I
107TH CONGRESS
2D SESSION
H. R. 3976
To amend title XVIII of the Social Security Act to provide for a direct
Medicare supplemental insurance option.
IN THE HOUSE OF REPRESENTATIVES
MARCH 14, 2002
Mr. MCDERMOTT (for himself and Mr. STARK) introduced the following bill;
which was referred to the Committee on Energy and Commerce, and in
addition to the Committee on Ways and Means, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
A BILL
To amend title XVIII of the Social Security Act to provide
for a direct Medicare supplemental insurance option.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Medicare Direct Sup-
plemental Insurance Option Act of 2002’’.
SEC. 2. MEDICARE DIRECT SUPPLEMENTAL INSURANCE
OPTION.
(a) IN GENERAL.—Title XVIII of the Social Security
Act is amended by inserting after section 1882 the fol-
lowing new section:
‘‘MEDICARE DIRECT SUPPLEMENTAL INSURANCE OPTION
‘‘SEC. 1882A. (a) IN GENERAL.—The Secretary shall
provide for the offering under this section of a voluntary
program to supplement the benefits provided to individ-
uals under parts A and B of this title.
‘‘(b) ELIGIBILITY; ENROLLMENT.—The Secretary
shall provide procedures for the enrollment under the pro-
gram under this section of individuals who are entitled to
benefits under part A and enrolled under part B, but who
are not enrolled in Medicare+Choice plan under part C
(or in a plan under section 1876). Such procedures shall
be consistent with the following:
‘‘(1) There shall be an initial enrollment period
during the last calendar quarter of 2003 that per-
mits all individuals who are eligible to enroll at that
time under this subsection may enroll and obtain
benefits effective on January 1, 2004.
‘‘(2) For individuals who are not eligible to en-
roll at such time but who become eligible subse-
quently, there shall be an individual enrollment pe-
riod which is the 6-month period described in section
1882(s)(2)(A).
‘‘(3) The Secretary shall permit eligible individ-
uals to enroll at other times (and not less frequently
than annually) in a uniform manner, but such en-
rollment is subject to a late enrollment penalty
under subsection (d)(2)(B).
‘‘(c) BENEFITS.—
‘‘(1) IN
GENERAL.—The benefits provided
under the program under this section shall consist of
payment of the cost of deductibles, copayments, and
other cost-sharing amounts (including amounts at-
tributable to and permitted as balance billing) other-
wise imposed or permitted under this title, subject to
an annual deductible of $100.
‘‘(2) ADMINISTRATION.—The Secretary shall
coordinate payment of benefits under this part with
those under parts A and B and may, for such pur-
pose, enter into appropriate arrangements with
qualified entities (which may include fiscal inter-
mediaries and carriers).
‘‘(3) NO
PRE-EXISTING
CONDITION
LIMITA-
TIONS.—The benefits under this section shall not be
subject to any pre-existing condition or similar un-
derwriting limitation.
‘‘(d) PREMIUMS.—
‘‘(1) ACTUARIAL
COST.—The Secretary shall,
during September of each year beginning with 2003,
determine a monthly actuarial rate for all enrollees
under this section, which rate shall be applicable for
months in the succeeding calendar year. Such actu-
arial rate shall be the amount the Secretary esti-
mates to be necessary so that the aggregate amount
for such calendar year with respect to those enrollees
will equal the total amount which the Secretary esti-
mates will be payable under this section for benefits
accrued (including services performed and related
administrative costs incurred) in such calendar year
under the program under this section. In calculating
the monthly actuarial rate, the Secretary shall make
adjustments to take into account errors in esti-
mations under this paragraph for previous years and
shall include an appropriate amount for a contin-
gency margin.
‘‘(2) PREMIUM.—
‘‘(A) IN GENERAL.—The monthly premium
of each individual enrolled under this section
for a month in a year shall be the monthly ac-
tuarial rate determined under paragraph (1) for
months in such year. Such premium shall be
community-rated and shall not vary among en-
rollees based upon the age, place of residence,
or any other factors, except as provided under
subparagraph (B).
‘‘(B) PENALTY FOR LATE ENROLLMENT.—
In the case of an individual who does not enroll
under this section in a time period provided
under paragraph (1) or (2) of subsection (b),
the Secretary shall increase the monthly pre-
mium (in a manner similar to that applied
under part B pursuant to section 1839(b)) of
10 percent for each full 12 months in which the
individual could have been but was not so en-
rolled. In applying such an increase—
‘‘(i) the aggregate percentage increase
may not exceed 100 percent; and
‘‘(ii) periods of time in which an indi-
vidual is enrolled under an employee wel-
fare benefit plan described in section
1882(s)(3)(B)(i), 
under 
a
Medicare+Choice plan, with an organiza-
tion described in section 1882(s)(3)(B)(iii),
or under a PACE program under section
1894 shall not be taken into account.
‘‘(3) COLLECTION.—The Secretary shall pro-
vide for the collection of premiums for enrollees
under this part in the same manner as premiums
under part B are collected under section 1840, ex-
cept that any reference in such section to the Fed-
eral Supplementary Medical Insurance Trust Fund
shall be deemed a reference to an account (to be
known as the ‘Direct Medicare Supplemental Insur-
ance Account’) to be established in the Treasury by
the Secretary to carry out the program under this
section. Amounts in such account may be invested
and draw interest in the same manner as such Trust
Fund under section 1840(c).
‘‘(4) USE OF FUNDS.—Premium amounts de-
posited into the account established under paragraph
(3) shall be available without regard to appropria-
tions to the Secretary to make payment for benefits
and administrative costs incurred in carrying out
this section.
‘‘(e) NONDUPLICATION
OF COVERAGE.—For pur-
poses of applying section 1882(d)(3)(A), coverage under
this section shall be treated as coverage under a medicare
supplemental policy.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act and shall apply to benefits for months
beginning with January 2004.
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