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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section 1896(b) of such Act is repealed.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''.
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.