SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Enhancement of Military Benefits 
Act''.

SEC. 2. 2001 PAY RAISE FOR MEMBERS OF THE UNIFORMED SERVICES.

    (a) Waiver of Section 1009 Adjustment.--The adjustment to become 
effective during fiscal year 2001 required by section 1009 of title 37, 
United States Code, in the rates of monthly basic pay authorized 
members of the uniformed services shall not be made.
    (b) Increase in Basic Pay.--Effective on January 1, 2001, the rates 
of monthly basic pay for members of the uniformed services are 
increased by 4.8 percent.

SEC. 3. EXPANSION OF MEDICARE SUBVENTION PROJECT FOR MILITARY RETIREES 
              AND DEPENDENTS.

    (a) Expansion of Sites.--
            (1) Expansion to 16 sites.--Effective January 1, 2001, 
        subsection (b)(2) of section 1896 of the Social Security Act 
        (42 U.S.C. 1395ggg) is amended by striking ``6'' and inserting 
        ``16''.
            (2) Future repeal of limitation on number of sites.--
        Effective October 1, 2003, paragraph (2) of section 1896(b) of 
        such Act is amended to read as follows:
            ``(2) Location of sites.--The program shall be conducted in 
        any site designated jointly by the administering 
        Secretaries.''.
    (b) Making Project Permanent; Changes in Project References.--
            (1) Elimination of time limitation.--Paragraph (4) of 
        section 1896(b) of such Act is repealed.
            (2) Treatment of caps.--Subsection (i)(4) of section 1896 
        of such Act is amended by adding at the end the following:
        ``This paragraph shall not apply after calendar year 2001.''.
            (3) Conforming changes of references to demonstration 
        project.--Section 1896 of such Act is further amended--
                    (A) in the heading, by striking ``demonstration 
                project'' and inserting ``program'';
                    (B) by amending subsection (a)(2) to read as 
                follows:
            ``(2) Program.--The term `program' means the program 
        carried out under this section.'';
                    (C) in the heading to subsection (b), by striking 
                ``Demonstration Project'' and inserting ``Program'';
                    (D) by striking ``demonstration project'' or 
                ``project'' each place either appears and inserting 
                ``program'';
                    (E) in subsection (k)(2)--
                            (i) by striking ``extension and expansion 
                        of demonstration project'' and inserting 
                        ``program''; and
                            (ii) by striking subparagraphs (A) through 
                        (C) and inserting the following:
                    ``(A) whether there is a cost to the health care 
                program under this title in conducting the program 
                under this section; and
                    ``(B) whether the terms and conditions of the 
                program should be modified.''.
            (4) Additional conforming amendment.--Paragraph (5) of 
        section 1896(b) of such Act is repealed.
    (c) Permitting Payment on a Fee-for-Service Basis.--
            (1) In general.--Section 1896 of the Social Security Act is 
        further amended by adding at the end the following new 
        subsection:
    ``(l) Payment on a Fee-for-Service Basis.--Instead of the payment 
method described in subsection (i)(1) and in the case of individuals 
who are not enrolled in the program in the manner described in 
subsection (d)(1), the Secretary may reimburse the Secretary of Defense 
for services provided under the program at a rate that does not exceed 
the rate of payment that would otherwise be made under this title for 
such services if sections 1814(c) and 1835(d), and paragraphs (2) and 
(3) of section 1862(a), did not apply.''.
            (2) Conforming amendments.--Such section is further 
        amended--
                    (A) in subsections (b)(1)(B)(v) and 
                (b)(1)(B)(viii)(I), by inserting ``or subsection (l)'' 
                after ``subsection (i)';
                    (B) in subsection (b)(2), by adding at the end the 
                following: ``If feasible, at least one of the sites 
                shall be conducted using the fee-for-service 
                reimbursement method described in subsection (l).'';
                    (C) in subsection (d)(1)(A), by inserting 
                ``(insofar as it provides for the enrollment of 
                individuals and payment on the basis described in 
                subsection (i))'' before ``shall meet'';
                    (D) in subsection (d)(1)(A), by inserting ``and the 
                program (insofar as it provides for payment for 
                facility services on the basis described in subsection 
                (l)) shall meet all requirements for such facilities 
                under this title'' after ``medicare payments'';
                    (E) in subsection (d)(2), by inserting ``, insofar 
                as it provides for the enrollment of individuals and 
                payment on the basis described in subsection (i),'' 
                before ``shall comply'';
                    (F) in subsection (g)(1), by inserting ``, insofar 
                as it provides for the enrollment of individuals and 
                payment on the basis described in subsection (i),'' 
                before ``the Secretary of Defense'';
                    (G) in subsection (i)(1), by inserting ``and 
                subsection (l)'' after ``of this subsection'';
                    (H) in subsection (i)(4), by inserting ``and 
                subsection (l)'' after ``under this subsection''; and
                    (I) in subsection (j)(2)(B)(ii), by inserting ``or 
                subsection (l)'' after ``subsection (i)(1)''.
            (3) Effective date.--The amendments made by this subsection 
        take effect on January 1, 2001, and apply to services furnished 
        on or after such date.
    (d) Elimination of Restriction on Eligibility.--Section 1896(b)(1) 
of such Act is amended by adding at the end the following new 
subparagraph:
                    ``(C) Elimination of restrictive policy.--If the 
                enrollment capacity in the program has been reached at 
                a particular site designated under paragraph (2) and 
                the Secretary therefore limits enrollment at the site 
                to medicare-eligible military retirees and dependents 
                who are enrolled in TRICARE Prime (as defined for 
                purposes of chapter 55 of title 10, United States Code) 
                at the site immediately before attaining 65 years of 
                age, participation in the program by a retiree or 
                dependent at such site shall not be restricted based on 
                whether the retiree or dependent has a civilian primary 
                care manager instead of a military primary care 
                manager.''.
    (e) Medigap Protection for Enrollees.--Section 1896 of such Act is 
further amended by adding at the end the following new subsection:
    ``(m) Medigap Protection for Enrollees.--(1) Subject to paragraph 
(2), the provisions of section 1882(s)(3) (other than clauses (i) 
through (iv) of subparagraph (B)) and 1882(s)(4) of the Social Security 
Act shall apply to any enrollment (and termination of enrollment) in 
the program (for which payment is made on the basis described in 
subsection (i)) in the same manner as they apply to enrollment (and 
termination of enrollment) with a Medicare+Choice organization in a 
Medicare+Choice plan.
    ``(2) In applying paragraph (1)--
            ``(A) in the case of enrollments occurring before January 
        1, 2001, any reference in clause (v) or (vi) of section 
        1882(s)(3)(B) of such Act to 12 months is deemed a reference to 
        the period ending on December 31, 2001; and
            ``(B) the notification required under section 1882(s)(3)(D) 
        of such Act shall be provided in a manner specified by the 
        Secretary of Defense in consultation with the Director of the 
        Office of Personnel Management.''.

SEC. 4. INCREASE IN MILITARY SURVIVOR BENEFIT PLAN ANNUITIES FOR 
              BENEFICIARIES 62 YEARS OF AGE AND OLDER.

    (a) Repeal of Annuity Reduction at Age 62.--(1) Subsection (a) of 
section 1451 of title 10, United States Code, is amended to read as 
follows:
    ``(a) Computation of Annuity for a Spouse, Former Spouse, or 
Child.--
            ``(1) Standard annuity.--In the case of a standard annuity 
        provided to a beneficiary under section 1450(a) of this title 
        (other than under section 1450(a)(4)), the monthly annuity 
        shall be the amount equal to 55 percent of the base amount.
            ``(2) Reserve-component annuity.--In the case of a reserve-
        component annuity provided to a beneficiary under section 
        1450(a) of this title (other than under section 1450(a)(4)), 
        the monthly annuity payable to the beneficiary shall be the 
        amount equal to a percentage of the base amount that--
                    ``(A) is less than 55 percent; and
                    ``(B) is determined under subsection (f).''.
    (2) Subsection (c)(1) of such section is amended to read as 
follows:
            ``(1) In general.--In the case of an annuity provided under 
        section 1448(d) or 1448(f) of this title, the amount of the 
        monthly annuity shall be the amount equal to 55 percent of the 
        retired pay to which the member or former member would have 
        been entitled if the member or former member had been entitled 
        to that pay based upon his years of active service when he 
        died.''.
    (3) Subsections (d) and (e) of such section are repealed.
    (b) Termination of Supplemental SBP Program.--The Secretary of 
Defense shall terminate the Supplemental Survivor Benefit Plan program 
under subchapter III of chapter 73 of title 10, United States Code, 
effective on the date specified in subsection (d). No annuity may be 
paid under that subchapter, and no reduction in retired pay may be made 
under that subchapter, for any period on or after that date.
    (c) Recomputation of Annuities.--Effective as of the date specified 
in subsection (d), the Secretary concerned shall recompute annuities 
payable under subchapter II of chapter 73 of title 10, United States 
Code, as necessary so that each such annuity is in the amount that 
would be in effect if initially computed under section 1450 of title 
10, United States Code, as amended by subsection (a).
    (d) Effective Date.--The amendments made by subsection (a) shall 
take effect on October 1, 2000, and shall apply to payments under 
chapter 73 of title 10, United States Code, for months beginning on or 
after that date.

SEC. 5. INCLUSION OF UNIFORMED SERVICES RETIREES AND DEPENDENTS IN 
              FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM.

    (a) In General.--Chapter 55 of title 10, United States Code, is 
amended by inserting after section 1108 the following new section:
``Sec. 1108a. Health care coverage through Federal Employees Health 
              Benefits program: retirees and dependents
    ``(a) FEHBP Option.--The Secretary of Defense, after consulting 
with the other administering Secretaries, shall enter into an agreement 
with the Office of Personnel Management under which eligible 
beneficiaries described in subsection (b) may enroll in health benefits 
plans offered through the Federal Employees Health Benefits program 
under chapter 89 of title 5.
    ``(b) Eligible Beneficiaries; Coverage.--(1) An eligible 
beneficiary under this subsection is--
            ``(A) a member or former member of the uniformed services 
        described in section 1074(b) of this title; or
            ``(B) an individual who is a dependent of such a member or 
        former member.
    ``(2) Eligible beneficiaries may enroll in a Federal Employees 
Health Benefit plan under chapter 89 of title 5 under this section for 
self-only coverage or for self and family coverage.
    ``(3) A person eligible for coverage under this subsection shall 
not be required to satisfy any eligibility criteria specified in 
chapter 89 of title 5 as a condition for enrollment in health benefits 
plans offered through the Federal Employees Health Benefits program 
under this section.
    ``(c) Separate Risk Pools; Charges.--(1) The Director of the Office 
of Personnel Management shall require health benefits plans under 
chapter 89 of title 5 that participate under this section to maintain a 
separate risk pool for purposes of establishing premium rates for 
eligible beneficiaries who enroll in such a plan in accordance with 
this section.
    ``(2) The Director shall determine total subscription charges for 
self only or for family coverage for eligible beneficiaries who enroll 
in a health benefits plan under chapter 89 of title 5 in accordance 
with this section. The subscription charges shall include premium 
charges paid to the plan and amounts described in section 8906(c) of 
title 5 for administrative expenses and contingency reserves.
    ``(d) Government Contributions.--The Secretary of Defense shall be 
responsible for the Government contribution for an eligible beneficiary 
who enrolls in a health benefits plan under chapter 89 of title 5 in 
accordance with this section, except that the amount of the 
contribution may not exceed the amount of the Government contribution 
which would be payable if the electing beneficiary were an employee (as 
defined for purposes of such chapter) enrolled in the same health 
benefits plan and level of benefits.''.
    (b) Conforming Amendments.--(1) The table of sections at the 
beginning of chapter 55 of title 10, United States Code, is amended by 
inserting after the item relating to section 1108 the following new 
item:

``1108a. Health care coverage through Federal Employees Health Benefits 
                            program: retirees and dependents.''.
    (2) Chapter 89 of title 5, United States Code, is amended in 
section 8905(d) by inserting ``or 1108a'' after ``section 1108''.
Output: Amends title XVIII (Medicare) of the Social Security Act to extend to up to 16 (currently six) the number of authorized sites for the Medicare subvention demonstration project (a project under which the Secretary of Health and Human Services reimburses the Secretary of Defense (Secretary) for certain services provided through the Department of Defense for Medicare-eligible military retirees and dependents). Makes such demonstration project permanent (currently terminates on January 1, 2001), designating it as a program. Authorizes such reimbursement on a fee-for-service basis in lieu of a current percentage rate. Eliminates a program eligibility restriction based on whether the retiree or dependent has a civilian primary care manager instead of a military primary care manager. Provides Medigap protection for program enrollees in the same manner as applied to enrollment with a Medicare+Choice plan.
Increases from 35 to 55 percent of the base amount of military retired pay the military Survivor Benefit Plan annuity for beneficiaries age 62 or older. Directs the Secretary to terminate the Supplemental Survivor Benefit Plan program.
Directs the Secretary to enter into an agreement with the Office of Personnel Management under which members and former members entitled to retired or retainer pay, and their dependents, may enroll in health benefits plans offered through the Federal Employees Health Benefits program (FEHBP). Prohibits such individuals from being required to satisfy any FEHBP eligibility criteria. Makes the Secretary responsible for required Government contributions for such enrollees.