of the entitlement of such seniors to Medicare bene-
fits. 
(3) Section 1802(b) of the Social Security Act 
(42 U.S.C. 1395a(b)), added by section 4507 of the 
Balanced Budget Act of 1997, states that a Medi-
care beneficiary may only enter into a private con-
tract with a physician for an item or service if no 
claim for payment under title XVIII of such Act will 
be submitted. In the case of such contract, the phy-
sician must sign an affidavit that acknowledges such 
contract and that provides that the physician will 
not submit a claim, and will forgo reimbursement, 
under such title for an item or service provided to 
any Medicare beneficiary for a period of two years. 
SEC. 3. AUTHORITY TO ELECT VOUCHER PROGRAM IN-
STEAD OF MEDICARE PART A ENTITLEMENT. 
(a) IN GENERAL.—Section 226 of the Social Security 
Act (42 U.S.C. 426) is amended by adding at the end the 
following new subsections: 
‘‘(k) WAIVER OF ENTITLEMENT AND ELECTION OF 
VOUCHER PROGRAM.— 
‘‘(1) IN GENERAL.—Notwithstanding the pre-
vious provisions of this section, the Secretary shall 
establish a procedure under which an individual oth-
erwise entitled under subsection (a) to benefits 
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under part A of title XVIII may waive such entitle-
ment and be automatically enrolled in the Medicare 
Alternative Voucher Program established under sub-
section (l) if— 
‘‘(A) at the time such waiver is made the 
individual— 
‘‘(i) has a health savings account de-
scribed in subsection (d) of section 223 of 
the Internal Revenue Code of 1986 (26 
U.S.C. 223); and 
‘‘(ii) is enrolled under a high deduct-
ible health plan, as defined in subsection 
(c)(1) of such section; and 
‘‘(B) the individual makes such waiver dur-
ing the initial enrollment period described in 
section 1837(d). 
‘‘(2) TREATMENT UNDER THE INTERNAL REV-
ENUE CODE OF 1986.—An individual who waives en-
titlement under paragraph (1) shall not be treated 
as entitled to benefits under title XVIII for purposes 
of section 223(b)(7) of the Internal Revenue Code of 
1986. 
‘‘(3) INELIGIBILITY FOR PART B OR D BENE-
FITS.—An individual shall not be eligible for benefits 
under part B or D of title XVIII during the period 
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for which the individual waives entitlement under 
part A of such title under paragraph (1). 
‘‘(4) TERMINATION OF WAIVER AND REENROLL-
MENT UNDER MEDICARE PROGRAM.—The Secretary 
shall establish a procedure under which an individual 
who waives entitlement under paragraph (1) may 
terminate such waiver during an annual period that 
shall be the same as the annual general enrollment 
period described in section 1837(e). For purposes of 
applying parts B and D of title XVIII, such indi-
vidual shall be treated as if the individual were enti-
tled to benefits under part A of such title as of the 
date such individual terminates the waiver under 
this paragraph. An individual who has terminated 
such a waiver may not subsequently make such a 
waiver. 
‘‘(l) MEDICARE
ALTERNATIVE
VOUCHER
PRO-
GRAM.— 
‘‘(1) ESTABLISHMENT OF PROGRAM.—The Sec-
retary shall establish a program to be known as the 
Medicare Alternative Voucher Program (in this sub-
section referred to as the ‘voucher program’) con-
sistent with this subsection. 
‘‘(2) AUTOMATIC ENROLLMENT.—An individual 
who waives entitlement under subsection (k)(1) shall 
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be enrolled in the voucher program for the period 
during which such waiver is in effect. 
‘‘(3) AMOUNT OF VOUCHER.— 
‘‘(A) AMOUNT BASED ON AGE COHORT.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), for each month that an individual 
within an age cohort is enrolled in the 
voucher program, the Secretary shall pro-
vide a voucher to such individual in an 
amount that is equal to the monthly actu-
arial rate for that month computed under 
section 1818(d)(1) multiplied by the age 
cohort adjustment factor for such age co-
hort under subparagraph (B). 
‘‘(ii) MONTHLY LIMIT.—The amount 
of a voucher provided to an individual for 
a month may not exceed $200. 
‘‘(B) AGE
COHORT
ADJUSTMENT
FAC-
TOR.—For each age cohort the Secretary shall 
determine an age cohort adjustment factor 
equal to the ratio of— 
‘‘(i) the monthly actuarial rate de-
scribed in section 1818(d)(1) as deter-
mined by the Secretary for individuals in 
such age cohort, to 
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‘‘(ii) the monthly actuarial rate de-
scribed in such section. 
‘‘(C) AGE
COHORT
DEFINED.—For pur-
poses of this paragraph, an ‘age cohort’ means 
a group of individuals whose age falls within a 
span of five consecutive years, consistent with 
the following: 
‘‘(i) The first such span begins at age 
65. 
‘‘(ii) Other spans follow consecutively. 
‘‘(4) PERMISSIBLE
USE
OF
VOUCHER.—A 
voucher under paragraph (3) may be used only for 
the following purposes: 
‘‘(A) As a contribution into a health sav-
ings account established by such individual, as 
described in subsection (k)(1)(A). 
‘‘(B) For payment of premiums for enroll-
ment of such individual under a high deductible 
health plan described in such subsection. 
‘‘(5) EFFECT
OF
SUBSEQUENT
TERMINATION 
OF WAIVER.—If an individual terminates a waiver 
under subsection (k)(3), the enrollment of such indi-
vidual in the voucher program shall be terminated 
on the date on which the termination becomes effec-
tive.’’. 
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(b) AMENDMENT OF INTERNAL REVENUE CODE OF 
1986.—Paragraph (7) of section 223(b) of the Internal 
Revenue Code of 1986 (relating to Medicare eligible indi-
viduals) is amended to read as follows: 
‘‘(7) MEDICARE ELIGIBLE INDIVIDUALS.— 
‘‘(A) IN GENERAL.—The limitation under 
this subsection for any month with respect to 
an individual shall be zero for any month such 
individual is entitled to benefits under title 
XVIII of the Social Security Act. 
‘‘(B) MEDICARE
ALTERNATIVE
VOUCHER 
PROGRAM.—In the case of an individual who is 
enrolled in the Medicare Alternative Voucher 
Program under section 226(l) of the Social Se-
curity Act, the applicable limitation under sub-
paragraphs (A) and (B) of paragraph (2) shall 
be increased by the amount of the voucher de-
scribed in paragraph (3) of such section which 
is contributed to a health savings account of 
such individual.’’. 
(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—The amendment made by 
subsection (a) shall take effect on the date that is 
six months after the date of the enactment of this 
Act and shall apply to an individual who becomes 
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entitled to benefits under part A of title XVIII of 
the Social Security Act on or after such date of the 
enactment. 
(2) AMENDMENT OF INTERNAL REVENUE CODE 
OF 1986.—The amendment made by subsection (b) 
shall apply to months ending after the date referred 
to in paragraph (1), in taxable years ending after 
such date. 
SEC. 4. SUSPENSION OF MEDICARE LATE ENROLLMENT 
PENALTIES BETWEEN AGES 65 AND 70. 
(a) PART B.—The second sentence of section 1839(b) 
of the Social Security Act (42 U.S.C. 1395r(b)) is amend-
ed by inserting before the period the following: ‘‘and there 
shall not be taken into account (for individuals not entitled 
to benefits under section 226A) any month during any 
part of which the individual attained age 65 and has not 
attained age 70’’. 
(b) PART D.— 
(1) IN GENERAL.—Section 1860D–13(b)(7)(A) 
of such Act (42 U.S.C. 1395w–113(b)(7)(A)) is 
amended by adding at the end the following sen-
tence: ‘‘For purposes of the preceding sentence, in 
the case of an individual not entitled to benefits 
under part A under section 226A, a continuous pe-
riod of eligibility shall not include any month during 
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any part of which the individual attained age 65 and 
has not attained age 70.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
1860D–1(b)(6)(A) of such Act (42 U.S.C. 1395w– 
101(b)(6)(A)) is amended by inserting after ‘‘para-
graph (2)’’ the following: ‘‘, but excluding the period 
between 65 and 70 years of age’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to individuals who attain 65 years 
of age in a month after the month in which this Act is 
enacted. 
Æ 
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