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105TH CONGRESS
2D SESSION
H.R. 3470
To amend title XVIII of the Social Security Act and the Employee Retirement
Income Security Act of 1974 to improve access to health insurance
and Medicare benefits for individuals ages 55 to 65 to be fully funded
through premiums and anti-fraud provisions, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 17, 1998
Mr. STARK (for himself, Mr. BROWN of Ohio, Mr. GEPHARDT, Mr. RANGEL,
Mr. DINGELL, Mr. BECERRA, Mr. BORSKI, Mr. BROWN of California, Mr.
CARDIN, Ms. CHRISTIAN-GREEN, Mrs. CLAYTON, Mr. COYNE, Ms.
DELAURO, Mr. DEUTSCH, Mr. DOOLEY of California, Mr. ENGEL, Mr.
FALEOMAVAEGA, Mr. FARR of California, Mr. FILNER, Mr. FRANK of
Massachusetts, Mr. FROST, Mr. GONZALEZ, Mr. GREEN, Mr. HASTINGS
of Florida, Mr. HINCHEY, Mr. HOYER, Mr. JEFFERSON, Ms. EDDIE
BERNICE JOHNSON of Texas, Mr. KENNEDY of Massachusetts, Mr. KEN-
NEDY of Rhode Island, Ms. KILPATRICK, Mr. KLECZKA, Mr. KUCINICH,
Mr. LAFALCE, Mr. LANTOS, Mr. LEWIS of Georgia, Mr. MALONEY of
Connecticut, Mr. MARKEY, Mr. MATSUI, Mr. MCDERMOTT, Mr. MCGOV-
ERN, Mr. MCHALE, Mr. MEEHAN, Mr. MEEKS of New York, Mr.
MENENDEZ, Mr. MILLER of California, Mr. MOAKLEY, Mr. MURTHA, Mr.
NADLER, Mr. OLVER, Mr. PALLONE, Mr. PASCRELL, Ms. PELOSI, Mr.
RAHALL, Mr. RUSH, Mr. SANDLIN, Mr. SCHUMER, Mr. SERRANO, Mr.
STOKES, Mr. STUPAK, Mr. TIERNEY, Mr. TOWNS, Mr. UNDERWOOD, Mr.
WAXMAN, Mr. WEYGAND, Mr. WISE, Ms. WOOLSEY, Mr. YATES, Mr.
OBERSTAR, and Ms. NORTON) introduced the following bill; which was re-
ferred to the Committee on Ways and Means, and in addition to the
Committees on Commerce, and Education and the Workforce, for a pe-
riod to be subsequently determined by the Speaker, in each case for con-
sideration of such provisions as fall within the jurisdiction of the commit-
tee concerned
A BILL
To amend title XVIII of the Social Security Act and the
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Employee Retirement Income Security Act of 1974 to
improve access to health insurance and Medicare benefits
for individuals ages 55 to 65 to be fully funded through
premiums and anti-fraud provisions, and for other pur-
poses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medicare Early Access Act of 1998’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title; table of contents.
TITLE I—ACCESS TO MEDICARE BENEFITS FOR INDIVIDUALS 62-
TO-65 YEARS OF AGE
Sec. 101. Access to Medicare benefits for individuals 62-to-65 years of age.
‘‘PART D—PURCHASE OF MEDICARE BENEFITS BY CERTAIN INDIVIDUALS
AGE 62-TO-65 YEARS OF AGE
‘‘Sec. 1859. Program benefits; eligibility.
‘‘Sec. 1859A. Enrollment process; coverage.
‘‘Sec. 1859B. Premiums.
‘‘Sec. 1859C. Payment of premiums.
‘‘Sec. 1859D. Medicare Early Access Trust Fund.
‘‘Sec. 1859E. Oversight and accountability.
‘‘Sec. 1859F. Administration and miscellaneous.
TITLE II—ACCESS TO MEDICARE BENEFITS FOR DISPLACED
WORKERS 55-TO-62 YEARS OF AGE
Sec. 201. Access to Medicare benefits for displaced workers 55-to-62 years of
age.
TITLE III—COBRA PROTECTION FOR EARLY RETIREES
Subtitle A—Amendments to the Employee Retirement Income Security Act of
1974
Sec. 301. COBRA continuation benefits for certain retired workers who lose re-
tiree health coverage.
Subtitle B—Amendments to the Public Health Service Act
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Sec. 311. COBRA continuation benefits for certain retired workers who lose re-
tiree health coverage.
Subtitle C—Amendments to the Internal Revenue Code of 1986
Sec. 321. COBRA continuation benefits for certain retired workers who lose re-
tiree health coverage.
TITLE IV—FINANCING
Sec. 401. Reference to financing provisions.
TITLE I—ACCESS TO MEDICARE
BENEFITS FOR INDIVIDUALS
62-TO-65 YEARS OF AGE
SEC. 101. ACCESS TO MEDICARE BENEFITS FOR INDIVID-
UALS 62-TO-65 YEARS OF AGE.
(a) IN GENERAL.—Title XVIII of the Social Security
Act is amended—
(1) by redesignating section 1859 and part D
as section 1858 and part E, respectively; and
(2) by inserting after such section the following
new part:
‘‘PART D—PURCHASE OF MEDICARE BENEFITS BY
CERTAIN INDIVIDUALS AGE 62-TO-65 YEARS OF AGE
‘‘SEC. 1859. PROGRAM BENEFITS; ELIGIBILITY.
‘‘(a) ENTITLEMENT TO MEDICARE BENEFITS FOR
ENROLLED INDIVIDUALS.—
‘‘(1) IN
GENERAL.—An individual enrolled
under this part is entitled to the same benefits
under this title as an individual entitled to benefits
under part A and enrolled under part B.
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‘‘(2) DEFINITIONS.—For purposes of this part:
‘‘(A) FEDERAL OR STATE COBRA CONTINU-
ATION PROVISION.—The term ‘Federal or State
COBRA continuation provision’ has the mean-
ing given the term ‘COBRA continuation provi-
sion’ in section 2791(d)(4) of the Public Health
Service Act and includes a comparable State
program, as determined by the Secretary.
‘‘(B) FEDERAL HEALTH INSURANCE PRO-
GRAM DEFINED.—The term ‘Federal health in-
surance program’ means any of the following:
‘‘(i) MEDICARE.—Part A or part B of
this title (other than by reason of this
part).
‘‘(ii) MEDICAID.—A State plan under
title XIX.
‘‘(iii) FEHBP.—The Federal employ-
ees health benefit program under chapter
89 of title 5, United States Code.
‘‘(iv) 
TRICARE.—The 
TRICARE
program (as defined in section 1072(7) of
title 10, United States Code).
‘‘(v) ACTIVE DUTY MILITARY.—Health
benefits under title 10, United States
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Code, to an individual as a member of the
uniformed services of the United States.
‘‘(C) GROUP
HEALTH
PLAN.—The term
‘group health plan’ has the meaning given such
term in section 2791(a)(1) of the Public Health
Service Act.
‘‘(b) ELIGIBILITY OF INDIVIDUALS AGE 62-TO-65
YEARS OF AGE.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
an individual who meets the following requirements
with respect to a month is eligible to enroll under
this part with respect to such month:
‘‘(A) AGE.—As of the last day of the
month, the individual has attained 62 years of
age, but has not attained 65 years of age.
‘‘(B) MEDICARE
ELIGIBILITY
(BUT
FOR
AGE).—The individual would be eligible for ben-
efits under part A or part B for the month if
the individual were 65 years of age.
‘‘(C) 
NOT
ELIGIBLE
FOR
COVERAGE
UNDER
GROUP
HEALTH
PLANS
OR
FEDERAL
HEALTH INSURANCE PROGRAMS.—The individ-
ual is not eligible for benefits or coverage under
a Federal health insurance program (as defined
in subsection (a)(2)(B)) or under a group
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health plan (other than such eligibility merely
through a Federal or State COBRA continu-
ation provision) as of the last day of the month
involved.
‘‘(2) LIMITATION
ON
ELIGIBILITY
IF
TERMI-
NATED ENROLLMENT.—If an individual described in
paragraph (1) enrolls under this part and coverage
of the individual is terminated under section
1859A(d) (other than because of age), the individual
is not again eligible to enroll under this subsection
unless the following requirements are met:
‘‘(A) NEW
COVERAGE
UNDER
GROUP
HEALTH
PLAN
OR
FEDERAL
HEALTH
INSUR-
ANCE PROGRAM.—After the date of termination
of coverage under such section, the individual
obtains coverage under a group health plan or
under a Federal health insurance program.
‘‘(B) SUBSEQUENT
LOSS
OF
NEW
COV-
ERAGE.—The individual subsequently loses eli-
gibility for the coverage described in subpara-
graph (A) and exhausts any eligibility the indi-
vidual may subsequently have for coverage
under a Federal or State COBRA continuation
provision.
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‘‘(3) CHANGE
IN
HEALTH
PLAN
ELIGIBILITY
DOES NOT AFFECT COVERAGE.—In the case of an
individual who is eligible for and enrolls under this
part under this subsection, the individual’s continued
entitlement to benefits under this part shall not be
affected by the individual’s subsequent eligibility for
benefits or coverage described in paragraph (1)(C),
or entitlement to such benefits or coverage.
‘‘SEC. 1859A. ENROLLMENT PROCESS; COVERAGE.
‘‘(a) IN GENERAL.—An individual may enroll in the
program established under this part only in such manner
and form as may be prescribed by regulations, and only
during an enrollment period prescribed by the Secretary
consistent with the provisions of this section. Such regula-
tions shall provide a process under which—
‘‘(1) individuals eligible to enroll as of a month
are permitted to pre-enroll during a prior month
within an enrollment period described in subsection
(b); and
‘‘(2) each individual seeking to enroll under sec-
tion 1859(b) is notified, before enrolling, of the de-
ferred monthly premium amount the individual will
be liable for under section 1859C(b) upon attaining
65 years of age as determined under section
1859B(c)(3).
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‘‘(b) ENROLLMENT PERIODS.—
‘‘(1) INDIVIDUALS 62-TO-65 YEARS OF AGE.—In
the case of individuals eligible to enroll under this
part under section 1859(b)—
‘‘(A) INITIAL
ENROLLMENT
PERIOD.—If
the individual is eligible to enroll under such
section for July 1999, the enrollment period
shall begin on May 1, 1999, and shall end on
August 31, 1999. Any such enrollment before
July 1, 1999, is conditioned upon compliance
with the conditions of eligibility for July 1999.
‘‘(B) SUBSEQUENT PERIODS.—If the indi-
vidual is eligible to enroll under such section for
a month after July 1999, the enrollment period
shall begin on the first day of the second month
before the month in which the individual first is
eligible to so enroll and shall end four months
later. Any such enrollment before the first day
of the third month of such enrollment period is
conditioned upon compliance with the condi-
tions of eligibility for such third month.
‘‘(2) AUTHORITY
TO
CORRECT
FOR
GOVERN-
MENT ERRORS.—The provisions of section 1837(h)
apply with respect to enrollment under this part in
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the same manner as they apply to enrollment under
part B.
‘‘(c) DATE COVERAGE BEGINS.—
‘‘(1) IN GENERAL.—The period during which
an individual is entitled to benefits under this part
shall begin as follows, but in no case earlier than
July 1, 1999:
‘‘(A) In the case of an individual who en-
rolls (including pre-enrolls) before the month in
which the individual satisfies eligibility for en-
rollment under section 1859, the first day of
such month of eligibility.
‘‘(B) In the case of an individual who en-
rolls during or after the month in which the in-
dividual first satisfies eligibility for enrollment
under such section, the first day of the follow-
ing month.
‘‘(2) AUTHORITY
TO
PROVIDE
FOR
PARTIAL
MONTHS
OF
COVERAGE.—Under regulations, the
Secretary may, in the Secretary’s discretion, provide
for coverage periods that include portions of a
month in order to avoid lapses of coverage.
‘‘(3) LIMITATION ON PAYMENTS.—No payments
may be made under this title with respect to the ex-
penses of an individual enrolled under this part un-
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less such expenses were incurred by such individual
during a period which, with respect to the individual,
is a coverage period under this section.
‘‘(d) TERMINATION OF COVERAGE.—
‘‘(1) IN
GENERAL.—An individual’s coverage
period under this part shall continue until the indi-
vidual’s enrollment has been terminated at the earli-
est of the following:
‘‘(A) GENERAL PROVISIONS.—
‘‘(i) NOTICE.—The individual files no-
tice (in a form and manner prescribed by
the Secretary) that the individual no
longer wishes to participate in the insur-
ance program under this part.
‘‘(ii) NONPAYMENT OF PREMIUMS.—
The individual fails to make payment of
premiums required for enrollment under
this part.
‘‘(iii) MEDICARE
ELIGIBILITY.—The
individual becomes entitled to benefits
under part A or enrolled under part B
(other than by reason of this part).
‘‘(B) TERMINATION BASED ON AGE.—The
individual attains 65 years of age.
‘‘(2) EFFECTIVE DATE OF TERMINATION.—
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may change the boundaries of such premium areas.
The Secretary shall seek to minimize the number of
such areas specified under this paragraph.
‘‘(b) BASE ANNUAL PREMIUM FOR INDIVIDUALS 62
YEARS OF AGE OR OLDER.—
‘‘(1) NATIONAL, PER
CAPITA
AVERAGE.—The
Secretary shall estimate the average, annual per
capita amount that would be payable under this title
with respect to individuals residing in the United
States who meet the requirement of section
1859(b)(1)(A) as if all such individuals were eligible
for (and enrolled) under this title during the entire
year (and assuming that section 1862(b)(2)(A)(i)
did not apply).
‘‘(2) GEOGRAPHIC
ADJUSTMENT.—The Sec-
retary shall adjust the amount determined under
paragraph (1) for each premium area (specified
under subsection (a)(3)) in order to take into ac-
count such factors as the Secretary deems appro-
priate and shall limit the maximum premium under
this paragraph in a premium area to assure partici-
pation in all areas throughout the United States.
‘‘(3) BASE ANNUAL PREMIUM.—The base an-
nual premium under this subsection for months in a
year for individuals 62 years of age or older residing
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in a premium area is equal to the average, annual
per capita amount estimated under paragraph (1)
for the year, adjusted for such area under paragraph
(2).
‘‘(c) DEFERRED PREMIUM RATE FOR INDIVIDUALS
62 YEARS OF AGE OR OLDER.—The deferred premium
rate for individuals with a group of individuals who obtain
coverage under section 1859(b) in a year shall be com-
puted by the Secretary as follows:
‘‘(1) ESTIMATION OF NATIONAL, PER CAPITA
ANNUAL
AVERAGE
EXPENDITURES
FOR
ENROLL-
MENT GROUP.—The Secretary shall estimate the av-
erage, per capita annual amount that will be paid
under this part for individuals in such group during
the period of enrollment under section 1859(b). In
making such estimate for coverage beginning in a
year before 2003, the Secretary may base such esti-
mate on the average, per capita amount that would
be payable if the program had been in operation over
a previous period of at least 4 years.
‘‘(2) DIFFERENCE
BETWEEN
ESTIMATED
EX-
PENDITURES
AND
ESTIMATED
PREMIUMS.—Based
on the characteristics of individuals in such group,
the Secretary shall estimate during the period of
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coverage of the group under this part under section
1859(b) the amount by which—
‘‘(A) the amount estimated under para-
graph (1); exceeds
‘‘(B) the average, annual per capita
amount of premiums that will be payable for
months during the year under section 1859C(a)
for individuals in such group (including pre-
miums that would be payable if there were no
terminations in enrollment under clause (i) or
(ii) of section 1859A(d)(1)(A)).
‘‘(3) ACTUARIAL COMPUTATION OF DEFERRED
MONTHLY
PREMIUM
RATES.—The Secretary shall
determine deferred monthly premium rates for indi-
viduals in such group in a manner so that—
‘‘(A) the estimated actuarial value of such
premiums payable under section 1859C(b), is
equal to
‘‘(B) the estimated actuarial present value
of the differences described in paragraph (2).
Such rate shall be computed for each individual in
the group in a manner so that the rate is based on
the number of months between the first month of
coverage based on enrollment under section 1859(b)
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and the month in which the individual attains 65
years of age.
‘‘(4) DETERMINANTS OF ACTUARIAL PRESENT
VALUES.—The actuarial present values described in
paragraph (3) shall reflect—
‘‘(A) the estimated probabilities of survival
at ages 62 through 84 for individuals enrolled
during the year; and
‘‘(B) the estimated effective average inter-
est rates that would be earned on investments
held in the trust funds under this title during
the period in question.
‘‘SEC. 1859C. PAYMENT OF PREMIUMS.
‘‘(a) PAYMENT OF BASE MONTHLY PREMIUM.—
‘‘(1) IN GENERAL.—The Secretary shall provide
for payment and collection of the base monthly pre-
mium, determined under section 1859B(a)(1) for the
age (and age cohort, if applicable) of the individual
involved and the premium area in which the individ-
ual principally resides, in the same manner as for
payment of monthly premiums under section 1840,
except that, for purposes of applying this section,
any reference in such section to the Federal Supple-
mentary Medical Insurance Trust Fund is deemed a
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reference to the Trust Fund established under sec-
tion 1859D.
‘‘(2) PERIOD OF PAYMENT.—In the case of an
individual who participates in the program estab-
lished by this title, the base monthly premium shall
be payable for the period commencing with the first
month of the individual’s coverage period and ending
with the month in which the individual’s coverage
under this title terminates.
‘‘(b) PAYMENT OF DEFERRED PREMIUM FOR INDI-
VIDUALS COVERED AFTER ATTAINING AGE 62.—
‘‘(1) RATE OF PAYMENT.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is covered under this part for a
month pursuant to an enrollment under section
1859(b), subject to subparagraph (B), the indi-
vidual is liable for payment of a deferred pre-
mium in each month during the period de-
scribed in paragraph (2) in an amount equal to
the full deferred monthly premium rate deter-
mined 
for 
the 
individual 
under 
section
1859B(c).
‘‘(B) SPECIAL
RULES
FOR
THOSE
WHO
DISENROLL EARLY.—
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‘‘(i) IN GENERAL.—If such an individ-
ual’s enrollment under such section is ter-
minated under clause (i) or (ii) of section
1859A(d)(1)(A), subject to clause (ii), the
amount of the deferred premium otherwise
established under this paragraph shall be
pro-rated to reflect the number of months
of coverage under this part under such en-
rollment compared to the maximum num-
ber of months of coverage that the individ-
ual would have had if the enrollment were
not so terminated.
‘‘(ii) ROUNDING TO 12-MONTH MINI-
MUM
COVERAGE
PERIODS.—In applying
clause (i), the number of months of cov-
erage (if not a multiple of 12) shall be
rounded to the next highest multiple of 12
months, except that in no case shall this
clause result in a number of months of
coverage exceeding the maximum number
of months of coverage that the individual
would have had if the enrollment were not
so terminated.
‘‘(2) PERIOD
OF
PAYMENT.—The period de-
scribed in this paragraph for an individual is the pe-
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riod beginning with the first month in which the in-
dividual has attained 65 years of age and ending
with the month before the month in which the indi-
vidual attains 85 years of age.
‘‘(3) COLLECTION.—In the case of an individual
who is liable for a premium under this subsection,
the amount of the premium shall be collected in the
same manner as the premium for enrollment under
such part is collected under section 1840, except
that any reference in such section to the Federal
Supplementary Medical Insurance Trust Fund is
deemed to be a reference to the Medicare Early Ac-
cess Trust Fund established under section 1859D.
‘‘(c) APPLICATION OF CERTAIN PROVISIONS.—The
provisions of section 1840 (other than subsection (h))
shall apply to premiums collected under this section in the
same manner as they apply to premiums collected under
part B, except that any reference in such section to the
Federal Supplementary Medical Insurance Trust Fund is
deemed a reference to the Trust Fund established under
section 1859D.
‘‘SEC. 1859D. MEDICARE EARLY ACCESS TRUST FUND.
‘‘(a) ESTABLISHMENT OF TRUST FUND.—
‘‘(1) IN GENERAL.—There is hereby created on
the books of the Treasury of the United States a
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trust fund to be known as the ‘Medicare Early Ac-
cess Trust Fund’ (in this section referred to as the
‘Trust Fund’). The Trust Fund shall consist of such
gifts and bequests as may be made as provided in
section 201(i)(1) and such amounts as may be de-
posited in, or appropriated to, such fund as provided
in this title.
‘‘(2) PREMIUMS.—Premiums collected under
section 1859B shall be transferred to the Trust
Fund.
‘‘(3) TRANSFER OF SAVINGS FROM NEW FRAUD
AND ABUSE INITIATIVES.—
‘‘(A) IN GENERAL.—There is hereby trans-
ferred to the Trust Fund from the Federal
Hospital Insurance Trust Fund and from the
Federal 
Supplementary 
Medical 
Insurance
Trust Fund amounts equivalent to the amounts
(specified under subparagraph (B)) of the re-
ductions in expenditures under such respective
trust fund as may be attributable to the enact-
ment of the Medicare Fraud and Overpayment
Act of 1998.
‘‘(B) USE OF CBO ESTIMATES.—For each
fiscal year during the 10-fiscal-year period be-
ginning with fiscal year 1999, the amounts
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under subparagraph (A) shall be the amounts
described in such subparagraph as determined
by the Congressional Budget Office at the time
of, and in connection with, the enactment of the
Medicare Early Access Act of 1998. For subse-
quent fiscal years, the amounts under subpara-
graph (A) shall be the amount determined
under this subparagraph for the previous fiscal
year increased by the same percentage as the
percentage increase in aggregate expenditures
under this title from the second previous fiscal
year to the previous fiscal year.
‘‘(b) INCORPORATION OF PROVISIONS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
subsections (b) through (i) of section 1841 shall
apply with respect to the Trust Fund and this title
in the same manner as they apply with respect to
the Federal Supplementary Medical Insurance Trust
Fund and part B, respectively.
‘‘(2) MISCELLANEOUS REFERENCES.—In apply-
ing provisions of section 1841 under paragraph
(1)—
‘‘(A) any reference in such section to ‘this
part’ is construed to refer to this part D;
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‘‘(B) any reference in section 1841(h) to
section 1840(d) and in section 1841(i) to sec-
tions 1840(b)(1) and 1842(g) are deemed ref-
erences to comparable authority exercised under
this part; and
‘‘(C) payments may be made under section
1841(g) to the Trust Funds under sections
1817 and 1841 as reimbursement to such funds
for payments they made for benefits provided
under this part.
‘‘SEC. 1859E. OVERSIGHT AND ACCOUNTABILITY.
‘‘(a) THROUGH ANNUAL REPORTS OF TRUSTEES.—
The Board of Trustees of the Medicare Early Access
Trust Fund under section 1859D(b)(1) shall report on an
annual basis to Congress concerning the status of the
Trust Fund and the need for adjustments in the program
under this part to maintain financial solvency of the pro-
gram under this part.
‘‘(b) PERIODIC GAO REPORTS.—The Comptroller
General of the United States shall periodically submit to
Congress reports on the adequacy of the financing of cov-
erage provided under this part. The Comptroller General
shall include in such report such recommendations for ad-
justments in such financing and coverage as the Comptrol-
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ler General deems appropriate in order to maintain finan-
cial solvency of the program under this part.
‘‘SEC. 1859F. ADMINISTRATION AND MISCELLANEOUS.
‘‘(a) TREATMENT FOR PURPOSES OF TITLE.—Ex-
cept as otherwise provided in this part—
‘‘(1) individuals enrolled under this part shall
be treated for purposes of this title as though the in-
dividual were entitled to benefits under part A and
enrolled under part B; and
‘‘(2) benefits described in section 1859 shall be
payable under this title to such individuals in the
same manner as if such individuals were so entitled
and enrolled.
‘‘(b) NOT TREATED AS MEDICARE PROGRAM FOR
PURPOSES OF MEDICAID PROGRAM.—For purposes of ap-
plying title XIX (including the provision of medicare cost-
sharing assistance under such title), an individual who is
enrolled under this part shall not be treated as being enti-
tled to benefits under this title.
‘‘(c) NOT TREATED AS MEDICARE PROGRAM FOR
PURPOSES OF COBRA CONTINUATION PROVISIONS.—In
applying a COBRA continuation provision (as defined in
section 2791(d)(4) of the Public Health Service Act), any
reference to an entitlement to benefits under this title
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shall not be construed to include entitlement to benefits
under this title pursuant to the operation of this part.’’.
(b) CONFORMING AMENDMENTS TO SOCIAL SECU-
RITY ACT PROVISIONS.—
(1) Section 201(i)(1) of the Social Security Act
(42 U.S.C. 401(i)(1)) is amended by striking ‘‘or the
Federal Supplementary Medical Insurance Trust
Fund’’ and inserting ‘‘the Federal Supplementary
Medical Insurance Trust Fund, and the Medicare
Early Access Trust Fund’’.
(2) Section 201(g)(1)(A) of such Act (42
U.S.C. 401(g)(1)(A)) is amended by striking ‘‘and
the Federal Supplementary Medical Insurance Trust
Fund established by title XVIII’’ and inserting ‘‘,
the Federal Supplementary Medical Insurance Trust
Fund, and the Medicare Early Access Trust Fund
established by title XVIII’’.
(3) Section 1820(i) of such Act (42 U.S.C.
1395i–4(i)) is amended by striking ‘‘part D’’ and in-
serting ‘‘part E’’.
(4) Part C of title XVIII of such Act is amend-
ed—
(A) in section 1851(a)(2)(B) (42 U.S.C.
1395w–21(a)(2)(B)), by striking ‘‘1859(b)(3)’’
and inserting ‘‘1858(b)(3)’’;
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(B) in section 1851(a)(2)(C) (42 U.S.C.
1395w–21(a)(2)(C)), by striking ‘‘1859(b)(2)’’
and inserting ‘‘1858(b)(2)’’;
(C) in section 1852(a)(1) (42 U.S.C.
1395w–22(a)(1)), by striking ‘‘1859(b)(3)’’ and
inserting ‘‘1858(b)(3)’’;
(D) 
in 
section 
1852(a)(3)(B)(ii) 
(42
U.S.C. 1395w–22(a)(3)(B)(ii)), by striking
‘‘1859(b)(2)(B)’’ 
and 
inserting
‘‘1858(b)(2)(B)’’;
(E) in section 1853(a)(1)(A) (42 U.S.C.
1395w–23(a)(1)(A)), by striking ‘‘1859(e)(4)’’
and inserting ‘‘1858(e)(4)’’; and
(F) in section 1853(a)(3)(D) (42 U.S.C.
1395w–23(a)(3)(D)), by striking ‘‘1859(e)(4)’’
and inserting ‘‘1858(e)(4)’’.
(5) Section 1853(c) of such Act (42 U.S.C.
1395w–23(c)) is amended—
(A) in paragraph (1), by striking ‘‘or (7)’’
and inserting ‘‘, (7), or (8)’’, and
(B) by adding at the end the following:
‘‘(8) ADJUSTMENT FOR EARLY ACCESS.—In ap-
plying this subsection with respect to individuals en-
titled to benefits under part D, the Secretary shall
provide for an appropriate adjustment in the
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Medicare+Choice capitation rate as may be appro-
priate to reflect differences between the population
served under such part and the population under
parts A and B.’’.
(c) OTHER CONFORMING AMENDMENTS.—
(1) Section 138(b)(4) of the Internal Revenue
Code of 1986 is amended by striking ‘‘1859(b)(3)’’
and inserting ‘‘1858(b)(3)’’.
(2)(A) Section 602(2)(D)(ii) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1162(2)) is amended by inserting ‘‘(not including an
individual who is so entitled pursuant to enrollment
under section 1859A)’’ after ‘‘Social Security Act’’.
(B) Section 2202(2)(D)(ii) of the Public Health
Service Act (42 U.S.C. 300bb–2(2)(D)(ii)) is amend-
ed by inserting ‘‘(not including an individual who is
so entitled pursuant to enrollment under section
1859A)’’ after ‘‘Social Security Act’’.
(C) Section 4980B(f)(2)(B)(i)(V) of the Inter-
nal Revenue Code of 1986 is amended by inserting
‘‘(not including an individual who is so entitled pur-
suant to enrollment under section 1859A)’’ after
‘‘Social Security Act’’.
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TITLE II—ACCESS TO MEDICARE
BENEFITS 
FOR 
DISPLACED
WORKERS 55-TO-62 YEARS OF
AGE
SEC. 201. ACCESS TO MEDICARE BENEFITS FOR DISPLACED
WORKERS 55-TO-62 YEARS OF AGE.
(a) ELIGIBILITY.—Section 1859 of the Social Secu-
rity Act, as inserted by section 101(a)(2), is amended by
adding at the end the following new subsection:
‘‘(c) DISPLACED WORKERS AND SPOUSES.—
‘‘(1) DISPLACED WORKERS.—Subject to para-
graph (3), an individual who meets the following re-
quirements with respect to a month is eligible to en-
roll under this part with respect to such month:
‘‘(A) AGE.—As of the last day of the
month, the individual has attained 55 years of
age, but has not attained 62 years of age.
‘‘(B) MEDICARE
ELIGIBILITY
(BUT
FOR
AGE).—The individual would be eligible for ben-
efits under part A or part B for the month if
the individual were 65 years of age.
‘‘(C) LOSS OF EMPLOYMENT-BASED COV-
ERAGE.—
‘‘(i) ELIGIBLE
FOR
UNEMPLOYMENT
COMPENSATION.—The individual meets the
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requirements relating to period of covered
employment and conditions of separation
from employment to be eligible for unem-
ployment compensation (as defined in sec-
tion 85(b) of the Internal Revenue Code of
1986), based on a separation from employ-
ment occurring on or after January 1,
1998. The previous sentence shall not be
construed as requiring the individual to be
receiving such unemployment compensa-
tion.
‘‘(ii) LOSS
OF
EMPLOYMENT-BASED
COVERAGE.—Immediately before the time
of such separation of employment, the indi-
vidual was covered under a group health
plan on the basis of such employment, and,
because of such loss, is no longer eligible
for coverage under such plan (including
such eligibility based on the application of
a Federal or State COBRA continuation
provision) as of the last day of the month
involved.
‘‘(iii) PREVIOUS
CREDITABLE
COV-
ERAGE FOR AT LEAST 1 YEAR.—As of the
date on which the individual loses coverage
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described in clause (ii), the aggregate of
the periods of creditable coverage (as de-
termined under section 2701(c) of the
Public Health Service Act) is 12 months or
longer.
‘‘(D) EXHAUSTION OF AVAILABLE COBRA
CONTINUATION BENEFITS.—
‘‘(i) IN GENERAL.—In the case of an
individual described in clause (ii) for a
month described in clause (iii)—
‘‘(I) the individual (or spouse)
elected coverage described in clause
(ii); and
‘‘(II) the individual (or spouse)
has continued such coverage for all
months described in clause (iii) in
which the individual (or spouse) is eli-
gible for such coverage.
‘‘(ii) INDIVIDUALS TO WHOM COBRA
CONTINUATION
COVERAGE
MADE
AVAIL-
ABLE.—An individual described in this
clause is an individual—
‘‘(I) who was offered coverage
under a Federal or State COBRA
continuation provision at the time of
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loss of coverage eligibility described in
subparagraph (C)(ii); or
‘‘(II) whose spouse was offered
such coverage in a manner that per-
mitted coverage of the individual at
such time.
‘‘(iii) MONTHS
OF
POSSIBLE
COBRA
CONTINUATION COVERAGE.—A month de-
scribed in this clause is a month for which
an individual described in clause (ii) could
have had coverage described in such clause
as of the last day of the month if the indi-
vidual (or the spouse of the individual, as
the case may be) had elected such coverage
on a timely basis.
‘‘(E) 
NOT
ELIGIBLE
FOR
COVERAGE
UNDER
FEDERAL
HEALTH
INSURANCE
PRO-
GRAM OR GROUP HEALTH PLANS.—The individ-
ual is not eligible for benefits or coverage under
a Federal health insurance program or under a
group health plan (whether on the basis of the
individual’s employment or employment of the
individual’s spouse) as of the last day of the
month involved.
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‘‘(2) SPOUSE OF DISPLACED WORKER.—Subject
to paragraph (3), an individual who meets the fol-
lowing requirements with respect to a month is eligi-
ble to enroll under this part with respect to such
month:
‘‘(A) AGE.—As of the last day of the
month, the individual has not attained 62 years
of age.
‘‘(B) MARRIED TO DISPLACED WORKER.—
The individual is the spouse of an individual at
the time the individual enrolls under this part
under paragraph (1) and loses coverage de-
scribed in paragraph (1)(C)(ii) because the in-
dividual’s spouse lost such coverage.
‘‘(C) MEDICARE
ELIGIBILITY
(BUT
FOR
AGE); EXHAUSTION OF ANY COBRA CONTINU-
ATION COVERAGE; AND NOT ELIGIBLE FOR COV-
ERAGE UNDER FEDERAL HEALTH INSURANCE
PROGRAM OR GROUP HEALTH PLAN.—The indi-
vidual meets the requirements of subparagraphs
(B), (D), and (E) of paragraph (1).
‘‘(3) CHANGE
IN
HEALTH
PLAN
ELIGIBILITY
AFFECTS
CONTINUED
ELIGIBILITY.—For provision
that terminates enrollment under this section in the
case of an individual who becomes eligible for cov-
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erage under a group health plan or under a Federal
health 
insurance 
program, 
see 
section
1859A(d)(1)(C).
‘‘(4) REENROLLMENT PERMITTED.—Nothing in
this subsection shall be construed as preventing an
individual who, after enrolling under this subsection,
terminates such enrollment from subsequently re-
enrolling under this subsection if the individual is el-
igible to enroll under this subsection at that time.’’.
(b) ENROLLMENT.—Section 1859A of such Act, as
so inserted, is amended—
(1) in subsection (a), by striking ‘‘and’’ at the
end of paragraph (1), by striking the period at the
end of paragraph (2) and inserting ‘‘; and’’, and by
adding at the end the following new paragraph:
‘‘(3) individuals whose coverage under this part
would terminate because of subsection (d)(1)(B)(ii)
are provided notice and an opportunity to continue
enrollment 
in 
accordance 
with 
section
1859E(c)(1).’’;
(2) in subsection (b), by inserting after Not-
withstanding any other provision of law, (1) the fol-
lowing:
‘‘(2) DISPLACED WORKERS AND SPOUSES.—In
the case of individuals eligible to enroll under this
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part under section 1859(c), the following rules
apply:
‘‘(A) INITIAL
ENROLLMENT
PERIOD.—If
the individual is first eligible to enroll under
such section for July 1999, the enrollment pe-
riod shall begin on May 1, 1999, and shall end
on August 31, 1999. Any such enrollment be-
fore July 1, 1999, is conditioned upon compli-
ance with the conditions of eligibility for July
1999.
‘‘(B) SUBSEQUENT PERIODS.—If the indi-
vidual is eligible to enroll under such section for
a month after July 1999, the enrollment period
based on such eligibility shall begin on the first
day of the second month before the month in
which the individual first is eligible to so enroll
(or reenroll) and shall end four months later.’’;
(3) in subsection (d)(1), by amending subpara-
graph (B) to read as follows:
‘‘(B) TERMINATION BASED ON AGE.—
‘‘(i) AT
AGE
65.—Subject to clause
(ii), the individual attains 65 years of age.
‘‘(ii) AT
AGE
FOR
DISPLACED
WORKERS AND SPOUSES.—In the case of
an individual enrolled under this part pur-
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suant to section 1859(c), subject to sub-
section (a)(1), the individual attains 62
years of age.’’;
(4) in subsection (d)(1), by adding at the end
the following new subparagraph:
‘‘(C) OBTAINING ACCESS TO EMPLOYMENT-
BASED COVERAGE OR FEDERAL HEALTH INSUR-
ANCE
PROGRAM
FOR
INDIVIDUALS
UNDER
YEARS OF AGE.—In the case of an individual
who has not attained 62 years of age, the indi-
vidual is covered (or eligible for coverage) as a
participant or beneficiary under a group health
plan or under a Federal health insurance pro-
gram.’’;
(5) in subsection (d)(2), by amending subpara-
graph (C) to read as follows:
‘‘(C) AGE OR MEDICARE ELIGIBILITY.—
‘‘(i) IN
GENERAL.—The termination
of a coverage period under paragraph
(1)(A)(iii) or (1)(B)(i) shall take effect as
of the first day of the month in which the
individual attains 65 years of age or be-
comes entitled to benefits under part A or
enrolled for benefits under part B.
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‘‘(ii) DISPLACED WORKERS.—The ter-
mination of a coverage period under para-
graph (1)(B)(ii) shall take effect as of the
first day of the month in which the individ-
ual attains 62 years of age, unless the in-
dividual has enrolled under this part pur-
suant to section 1859(b) and section
1859E(c)(1).’’; and
(6) in subsection (d)(2), by adding at the end
the following new subparagraph:
‘‘(D) ACCESS TO COVERAGE.—The termi-
nation of a coverage period under paragraph
(1)(C) shall take effect on the date on which
the individual is eligible to begin a period of
creditable coverage (as defined in section
2701(c) of the Public Health Service Act)
under a group health plan or under a Federal
health insurance program.’’.
(c) PREMIUMS.—Section 1859B of such Act, as so
inserted, is amended—
(1) in subsection (a)(1), by adding at the end
the following:
‘‘(B) BASE MONTHLY PREMIUM FOR INDI-
VIDUALS UNDER 62 YEARS OF AGE.—A base
monthly premium for individuals under 62
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years of age, equal to 1⁄12 of the base annual
premium rate computed under subsection (d)(3)
for each premium area and age cohort.’’; and
(2) by adding at the end the following new sub-
section:
‘‘(d) BASE MONTHLY PREMIUM FOR INDIVIDUALS
UNDER 62 YEARS OF AGE.—
‘‘(1) NATIONAL, PER CAPITA AVERAGE FOR AGE
GROUPS.—
‘‘(A) ESTIMATE
OF
AMOUNT.—The Sec-
retary shall estimate the average, annual per
capita amount that would be payable under this
title with respect to individuals residing in the
United States who meet the requirement of sec-
tion 1859(c)(1)(A) within each of the age co-
horts established under subparagraph (B) as if
all such individuals within such cohort were eli-
gible for (and enrolled) under this title during
the entire year (and assuming that section
1862(b)(2)(A)(i) did not apply).
‘‘(B) AGE
COHORTS.—For purposes of
subparagraph (A), the Secretary shall establish
separate age cohorts in 5 year age increments
for individuals who have not attained 60 years
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of ages and a separate cohort for individuals
who have attained 60 years of age.
‘‘(2) GEOGRAPHIC
ADJUSTMENT.—The Sec-
retary shall adjust the amount determined under
paragraph (1)(A) for each premium area (specified
under subsection (a)(3)) in the same manner and to
the same extent as the Secretary provides for adjust-
ments under subsection (b)(2).
‘‘(3) BASE ANNUAL PREMIUM.—The base an-
nual premium under this subsection for months in a
year for individuals in an age cohort under para-
graph (1)(B) in a premium area is equal to 165 per-
cent of the average, annual per capita amount esti-
mated under paragraph (1) for the age cohort and
year, adjusted for such area under paragraph (2).
‘‘(4) PRO-RATION OF PREMIUMS TO REFLECT
COVERAGE DURING A PART OF A MONTH.—If the
Secretary provides for coverage of portions of a
month under section 1859A(c)(2), the Secretary
shall pro-rate the premiums attributable to such cov-
erage under this section to reflect the portion of the
month so covered.’’.
(d) ADMINISTRATIVE PROVISIONS.—Section 1859F
of such Act, as so inserted, is amended by adding at the
end the following:
HR 3470 IH1S
‘‘(d) ADDITIONAL ADMINISTRATIVE PROVISIONS.—
‘‘(1) PROCESS FOR CONTINUED ENROLLMENT
OF DISPLACED WORKERS WHO ATTAIN 62 YEARS OF
AGE.—The Secretary shall provide a process for the
continuation of enrollment of individuals whose en-
rollment under section 1859(c) would be terminated
upon attaining 62 years of age. Under such process
such individuals shall be provided appropriate and
timely notice before the date of such termination
and of the requirement to enroll under this part pur-
suant to section 1859(b) in order to continue entitle-
ment to benefits under this title after attaining 62
years of age.
‘‘(2) ARRANGEMENTS WITH STATES FOR DE-
TERMINATIONS RELATING TO UNEMPLOYMENT COM-
PENSATION ELIGIBILITY.—The Secretary may pro-
vide for appropriate arrangements with States for
the determination of whether individuals in the State
meet or would meet the requirements of section
1859(c)(1)(C)(i).’’.
(e) CONFORMING AMENDMENT
TO HEADING
TO
PART.—The heading of part D of title XVIII of the Social
Security Act, as so inserted, is amended by striking ‘‘62’’
and inserting ‘‘55’’.
HR 3470 IH1S
TITLE III—COBRA PROTECTION
FOR EARLY RETIREES
Subtitle A—Amendments to the
Employee 
Retirement 
Income
Security Act of 1974
SEC. 301. COBRA CONTINUATION BENEFITS FOR CERTAIN
RETIRED 
WORKERS 
WHO 
LOSE 
RETIREE
HEALTH COVERAGE.
(a) 
ESTABLISHMENT
OF
NEW
QUALIFYING
EVENT.—
(1) IN GENERAL.—Section 603 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1163) is amended by inserting after paragraph (6)
the following new paragraph:
‘‘(7) The termination or substantial reduction
in benefits (as defined in section 607(7)) of group
health plan coverage as a result of plan changes or
termination in the case of a covered employee who
is a qualified retiree.’’.
(2) QUALIFIED
RETIREE; QUALIFIED
BENE-
FICIARY; 
AND
SUBSTANTIAL
REDUCTION
DE-
FINED.—Section 607 of such Act (29 U.S.C. 1167)
is amended—
(A) in paragraph (3)—
HR 3470 IH1S
(i) in subparagraph (A), by inserting
‘‘except as otherwise provided in this para-
graph,’’ after ‘‘means,’’; and
(ii) by adding at the end the following
new subparagraph:
‘‘(D) SPECIAL RULE FOR QUALIFYING RE-
TIREES AND DEPENDENTS.—In the case of a
qualifying event described in section 603(7), the
term ‘qualified beneficiary’ means a qualified
retiree and any other individual who, on the day
before such qualifying event, is a beneficiary
under the plan on the basis of the individual’s
relationship to such qualified retiree.’’; and
(B) by adding at the end the following new
paragraphs:
‘‘(6) QUALIFIED RETIREE.—The term ‘qualified
retiree’ means, with respect to a qualifying event de-
scribed in section 603(7), a covered employee who,
at the time of the event—
‘‘(A) has attained 55 years of age; and
‘‘(B) was receiving group health coverage
under the plan by reason of the retirement of
the covered employee.
‘‘(7) SUBSTANTIAL
REDUCTION.—The term
‘substantial reduction’—
HR 3470 IH1S
‘‘(A) means, as determined under regula-
tions of the Secretary and with respect to a
qualified beneficiary, a reduction in the average
actuarial value of benefits under the plan
(through reduction or elimination of benefits,
an increase in premiums, deductibles, copay-
ments, and coinsurance, or any combination
thereof), since the date of commencement of
coverage of the beneficiary by reason of the re-
tirement of the covered employee (or, if later,
January 6, 1998), in an amount equal to at
least 50 percent of the total average actuarial
value of the benefits under the plan as of such
date (taking into account an appropriate ad-
justment to permit comparison of values over
time); and
‘‘(B) includes an increase in premiums re-
quired to an amount that exceeds the premium
level described in the fourth sentence of section
602(3).’’.
(b) DURATION OF COVERAGE THROUGH AGE 65.—
Section 602(2)(A) of such Act (29 U.S.C. 1162(2)(A)) is
amended—
(1) in clause (ii), by inserting ‘‘or 603(7)’’ after
‘‘603(6)’’;
HR 3470 IH1S
(2) in clause (iv), by striking ‘‘or 603(6)’’ and
inserting ‘‘, 603(6), or 603(7)’’;
(3) by redesignating clause (iv) as clause (vi);
(4) by redesignating clause (v) as clause (iv)
and by moving such clause to immediately follow
clause (iii); and
(5) by inserting after such clause (iv) the fol-
lowing new clause:
‘‘(v) SPECIAL RULE FOR CERTAIN DE-
PENDENTS IN CASE OF TERMINATION OR
SUBSTANTIAL
REDUCTION
OF
RETIREE
HEALTH
COVERAGE.—In the case of a
qualifying 
event 
described 
in 
section
603(7), in the case of a qualified bene-
ficiary described in section 607(3)(D) who
is not the qualified retiree or spouse of
such retiree, the later of—
‘‘(I) the date that is 36 months
after the earlier of the date the quali-
fied retiree becomes entitled to bene-
fits under title XVIII of the Social Se-
curity Act, or the date of the death of
the qualified retiree; or
HR 3470 IH1S
‘‘(II) the date that is 36 months
after the date of the qualifying
event.’’.
(c) TYPE OF COVERAGE IN CASE OF TERMINATION
OR SUBSTANTIAL REDUCTION OF RETIREE HEALTH COV-
ERAGE.—Section 602(1) of such Act (29 U.S.C. 1162(1))
is amended—
(1) by striking ‘‘The coverage’’ and inserting
the following:
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the coverage’’; and
(2) by adding at the end the following:
‘‘(B) CERTAIN RETIREES.—In the case of
a qualifying event described in section 603(7),
in applying the first sentence of subparagraph
(A) and the fourth sentence of paragraph (3),
the coverage offered that is the most prevalent
coverage option (as determined under regula-
tions of the Secretary) continued under the
group health plan (or, if none, under the most
prevalent other plan offered by the same plan
sponsor) shall be treated as the coverage de-
scribed in such sentence, or (at the option of
the plan and qualified beneficiary) such other
HR 3470 IH1S
coverage option as may be offered and elected
by the qualified beneficiary involved.’’.
(d) INCREASED LEVEL OF PREMIUMS PERMITTED.—
Section 602(3) of such Act (29 U.S.C. 1162(3)) is amend-
ed by adding at the end the following new sentence: ‘‘In
the case of an individual provided continuation coverage
by reason of a qualifying event described in section
603(7), any reference in subparagraph (A) of this para-
graph to ‘102 percent of the applicable premium’ is
deemed a reference to ‘125 percent of the applicable pre-
mium for employed individuals (and their dependents, if
applicable) for the coverage option referred to in para-
graph (1)(B)’.’’.
(e) NOTICE.—Section 606(a) of such Act (29 U.S.C.
1166) is amended—
(1) in paragraph (4)(A), by striking ‘‘or (6)’’
and inserting ‘‘(6), or (7)’’; and
(2) by adding at the end the following:
‘‘The notice under paragraph (4) in the case of a qualify-
ing event described in section 603(7) shall be provided at
least 90 days before the date of the qualifying event.’’.
(f) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
this section (other than subsection (e)(2)) shall
apply to qualifying events occurring on or after Jan-
HR 3470 IH1S
uary 6, 1998. In the case of a qualifying event oc-
curring on or after such date and before the date of
the enactment of this Act, such event shall be
deemed (for purposes of such amendments) to have
occurred on the date of the enactment of this Act.
(2) ADVANCE NOTICE OF TERMINATIONS AND
REDUCTIONS.—The amendment made by subsection
(e)(2) shall apply to qualifying events occurring
after the date of the enactment of this Act, except
that in no case shall notice be required under such
amendment before such date.
Subtitle B—Amendments to the
Public Health Service Act
SEC. 311. COBRA CONTINUATION BENEFITS FOR CERTAIN
RETIRED 
WORKERS 
WHO 
LOSE 
RETIREE
HEALTH COVERAGE.
(a) 
ESTABLISHMENT
OF
NEW
QUALIFYING
EVENT.—
(1) IN GENERAL.—Section 2203 of the Public
Health Service Act (42 U.S.C. 300bb–3) is amended
by inserting after paragraph (5) the following new
paragraph:
‘‘(6) The termination or substantial reduction
in benefits (as defined in section 2208(6)) of group
health plan coverage as a result of plan changes or
HR 3470 IH1S
termination in the case of a covered employee who
is a qualified retiree.’’.
(2) QUALIFIED
RETIREE; QUALIFIED
BENE-
FICIARY; 
AND
SUBSTANTIAL
REDUCTION
DE-
FINED.—Section 2208 of such Act (42 U.S.C.
300bb–8) is amended—
(A) in paragraph (3)—
(i) in subparagraph (A), by inserting
‘‘except as otherwise provided in this para-
graph,’’ after ‘‘means,’’; and
(ii) by adding at the end the following
new subparagraph:
‘‘(C) SPECIAL RULE FOR QUALIFYING RE-
TIREES AND DEPENDENTS.—In the case of a
qualifying event described in section 2203(6),
the term ‘qualified beneficiary’ means a quali-
fied retiree and any other individual who, on
the day before such qualifying event, is a bene-
ficiary under the plan on the basis of the indi-
vidual’s relationship to such qualified retiree.’’;
and
(B) by adding at the end the following new
paragraphs:
‘‘(5) QUALIFIED RETIREE.—The term ‘qualified
retiree’ means, with respect to a qualifying event de-
HR 3470 IH1S
scribed in section 2203(6), a covered employee who,
at the time of the event—
‘‘(A) has attained 55 years of age; and
‘‘(B) was receiving group health coverage
under the plan by reason of the retirement of
the covered employee.
‘‘(6) SUBSTANTIAL
REDUCTION.—The term
‘substantial reduction’—
‘‘(A) means, as determined under regula-
tions of the Secretary of Labor and with respect
to a qualified beneficiary, a reduction in the av-
erage actuarial value of benefits under the plan
(through reduction or elimination of benefits,
an increase in premiums, deductibles, copay-
ments, and coinsurance, or any combination
thereof), since the date of commencement of
coverage of the beneficiary by reason of the re-
tirement of the covered employee (or, if later,
January 6, 1998), in an amount equal to at
least 50 percent of the total average actuarial
value of the benefits under the plan as of such
date (taking into account an appropriate ad-
justment to permit comparison of values over
time); and
HR 3470 IH1S
‘‘(B) includes an increase in premiums re-
quired to an amount that exceeds the premium
level described in the fourth sentence of section
2202(3).’’.
(b) DURATION OF COVERAGE THROUGH AGE 65.—
Section 2202(2)(A) of such Act (42 U.S.C. 300bb–
2(2)(A)) is amended—
(1) by redesignating clause (iii) as clause (iv);
and
(2) by inserting after clause (ii) the following
new clause:
‘‘(iii) SPECIAL
RULE
FOR
CERTAIN
DEPENDENTS
IN
CASE
OF
TERMINATION
OR SUBSTANTIAL REDUCTION OF RETIREE
HEALTH
COVERAGE.—In the case of a
qualifying 
event 
described 
in 
section
2203(6), in the case of a qualified bene-
ficiary described in section 2208(3)(C) who
is not the qualified retiree or spouse of
such retiree, the later of—
‘‘(I) the date that is 36 months
after the earlier of the date the quali-
fied retiree becomes entitled to bene-
fits under title XVIII of the Social Se-
HR 3470 IH1S
curity Act, or the date of the death of
the qualified retiree; or
‘‘(II) the date that is 36 months
after the date of the qualifying
event.’’.
(c) TYPE OF COVERAGE IN CASE OF TERMINATION
OR SUBSTANTIAL REDUCTION OF RETIREE HEALTH COV-
ERAGE.—Section 2202(1) of such Act (42 U.S.C. 300bb–
2(1)) is amended—
(1) by striking ‘‘The coverage’’ and inserting
the following:
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the coverage’’; and
(2) by adding at the end the following:
‘‘(B) CERTAIN RETIREES.—In the case of
a qualifying event described in section 2203(6),
in applying the first sentence of subparagraph
(A) and the fourth sentence of paragraph (3),
the coverage offered that is the most prevalent
coverage option (as determined under regula-
tions of the Secretary of Labor) continued
under the group health plan (or, if none, under
the most prevalent other plan offered by the
same plan sponsor) shall be treated as the cov-
erage described in such sentence, or (at the op-
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tion of the plan and qualified beneficiary) such
other coverage option as may be offered and
elected by the qualified beneficiary involved.’’.
(d) INCREASED LEVEL OF PREMIUMS PERMITTED.—
Section 2202(3) of such Act (42 U.S.C. 300bb–2(3)) is
amended by adding at the end the following new sentence:
‘‘In the case of an individual provided continuation cov-
erage by reason of a qualifying event described in section
2203(6), any reference in subparagraph (A) of this para-
graph to ‘102 percent of the applicable premium’ is
deemed a reference to ‘125 percent of the applicable pre-
mium for employed individuals (and their dependents, if
applicable) for the coverage option referred to in para-
graph (1)(B)’.’’.
(e) NOTICE.—Section 2206(a) of such Act (42 U.S.C.
300bb–6(a)) is amended—
(1) in paragraph (4)(A), by striking ‘‘or (4)’’
and inserting ‘‘(4), or (6)’’; and
(2) by adding at the end the following:
‘‘The notice under paragraph (4) in the case of a qualify-
ing event described in section 2203(6) shall be provided
at least 90 days before the date of the qualifying event.’’.
(f) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
this section (other than subsection (e)(2)) shall
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apply to qualifying events occurring on or after Jan-
uary 6, 1998. In the case of a qualifying event oc-
curring on or after such date and before the date of
the enactment of this Act, such event shall be
deemed (for purposes of such amendments) to have
occurred on the date of the enactment of this Act.
(2) ADVANCE NOTICE OF TERMINATIONS AND
REDUCTIONS.—The amendment made by subsection
(e)(2) shall apply to qualifying events occurring
after the date of the enactment of this Act, except
that in no case shall notice be required under such
amendment before such date.
Subtitle C—Amendments to the
Internal Revenue Code of 1986
SEC. 321. COBRA CONTINUATION BENEFITS FOR CERTAIN
RETIRED 
WORKERS 
WHO 
LOSE 
RETIREE
HEALTH COVERAGE.
(a) 
ESTABLISHMENT
OF
NEW
QUALIFYING
EVENT.—
(1) IN GENERAL.—Section 4980B(f)(3) of the
Internal Revenue Code of 1986 is amended by in-
serting after subparagraph (F) the following new
subparagraph:
‘‘(G) The termination or substantial reduc-
tion in benefits (as defined in subsection (g)(6))
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of group health plan coverage as a result of
plan changes or termination in the case of a
covered employee who is a qualified retiree.’’.
(2) QUALIFIED
RETIREE; QUALIFIED
BENE-
FICIARY; 
AND
SUBSTANTIAL
REDUCTION
DE-
FINED.—Section 4980B(g) of such Code is amend-
ed—
(A) in paragraph (1)—
(i) in subparagraph (A), by inserting
‘‘except as otherwise provided in this para-
graph,’’ after ‘‘means,’’; and
(ii) by adding at the end the following
new subparagraph:
‘‘(E) SPECIAL RULE FOR QUALIFYING RE-
TIREES AND DEPENDENTS.—In the case of a
qualifying 
event 
described 
in 
subsection
(f)(3)(G), the term ‘qualified beneficiary’ means
a qualified retiree and any other individual who,
on the day before such qualifying event, is a
beneficiary under the plan on the basis of the
individual’s relationship to such qualified re-
tiree.’’; and
(B) by adding at the end the following new
paragraphs:
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‘‘(5) QUALIFIED RETIREE.—The term ‘qualified
retiree’ means, with respect to a qualifying event de-
scribed in subsection (f)(3)(G), a covered employee
who, at the time of the event—
‘‘(A) has attained 55 years of age; and
‘‘(B) was receiving group health coverage
under the plan by reason of the retirement of
the covered employee.
‘‘(6) SUBSTANTIAL
REDUCTION.—The term
‘substantial reduction’—
‘‘(A) means, as determined under regula-
tions of the Secretary of Labor and with respect
to a qualified beneficiary, a reduction in the av-
erage actuarial value of benefits under the plan
(through reduction or elimination of benefits,
an increase in premiums, deductibles, copay-
ments, and coinsurance, or any combination
thereof), since the date of commencement of
coverage of the beneficiary by reason of the re-
tirement of the covered employee (or, if later,
January 6, 1998), in an amount equal to at
least 50 percent of the total average actuarial
value of the benefits under the plan as of such
date (taking into account an appropriate ad-
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justment to permit comparison of values over
time); and
‘‘(B) includes an increase in premiums re-
quired to an amount that exceeds the premium
level described in the fourth sentence of sub-
section (f)(2)(C).’’.
(b) DURATION OF COVERAGE THROUGH AGE 65.—
Section 4980B(f)(2)(B)(i) of such Code is amended—
(1) in subclause (II), by inserting ‘‘or (3)(G)’’
after ‘‘(3)(F)’’;
(2) in subclause (IV), by striking ‘‘or (3)(F)’’
and inserting ‘‘, (3)(F), or (3)(G)’’;
(3) by redesignating subclause (IV) as sub-
clause (VI);
(4) by redesignating subclause (V) as subclause
(IV) and by moving such clause to immediately fol-
low subclause (III); and
(5) by inserting after such subclause (IV) the
following new subclause:
‘‘(V) SPECIAL
RULE
FOR
CER-
TAIN DEPENDENTS IN CASE OF TER-
MINATION
OR
SUBSTANTIAL
REDUC-
TION
OF
RETIREE
HEALTH
COV-
ERAGE.—In the case of a qualifying
event described in paragraph (3)(G),
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in the case of a qualified beneficiary
described in subsection (g)(1)(E) who
is not the qualified retiree or spouse
of such retiree, the later of—
‘‘(a) the date that is 36
months after the earlier of the
date the qualified retiree becomes
entitled to benefits under title
XVIII of the Social Security Act,
or the date of the death of the
qualified retiree; or
‘‘(b) the date that is 36
months after the date of the
qualifying event.’’.
(c) TYPE OF COVERAGE IN CASE OF TERMINATION
OR SUBSTANTIAL REDUCTION OF RETIREE HEALTH COV-
ERAGE.—Section 4980B(f)(2)(A) of such Code is amend-
ed—
(1) by striking ‘‘The coverage’’ and inserting
the following:
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the coverage’’; and
(2) by adding at the end the following:
‘‘(ii) CERTAIN
RETIREES.—In the
case of a qualifying event described in
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(e) NOTICE.—Section 4980B(f)(6) of such Code is
amended—
(1) in subparagraph (D)(i), by striking ‘‘or
(F)’’ and inserting ‘‘(F), or (G)’’; and
(2) by adding at the end the following:
‘‘The notice under subparagraph (D)(i) in the case of a
qualifying event described in paragraph (3)(G) shall be
provided at least 90 days before the date of the qualifying
event.’’.
(f) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
this section (other than subsection (e)(2)) shall
apply to qualifying events occurring on or after Jan-
uary 6, 1998. In the case of a qualifying event oc-
curring on or after such date and before the date of
the enactment of this Act, such event shall be
deemed (for purposes of such amendments) to have
occurred on the date of the enactment of this Act.
(2) ADVANCE NOTICE OF TERMINATIONS AND
REDUCTIONS.—The amendment made by subsection
(e)(2) shall apply to qualifying events occurring
after the date of the enactment of this Act, except
that in no case shall notice be required under such
amendment before such date.
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TITLE IV—FINANCING
SEC. 401. REFERENCE TO FINANCING PROVISIONS.
Any increase in payments under the medicare pro-
gram under title XVIII of the Social Security Act that
results from the enactment of this Act shall be offset by
reductions in payments under such program pursuant to
the anti-fraud and anti-abuse provisions enacted as part
of the Medicare Fraud and Overpayment Act of 1998.
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