‘‘(1) CHOICE OF AT LEAST TWO PLANS IN EACH 
AREA.—
‘‘(A) IN
GENERAL.—The Secretary shall 
assure that each individual who is entitled to 
benefits under part A or is enrolled under part 
B and who is residing in an area has available, 
consistent with subparagraph (B), a choice of 
enrollment in at least two qualifying plans (as 
defined in paragraph (5)) in the area in which 
the individual resides, at least one of which is 
a prescription drug plan. 
‘‘(B) 
REQUIREMENT
FOR
DIFFERENT 
PLAN SPONSORS.—The requirement in subpara-
graph (A) is not satisfied with respect to an 
area 
if 
only 
one 
PDP 
sponsor 
or 
Medicare+Choice organization offers all the 
qualifying plans in the area. 
‘‘(2) GUARANTEEING ACCESS TO COVERAGE.—
In order to assure access under paragraph (1) and 
consistent with paragraph (3), the Secretary may 
provide financial incentives (including partial under-
writing of risk) for a PDP sponsor to expand the 
service area under an existing prescription drug plan 
to adjoining or additional areas or to establish such 
a plan (including offering such a plan on a regional
or nationwide basis), but only so long as (and to the 
extent) necessary to assure the access guaranteed 
under paragraph (1). 
‘‘(3) LIMITATION
ON
AUTHORITY.—In exer-
cising authority under this subsection, the Sec-
retary—
‘‘(A) shall not provide for the full under-
writing of financial risk for any PDP sponsor; 
‘‘(B) shall not provide for any under-
writing of financial risk for a public PDP spon-
sor with respect to the offering of a nationwide 
prescription drug plan; and 
‘‘(C) shall seek to maximize the assump-
tion of financial risk by PDP sponsors or 
Medicare+Choice organizations. 
‘‘(4) REPORTS.—The Secretary shall, in each 
annual report to Congress under section 1807(f), in-
clude information on the exercise of authority under 
this subsection. The Secretary also shall include 
such recommendations as may be appropriate to 
minimize the exercise of such authority, including 
minimizing the assumption of financial risk.
‘‘(5) QUALIFYING
PLAN
DEFINED.—For pur-
poses of this subsection, the term ‘qualifying plan’ 
means 
a 
prescription 
drug 
plan 
or 
a
Medicare+Choice plan that includes qualified pre-
scription drug coverage. 
‘‘SEC. 1860F. PREMIUMS. 
‘‘(a) SUBMISSION OF PREMIUMS AND RELATED IN-
FORMATION.—
‘‘(1) IN GENERAL.—Each PDP sponsor shall 
submit to the Secretary information of the type de-
scribed in paragraph (2) in the same manner as in-
formation is submitted by a Medicare+Choice orga-
nization under section 1854(a)(1). 
‘‘(2) TYPE OF INFORMATION.—The information 
described in this paragraph is the following: 
‘‘(A) Information on the qualified prescrip-
tion drug coverage to be provided. 
‘‘(B) Information on the actuarial value of 
the coverage. 
‘‘(C) Information on the monthly premium 
to be charged for the coverage, including an ac-
tuarial certification of—
‘‘(i) the actuarial basis for such pre-
mium; 
‘‘(ii) the portion of such premium at-
tributable to benefits in excess of standard 
coverage; and
‘‘(iii) the reduction in such premium 
resulting from the reinsurance subsidy 
payments provided under section 1860H. 
‘‘(D) Such other information as the Sec-
retary may require to carry out this part. 
‘‘(3) REVIEW.—The Secretary shall review the 
information filed under paragraph (2) for the pur-
pose of conducting negotiations under section 
1860D(b)(2). 
‘‘(4) LIMITATIONS ON PREMIUMS.—
‘‘(A) $35 MONTHLY PREMIUM FOR 2006.—
In no case may the monthly premium of a PDP 
plan for months in 2006 exceed $35. 
‘‘(B) MONTHLY PREMIUM LIMITATION FOR 
SUBSEQUENT
YEARS.—In no case may the 
monthly premium of a PDP plan for months in 
a year after 2006 exceed the dollar limitation 
specified in this paragraph for the preceding 
year adjusted by the annual percentage change 
in the increase in the consumer price index for 
all urban consumers (U.S. city average) as esti-
mated by the Secretary for the 12-month period 
ending with the midpoint of previous year. If 
any dollar amount after being adjusted under 
this subparagraph is not a multiple of $1, such
dollar amount shall be rounded to the nearest 
multiple of $1. 
‘‘(b) UNIFORM PREMIUM.—The premium for a pre-
scription drug plan charged under this section may not 
vary among individuals enrolled in the plan in the same 
service area, except as is permitted under section 
1860A(c)(2)(B) (relating to late enrollment penalties). 
‘‘(c) TERMS AND CONDITIONS FOR IMPOSING PRE-
MIUMS.—The provisions of section 1854(d) shall apply 
under this part in the same manner as they apply under 
part C, and, for this purpose, the reference in such section 
to section 1851(g)(3)(B)(i) is deemed a reference to sec-
tion 1860A(d)(3)(B) (relating to failure to pay premiums 
required under this part). 
‘‘(d) ACCEPTANCE
OF REFERENCE PREMIUM
AS 
FULL PREMIUM
IF NO STANDARD (OR EQUIVALENT) 
COVERAGE IN AN AREA.—
‘‘(1) IN GENERAL.—If there is no standard pre-
scription drug coverage (as defined in paragraph 
(2)) offered in an area, in the case of an individual 
who is eligible for a premium subsidy under section 
1860G and resides in the area, the PDP sponsor of 
any prescription drug plan offered in the area (and 
any Medicare+Choice organization that offers quali-
fied prescription drug coverage in the area) shall ac-
cept 
the 
reference 
premium 
under 
section 
1860G(b)(2) as payment in full for the premium 
charge for qualified prescription drug coverage. 
‘‘(2) STANDARD
PRESCRIPTION
DRUG
COV-
ERAGE DEFINED.—For purposes of this subsection, 
the term ‘standard prescription drug coverage’ 
means qualified prescription drug coverage that is 
standard coverage or that has an actuarial value 
equivalent to the actuarial value for standard cov-
erage. 
‘‘SEC. 1860G. PREMIUM AND COST-SHARING SUBSIDIES FOR 
LOW-INCOME INDIVIDUALS. 
‘‘(a) IN GENERAL.—
‘‘(1) FULL PREMIUM SUBSIDY AND REDUCTION 
OF COST-SHARING FOR INDIVIDUALS WITH INCOME 
BELOW
135
PERCENT
OF
FEDERAL
POVERTY 
LEVEL.—In the case of a subsidy eligible individual 
(as defined in paragraph (4)) who is determined to 
have income that does not exceed 150 percent of the 
Federal poverty level, the individual is entitled under 
this section—
‘‘(A) to a premium subsidy equal to 100 
percent of the amount described in subsection 
(b)(1); and
‘‘(B) subject to subsection (c), to the sub-
stitution for the beneficiary cost-sharing de-
scribed in section 1860B(b)(2)) of amounts 
that are nominal. 
‘‘(2) PREMIUM
SUBSIDY
ONLY
FOR
INDIVID-
UALS
WITH
INCOME
ABOVE
150, BUT
BELOW
175 
PERCENT, OF FEDERAL POVERTY LEVEL.—In the 
case of a subsidy eligible individual who is deter-
mined to have income that exceeds 150 percent, but 
does not exceed 175 percent, of the Federal poverty 
level, the individual is entitled under this section to 
a premium subsidy equal to 100 percent of the 
amount described in subsection (b)(1). 
‘‘(3) SLIDING
SCALE
PREMIUM
SUBSIDY
FOR 
INDIVIDUALS WITH INCOME ABOVE 175, BUT BELOW 
200
PERCENT, OF
FEDERAL
POVERTY
LEVEL.—In 
the case of a subsidy eligible individual who is deter-
mined to have income that exceeds 175 percent, but 
does not exceed 200 percent, of the Federal poverty 
level, the individual is entitled under this section to 
a premium subsidy determined on a linear sliding 
scale ranging from 100 percent of the amount de-
scribed in subsection (b)(1) for individuals with in-
comes at 175 percent of such level to 0 percent of
such amount for individuals with incomes at 200 
percent of such level. 
‘‘(4) DETERMINATION OF ELIGIBILITY.—
‘‘(A) SUBSIDY ELIGIBLE INDIVIDUAL DE-
FINED.—For purposes of this section, subject 
to subparagraph (D), the term ‘subsidy eligible 
individual’ means an individual who—
‘‘(i) is eligible to elect, and has elect-
ed, to obtain qualified prescription drug 
coverage under this part; and 
‘‘(ii) has income below 200 percent of 
the Federal poverty line. 
‘‘(B) DETERMINATIONS.—The determina-
tion of whether an individual residing in a State 
is a subsidy eligible individual and the amount 
of such individual’s income shall be determined 
under the State medicaid plan for the State 
under section 1935(a). In the case of a State 
that does not operate such a medicaid plan (ei-
ther under title XIX or under a statewide waiv-
er granted under section 1115), such deter-
mination shall be made under arrangements 
made by the Secretary. 
‘‘(C) INCOME DETERMINATIONS.—For pur-
poses of applying this section—
‘‘(i) income shall be determined in the 
manner 
described 
in 
section 
1905(p)(1)(B); and 
‘‘(ii) the term ‘Federal poverty line’ 
means the official poverty line (as defined 
by the Office of Management and Budget, 
and revised annually in accordance with 
section 673(2) of the Omnibus Budget 
Reconciliation Act of 1981) applicable to a 
family of the size involved. 
‘‘(D) TREATMENT OF TERRITORIAL RESI-
DENTS.—In the case of an individual who is not 
a resident of the 50 States or the District of 
Columbia, the individual is not eligible to be a 
subsidy eligible individual but may be eligible 
for financial assistance with prescription drug 
expenses under section 1935(e). 
‘‘(b) PREMIUM SUBSIDY AMOUNT.—
‘‘(1) IN
GENERAL.—The premium subsidy 
amount described in this subsection for an individual 
residing in an area is the reference premium (as de-
fined in paragraph (2)) for qualified prescription 
drug coverage offered by the prescription drug plan 
or the Medicare+Choice plan in which the individual 
is enrolled.
‘‘(2) REFERENCE
PREMIUM
DEFINED.—For 
purposes of this subsection, the term ‘reference pre-
mium’ means, with respect to qualified prescription 
drug coverage offered under—
‘‘(A) a prescription drug plan that—
‘‘(i) provides standard coverage (or al-
ternative prescription drug coverage the 
actuarial value is equivalent to that of 
standard coverage), the premium imposed 
for enrollment under the plan under this 
part (determined without regard to any 
subsidy under this section or any late en-
rollment 
penalty 
under 
section 
1860A(c)(2)(B)); or 
‘‘(ii) provides alternative prescription 
drug coverage the actuarial value of which 
is greater than that of standard coverage, 
the premium described in clause (i) multi-
plied by the ratio of (I) the actuarial value 
of standard coverage, to (II) the actuarial 
value of the alternative coverage; or 
‘‘(B) a Medicare+Choice plan, the stand-
ard 
premium 
computed 
under 
section 
1851(j)(5)(A)(iii), determined without regard to
any 
reduction 
effected 
under 
section 
1851(j)(5)(B). 
‘‘(c) RULES
IN
APPLYING
COST-SHARING
SUB-
SIDIES.—
‘‘(1) IN
GENERAL.—In applying subsection 
(a)(1)(B)—
‘‘(A) the maximum amount of subsidy that 
may be provided with respect to an enrollee for 
a year may not exceed 95 percent of the max-
imum cost-sharing described in such subsection 
that may be incurred for standard coverage; 
‘‘(B) the Secretary shall determine what is 
‘nominal’ taking into account the rules applied 
under section 1916(a)(3); and 
‘‘(C) nothing in this part shall be con-
strued as preventing a plan or provider from 
waiving or reducing the amount of cost-sharing 
otherwise applicable. 
‘‘(2) LIMITATION ON CHARGES.—In the case of 
an individual receiving cost-sharing subsidies under 
subsection (a)(1)(B), the PDP sponsor may not 
charge more than a nominal amount in cases in 
which the cost-sharing subsidy is provided under 
such subsection.