 

20 the program under this section may be entitled to 

21 payment under this title for any specified health 

22 care items or services only if the items or services 

23 have been furnished by the care coordinator, or co24 ordinated through the care coordination services pro25 gram. Under such provision, the Secretary shall pre-
78

•S 1935 IS 

1 scribe exceptions for emergency medical services as 

2 described in section 1852(d)(3), and other excep3 tions determined by the Secretary for the delivery of 

4 timely and needed care. 

5 ‘‘(e) CARE COORDINATORS.—

6 ‘‘(1) CONDITIONS OF PARTICIPATION.—In order 

7 to be qualified to furnish care coordination services 

8 under this section, an individual or entity shall—

9 ‘‘(A) be a health care professional or entity 

10 (which may include physicians, physician group 

11 practices, or other health care professionals or 

12 entities the Secretary may find appropriate) 

13 meeting such conditions as the Secretary may 

14 specify; 

15 ‘‘(B) have entered into a care coordination 

16 agreement; and 

17 ‘‘(C) meet such criteria as the Secretary 

18 may establish (which may include experience in 

19 the provision of care coordination or primary 

20 care physician’s services). 

21 ‘‘(2) AGREEMENT TERM; PAYMENT.—

22 ‘‘(A) DURATION AND RENEWAL.—A care 

23 coordination agreement under this subsection 

24 shall be for one year and may be renewed if the 

25 Secretary is satisfied that the care coordinator 
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1 continues to meet the conditions of participa2 tion specified in paragraph (1). 

3 ‘‘(B) PAYMENT FOR SERVICES.—The Sec4 retary may negotiate or otherwise establish pay5 ment terms and rates for services described in 

6 subsection (d)(1). 

7 ‘‘(C) LIABILITY.—Case coordinators shall 

8 be subject to liability for actual health damages 

9 which may be suffered by recipients as a result 

10 of the care coordinator’s decisions, failure or 

11 delay in making decisions, or other actions as 

12 a care coordinator. 

13 ‘‘(D) TERMS.—In addition to such other 

14 terms as the Secretary may require, an agree15 ment under this section shall include the terms 

16 specified in subparagraphs (A) through (C) of 

17 section 1905(t)(3). 

18 ‘‘SEC. 2207. ADMINISTRATION AND MISCELLANEOUS. 

19 ‘‘(a) IN GENERAL.—Except as otherwise provided in 

20 this title—

21 ‘‘(1) the Secretary shall enter into appropriate 

22 contracts with providers of services, other health 

23 care providers, carriers, and fiscal intermediaries, 

24 taking into account the types of contracts used 
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•S 1935 IS 

1 under title XVIII with respect to such entities, to 

2 administer the program under this title; 

3 ‘‘(2) individuals enrolled under this title shall 

4 be treated for purposes of title XVIII as though the 

5 individual were entitled to benefits under part A and 

6 enrolled under part B of such title; 

7 ‘‘(3) benefits described in section 2202 that are 

8 payable under this title to such individuals shall be 

9 paid in a manner specified by the Secretary (taking 

10 into account, and based to the greatest extent prac11 ticable upon, the manner in which they are provided 

12 under title XVIII); 

13 ‘‘(4) provider participation agreements under 

14 title XVIII shall apply to enrollees and benefits 

15 under this title in the same manner as they apply 

16 to enrollees and benefits under title XVIII; and 

17 ‘‘(5) individuals entitled to benefits under this 

18 title may elect to receive such benefits under health 

19 plans in a manner, specified by the Secretary, simi20 lar to the manner provided under part C of title 

21 XVIII. 

22 ‘‘(b) COORDINATION WITH MEDICAID AND

23 SCHIP.—Notwithstanding any other provision of law, in24 dividuals entitled to benefits for items and services under 

25 this title who also qualify for benefits under title XIX or 
81

•S 1935 IS 

1 XXI or any other Federally funded program may continue 

2 to qualify and obtain benefits under such other title or 

3 program, and in such case such an individual shall elect 

4 either—

5 ‘‘(1) such other title or program to be primary 

6 payor to benefits under this title, in which case no 

7 benefits shall be payable under this title and the 

8 monthly premium under section 2203 shall be zero; 

9 or 

10 ‘‘(2) benefits under this title shall be primary 

11 payor to benefits provided under such program or 

12 title, in which case the Secretary shall enter into 

13 agreements with States as may be appropriate to 

14 provide that, in the case of such individuals, the ben15 efits under titles XIX and XXI or such other pro16 gram (including reduction of cost-sharing) are pro17 vided on a ‘wrap-around’ basis to the benefits under 

18 this title.’’. 

19 (2) CONFORMING AMENDMENTS TO SOCIAL SE20 CURITY ACT PROVISIONS.—

21 (A) Section 201(i)(1) of the Social Secu22 rity Act (42 U.S.C. 401(i)(1)) is amended by 

23 striking ‘‘or the Federal Supplementary Medical 

24 Insurance Trust Fund’’ and inserting ‘‘the Fed-
82

•S 1935 IS 

1 eral Supplementary Medical Insurance Trust 

2 Fund, and the MediKids Trust Fund’’. 

3 (B) Section 201(g)(1)(A) of such Act (42 

4 U.S.C. 401(g)(1)(A)) is amended by striking 

5 ‘‘and the Federal Supplementary Medical Insur6 ance Trust Fund established by title XVIII’’ 

7 and inserting ‘‘, the Federal Supplementary 

8 Medical Insurance Trust Fund, and the 

9 MediKids Trust Fund established by title 

10 XVIII’’. 

11 (C) Section 1853(c) of such Act (42 

12 U.S.C. 1395w–23(c)) is amended—

13 (i) in paragraph (1), by striking ‘‘or 

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

15 (ii) by adding at the end the fol16 lowing: 

17 ‘‘(8) ADJUSTMENT FOR MEDIKIDS.—In apply18 ing this subsection with respect to individuals enti19 tled to benefits under title XXII, the Secretary shall 

20 provide for an appropriate adjustment in the 

21 Medicare+Choice capitation rate as may be appro22 priate to reflect differences between the population 

23 served under such title and the population under 

24 parts A and B.’’.
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1 (3) MAINTENANCE OF MEDICAID ELIGIBILITY

2 AND BENEFITS FOR CHILDREN.—

3 (A) IN GENERAL.—In order for a State to 

4 continue to be eligible for payments under sec5 tion 1903(a) of the Social Security Act (42 

6 U.S.C. 1396b(a))—

7 (i) the State may not reduce stand8 ards of eligibility, or benefits, provided 

9 under its State medicaid plan under title 

10 XIX of the Social Security Act or under its 

11 State child health plan under title XXI of 

12 such Act for individuals under 23 years of 

13 age below such standards of eligibility, and 

14 benefits, in effect on the date of the enact15 ment of this Act; and 

16 (ii) the State shall demonstrate to the 

17 satisfaction of the Secretary of Health and 

18 Human Services that any savings in State 

19 expenditures under title XIX or XXI of the 

20 Social Security Act that results from chil21 dren from enrolling under title XXII of 

22 such Act shall be used in a manner that 

23 improves services to beneficiaries under 

24 title XIX of such Act, such as through in25 creases in provider payment rates, expan-
84

•S 1935 IS 

1 sion of eligibility, improved nurse and 

2 nurse aide staffing and improved inspec3 tions of nursing facilities, and coverage of 

4 additional services. 

5 (B) MEDIKIDS AS PRIMARY PAYOR.—In 

6 applying title XIX of the Social Security Act, 

7 the MediKids program under title XXII of such 

8 Act shall be treated as a primary payor in cases 

9 in which the election described in section 

10 2207(b)(2) of such Act, as added by subsection 

11 (a), has been made. 

12 (4) EXPANSION OF MEDPAC MEMBERSHIP TO

13 19.—

14 (A) IN GENERAL.—Section 1805(c) of the 

15 Social Security Act (42 U.S.C. 1395b–6(c)) is 

16 amended—

17 (i) in paragraph (1), by striking ‘‘17’’ 

18 and inserting ‘‘19’’; and 

19 (ii) in paragraph (2)(B), by inserting 

20 ‘‘experts in children’s health,’’ after ‘‘other 

21 health professionals,’’. 

22 (B) INITIAL TERMS OF ADDITIONAL MEM23 BERS.—

24 (i) IN GENERAL.—For purposes of 

25 staggering the initial terms of members of 
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•S 1935 IS 

1 the Medicare Payment Advisory Commis2 sion under section 1805(c)(3) of the Social 

3 Security Act (42 U.S.C. 1395b–6(c)(3)), 

4 the initial terms of the 2 additional mem5 bers of the Commission provided for by the 

6 amendment under subsection (a)(1) are as 

7 follows: 

8 (I) One member shall be ap9 pointed for 1 year. 

10 (II) One member shall be ap11 pointed for 2 years. 

12 (ii) COMMENCEMENT OF TERMS.—

13 Such terms shall begin on January 1, 

14 2002. 

15 (b) MEDIKIDS PREMIUM.—

16 (1) IN GENERAL.—Subchapter A of chapter 1 

17 of the Internal Revenue Code of 1986 (relating to 

18 determination of tax liability) is amended by adding 

19 at the end the following new part: 

20 ‘‘PART VIII—MEDIKIDS PREMIUM

‘‘Sec. 59B. MediKids premium.

21 ‘‘SEC. 59B. MEDIKIDS PREMIUM. 

22 ‘‘(a) IMPOSITION OF TAX.—In the case of an indi23 vidual to whom this section applies, there is hereby im-
86

•S 1935 IS 

1 posed (in addition to any other tax imposed by this sub2 title) a MediKids premium for the taxable year. 

3 ‘‘(b) INDIVIDUALS SUBJECT TO PREMIUM.—

4 ‘‘(1) IN GENERAL.—This section shall apply to 

5 an individual if the taxpayer has a MediKid at any 

6 time during the taxable year. 

7 ‘‘(2) MEDIKID.—For purposes of this section, 

8 the term ‘MediKid’ means, with respect to a tax9 payer, any individual with respect to whom the tax10 payer is required to pay a premium under section 

11 2203(c) of the Social Security Act for any month of 

12 the taxable year. 

13 ‘‘(c) AMOUNT OF PREMIUM.—For purposes of this 

14 section, the MediKids premium for a taxable year is the 

15 sum of the monthly premiums under section 2203 of the 

16 Social Security Act for months in the taxable year. 

17 ‘‘(d) EXCEPTIONS BASED ON ADJUSTED GROSS IN18 COME.—

19 ‘‘(1) EXEMPTION FOR VERY LOW-INCOME TAX20 PAYERS.—

21 ‘‘(A) IN GENERAL.—No premium shall be 

22 imposed by this section on any taxpayer having 

23 an adjusted gross income not in excess of the 

24 exemption amount. 
87

•S 1935 IS 

1 ‘‘(B) EXEMPTION AMOUNT.—For purposes 

2 of this paragraph, the exemption amount is—

3 ‘‘(i) $17,415 in the case of a taxpayer 

4 having 1 MediKid, 

5 ‘‘(ii) $21,945 in the case of a tax6 payer having 2 MediKids, 

7 ‘‘(iii) $26,475 in the case of a tax8 payer having 3 MediKids, and 

9 ‘‘(iv) $31,005 in the case of a tax10 payer having 4 or more MediKids.

11 ‘‘(C) PHASEOUT OF EXEMPTION.—In the 

12 case of a taxpayer having an adjusted gross in13 come which exceeds the exemption amount but 

14 does not exceed twice the exemption amount, 

15 the premium shall be the amount which bears 

16 the same ratio to the premium which would 

17 (but for this subparagraph) apply to the tax18 payer as such excess bears to the exemption 

19 amount. 

20 ‘‘(D) INFLATION ADJUSTMENT OF EXEMP21 TION AMOUNTS.—In the case of any taxable 

22 year beginning in a calendar year after 2001, 

23 each dollar amount contained in subparagraph 

24 (C) shall be increased by an amount equal to 

25 the product of—
88

•S 1935 IS 

1 ‘‘(i) such dollar amount, and 

2 ‘‘(ii) the cost-of-living adjustment de3 termined under section 1(f)(3) for the cal4 endar year in which the taxable year be5 gins, determined by substituting ‘calendar 

6 year 2000’ for ‘calendar year 1992’ in sub7 paragraph (B) thereof. 

8 If any increase determined under the preceding 

9 sentence is not a multiple of $50, such increase 

10 shall be rounded to the nearest multiple of $50. 

11 ‘‘(2) PREMIUM LIMITED TO 5 PERCENT OF AD12 JUSTED GROSS INCOME.—In no event shall any tax13 payer be required to pay a premium under this sec14 tion in excess of an amount equal to 5 percent of the 

15 taxpayer’s adjusted gross income. 

16 ‘‘(e) COORDINATION WITH OTHER PROVISIONS.—

17 ‘‘(1) NOT TREATED AS MEDICAL EXPENSE.—

18 For purposes of this chapter, any premium paid 

19 under this section shall not be treated as expense for 

20 medical care. 

21 ‘‘(2) NOT TREATED AS TAX FOR CERTAIN PUR22 POSES.—The premium paid under this section shall 

23 not be treated as a tax imposed by this chapter for 

24 purposes of determining—
89

•S 1935 IS 

1 ‘‘(A) the amount of any credit allowable 

2 under this chapter, or 

3 ‘‘(B) the amount of the minimum tax im4 posed by section 55. 

5 ‘‘(3) TREATMENT UNDER SUBTITLE F.—For 

6 purposes of subtitle F, the premium paid under this 

7 section shall be treated as if it were a tax imposed 

8 by section 1.’’. 

9 (2) TECHNICAL AMENDMENTS.—

10 (A) Subsection (a) of section 6012 of such 

11 Code is amended by inserting after paragraph 

12 (9) the following new paragraph: 

13 ‘‘(10) Every individual liable for a premium 

14 under section 59B.’’. 

15 (B) The table of parts for subchapter A of 

16 chapter 1 of such Code is amended by adding 

17 at the end the following new item:

‘‘Part VIII. MediKids premium.’’.

18 (3) EFFECTIVE DATE.—The amendments made 

19 by this subsection shall apply to months beginning 

20 after December 2002, in taxable years ending after 

21 such date. 

22 (c) REFUNDABLE CREDIT FOR COST-SHARING EX23 PENSES UNDER MEDIKIDS PROGRAM.—

24 (1) IN GENERAL.—Subpart C of part IV of sub25 chapter A of chapter 1 of the Internal Revenue Code 
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•S 1935 IS 

1 of 1986 (relating to refundable credits) is amended 

2 by redesignating section 35 as section 36 and by in3 serting after section 34 the following new section: 

4 ‘‘SEC. 35. COST-SHARING EXPENSES UNDER MEDIKIDS PRO5 GRAM. 

6 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in7 dividual who has a MediKid (as defined in section 59B) 

8 at any time during the taxable year, there shall be allowed 

9 as a credit against the tax imposed by this subtitle an 

10 amount equal to 50 percent of the amount paid by the 

11 taxpayer during the taxable year as cost-sharing under 

12 section 2202(b)(4) of the Social Security Act. 

13 ‘‘(b) LIMITATION BASED ON ADJUSTED GROSS IN14 COME.—The amount of the credit which would (but for 

15 this subsection) be allowed under this section for the tax16 able year shall be reduced (but not below zero) by an 

17 amount which bears the same ratio to such amount of 

18 credit as the excess of the taxpayer’s adjusted gross in19 come for such taxable year over the exemption amount (as 

20 defined in section 59B(d)) bears to such exemption 

21 amount.’’. 

22 (2) TECHNICAL AMENDMENTS.—

23 (A) Paragraph (2) of section 1324(b) of 

24 title 31, United States Code, is amended by in-
91

•S 1935 IS 

1 serting before the period ‘‘or from section 35 of 

2 such Code’’. 

3 (B) The table of sections for subpart C of 

4 part IV of subchapter A of chapter 1 of such 

5 Code is amended by striking the last item and 

6 inserting the following new items:

‘‘Sec. 35. Cost-sharing expenses under MediKids program. 

‘‘Sec. 36. Overpayments of tax.’’.

7 (3) EFFECTIVE DATE.—The amendments made 

8 by this subsection shall apply to taxable years begin9 ning after December 31, 2002. 

10 (d) REPORT ON LONG-TERM REVENUES.—Within 1 

11 year after the date of enactment of this Act, the Secretary 

12 of the Treasury shall propose a gradual schedule of pro13 gressive tax changes to fund the program under title XXII 

14 of the Social Security Act, as the number of enrollees 

15 grows in the out-years.

Æ