HR 1255 IH
107th CONGRESS
1st Session
H. R. 1255
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 amend the Internal Revenue
Code of 1986 to allow a 50 percent credit against income tax for payment of such
premiums and of premiums for certain COBRA continuation coverage, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
March 27, 2001
Mr. STARK (for himself, Mr. BROWN of Ohio, Mr. GEPHARDT, Mr. DINGELL, Mr.
RANGEL, Mr. BONIOR, Mr. WAXMAN, Mr. GORDON, Mr. THOMPSON of Mississippi, Mr.
FILNER, Mr. MCGOVERN, Ms. MCCARTHY of Missouri, Mr. FROST, Mr. CLAY, Mr. GEORGE
MILLER of California, Mr. KUCINICH, Mr. GONZALEZ, Mr. PAYNE, Mr. PALLONE, Mr.
BRADY of Pennsylvania, Mr. GUTIERREZ, Ms. SLAUGHTER, Ms. BERKLEY, Ms.
MILLENDER-MCDONALD, Mr. GREEN of Texas, Mr. HINCHEY, Ms. SCHAKOWSKY, Mr.
DEUTSCH, Mr. EVANS, Mr. FRANK, Mr. WEINER, Mr. STUPAK, Mr. KILDEE, Mr. CROWLEY,
Mr. LANTOS, Mr. BARRETT, Mr. TIERNEY, Mr. LAFALCE, and Mr. MATSUI) introduced
the following bill; which was referred to the Committee on Ways and Means, and
in addition to the Committees on Energy and Commerce, and Education and the
Workforce, for a period to be subsequently 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 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 amend the Internal Revenue
Code of 1986 to allow a 50 percent credit against income tax for payment of such
premiums and of premiums for certain COBRA continuation coverage, and for other
purposes.
Be it enacted by the Senate and House of Representatives 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 and
Tax Credit Act of 2001'.
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 retiree health coverage.
Subtitle B--Amendments to the Public Health Service Act
Sec. 311. COBRA continuation benefits for certain retired workers who
lose retiree health coverage.
Subtitle C--Amendments to the Internal Revenue Code of 1986
Sec. 321. COBRA continuation benefits for certain retired workers who
lose retiree health coverage.
TITLE IV--50 PERCENT CREDIT AGAINST INCOME TAX FOR MEDICARE BUY-IN PREMIUMS
AND FOR CERTAIN COBRA CONTINUATION COVERAGE PREMIUMS
Sec. 401. 50 percent income tax credit for medicare buy-in premiums and
for certain COBRA continuation coverage premiums.
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.
(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.
`(2) DEFINITIONS- For purposes of this part:
`(A) FEDERAL OR STATE COBRA CONTINUATION PROVISION- The term `Federal
or State COBRA continuation provision' has the meaning given the term
`COBRA continuation provision' 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 PROGRAM DEFINED- The term `Federal
health insurance 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 employees 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 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 benefits 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 individual is not eligible for benefits or
coverage under a Federal health insurance program (as defined in
subsection (a)(2)(B)) or under a group health plan (other than such
eligibility merely through a Federal or State COBRA continuation
provision) as of the last day of the month involved.
`(2) LIMITATION ON ELIGIBILITY IF TERMINATED 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 INSURANCE
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 COVERAGE- The individual subsequently
loses eligibility for the coverage described in subparagraph (A) and
exhausts any eligibility the individual may subsequently have for coverage
under a Federal or State COBRA continuation provision.
`(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 regulations 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 section 1859(b) is
notified, before enrolling, of the deferred 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).
`(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 January 2002, the enrollment period shall
begin on November 1, 2001, and shall end on February 28, 2002. Any such
enrollment before January 1, 2002, is conditioned upon compliance with the
conditions of eligibility for January 2002.
`(B) SUBSEQUENT PERIODS- If the individual is eligible to enroll under
such section for a month after January 2002, 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 conditions of
eligibility for such third month.
`(2) AUTHORITY TO CORRECT FOR GOVERNMENT ERRORS- The provisions of
section 1837(h) apply with respect to enrollment under this part in 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
January 1, 2002:
`(A) In the case of an individual who enrolls (including pre-enrolls)
before the month in which the individual satisfies eligibility for
enrollment under section 1859, the first day of such month of
eligibility.
`(B) In the case of an individual who enrolls during or after the
month in which the individual first satisfies eligibility for enrollment
under such section, the first day of the following 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 expenses of an individual enrolled under this part
unless 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 individual's enrollment has been terminated at the
earliest of the following:
`(i) NOTICE- The individual files notice (in a form and manner
prescribed by the Secretary) that the individual no longer wishes to
participate in the insurance 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-
`(A) NOTICE- The termination of a coverage period under paragraph
(1)(A)(i) shall take effect at the close of the month following for which
the notice is filed.
`(B) NONPAYMENT OF PREMIUM- The termination of a coverage period under
paragraph (1)(A)(ii) shall take effect on a date determined under
regulations, which may be determined so as to provide a grace period in
which overdue premiums may be paid and coverage continued. The grace
period determined under the preceding sentence shall not exceed 60 days;
except that it may be extended for an additional 30 days in any case where
the Secretary determines that there was good cause for failure to pay the
overdue premiums within such 60-day period.
`(C) AGE OR MEDICARE ELIGIBILITY- The termination of a coverage period
under paragraph (1)(A)(iii) or (1)(B) shall take effect as of the first
day of the month in which the individual attains 65 years of age or
becomes entitled to benefits under part A or enrolled for benefits under
part B (other than by reason of this part).
`SEC. 1859B. PREMIUMS.
`(a) AMOUNT OF MONTHLY PREMIUMS-
`(1) BASE MONTHLY PREMIUMS- The Secretary shall, during September of
each year (beginning with 1998), determine the following premium rates which
shall apply with respect to coverage provided under this title for any month
in the succeeding year:
`(A) BASE MONTHLY PREMIUM FOR INDIVIDUALS 62 YEARS OF AGE OR OLDER- A
base monthly premium for individuals 62 years of age or older, equal to
1/12 of the base annual premium rate computed under subsection (b) for
each premium area.
`(2) DEFERRED MONTHLY PREMIUMS FOR INDIVIDUALS 62 YEARS OF AGE OR OLDER-
The Secretary shall, during September of each year (beginning with 2001),
determine under subsection (c) the amount of deferred monthly premiums that
shall apply with respect to individuals who first obtain coverage under this
part under section 1859(b) in the succeeding year.
`(3) ESTABLISHMENT OF PREMIUM AREAS- For purposes of this part, the term
`premium area' means such an area as the Secretary shall specify to carry
out this part. The Secretary from time to time 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 Secretary shall adjust the amount
determined under paragraph (1) for each premium area (specified under
subsection (a)(3)) in order to take into account such factors as the
Secretary deems appropriate and shall limit the maximum premium under this
paragraph in a premium area to assure participation in all areas throughout
the United States.
`(3) BASE ANNUAL PREMIUM- The base annual premium under this subsection
for months in a year for individuals 62 years of age or older residing 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 computed by the Secretary as
follows:
`(1) ESTIMATION OF NATIONAL, PER CAPITA ANNUAL AVERAGE EXPENDITURES FOR
ENROLLMENT GROUP- The Secretary shall estimate the average, 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 2005, the Secretary may
base such estimate 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 EXPENDITURES AND ESTIMATED PREMIUMS-
Based on the characteristics of individuals in such group, the Secretary
shall estimate during the period of coverage of the group under this part
under section 1859(b) the amount by which--
`(A) the amount estimated under paragraph (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 premiums 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 individuals 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) 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 interest 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 premium, 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 individual 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 Supplementary Medical Insurance Trust Fund is deemed a reference to
the Trust Fund established under section 1859D.
`(2) PERIOD OF PAYMENT- In the case of an individual who participates in
the program established 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 INDIVIDUALS COVERED AFTER ATTAINING
AGE 62-
`(A) IN GENERAL- In the case of an individual who is covered under
this part for a month pursuant to an enrollment under section 1859(b),
subject to subparagraph (B), the individual is liable for payment of a
deferred premium in each month during the period described in paragraph
(2) in an amount equal to the full deferred monthly premium rate
determined for the individual under section 1859B(c).
`(B) SPECIAL RULES FOR THOSE WHO DISENROLL EARLY-
`(i) IN GENERAL- If such an individual's enrollment under such
section is terminated 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
enrollment compared to the maximum number of months of coverage that the
individual would have had if the enrollment were not so
terminated.
`(ii) ROUNDING TO 12-MONTH MINIMUM COVERAGE PERIODS- In applying
clause (i), the number of months of coverage (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 described in this paragraph for an
individual is the period beginning with the first month in which the
individual has attained 65 years of age and ending with the month before the
month in which the individual 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 Access 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 trust fund to be known as the `Medicare Early Access
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 deposited 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.
`(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 applying provisions of section 1841
under paragraph (1)--
`(A) any reference in such section to `this part' is construed to
refer to this part D;
`(B) any reference in section 1841(h) to section 1840(d) and in
section 1841(i) to sections 1840(b)(1) and 1842(g) are deemed references
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 program 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 coverage provided under this part. The Comptroller General shall include in
such report such recommendations for adjustments in such financing and
coverage as the Comptroller General deems appropriate in order to maintain
financial solvency of the program under this part.
`SEC. 1859F. ADMINISTRATION AND MISCELLANEOUS.
`(a) TREATMENT FOR PURPOSES OF TITLE- Except as otherwise provided in this
part--
`(1) individuals enrolled under this part shall be treated for purposes
of this title as though the individual 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 applying 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 entitled 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 shall not be construed to include entitlement to
benefits under this title pursuant to the operation of this part.'.
(b) CONFORMING AMENDMENTS TO SOCIAL SECURITY 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 inserting `part E'.
(4) Part C of title XVIII of such Act is amended--
(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)';
(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 applying this subsection with
respect to individuals entitled to benefits under part D, the Secretary
shall provide for an appropriate adjustment in the Medicare+Choice
capitation rate as may be appropriate 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 amended 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 Internal Revenue Code of 1986 is
amended by inserting `(not including an individual who is so entitled
pursuant to enrollment under section 1859A)' after `Social Security
Act'.
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 Security 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 paragraph (3), 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
55 years of age, but has not attained 62 years of age.
`(B) MEDICARE ELIGIBILITY (BUT FOR AGE)- The individual would be
eligible for benefits under part A or part B for the month if the
individual were 65 years of age.
`(C) LOSS OF EMPLOYMENT-BASED COVERAGE-
`(i) ELIGIBLE FOR UNEMPLOYMENT COMPENSATION- The individual meets
the requirements relating to period of covered employment and conditions
of separation from employment to be eligible for unemployment
compensation (as defined in section 85(b) of the Internal Revenue Code
of 1986), based on a separation from employment occurring on or after
July 1, 2001. The previous sentence shall not be construed as requiring
the individual to be receiving such unemployment
compensation.
`(ii) LOSS OF EMPLOYMENT-BASED COVERAGE- Immediately before the time
of such separation of employment, the individual 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 COVERAGE FOR AT LEAST 1 YEAR- As of the
date on which the individual loses coverage described in clause (ii),
the aggregate of the periods of creditable coverage (as determined 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 eligible for such coverage.
`(ii) INDIVIDUALS TO WHOM COBRA CONTINUATION COVERAGE MADE
AVAILABLE- 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 loss of coverage eligibility
described in subparagraph (C)(ii); or
`(II) whose spouse was offered such coverage in a manner that
permitted coverage of the individual at such time.
`(iii) MONTHS OF POSSIBLE COBRA CONTINUATION COVERAGE- A month
described 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 individual (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 PROGRAM
OR GROUP HEALTH PLANS- The individual 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.
`(2) SPOUSE OF DISPLACED WORKER- Subject to paragraph (3), 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 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 described in paragraph (1)(C)(ii) because
the individual's spouse lost such coverage.
`(C) MEDICARE ELIGIBILITY (BUT FOR AGE); EXHAUSTION OF ANY COBRA
CONTINUATION COVERAGE; AND NOT ELIGIBLE FOR COVERAGE UNDER FEDERAL HEALTH
INSURANCE PROGRAM OR GROUP HEALTH PLAN- The individual 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 coverage 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 reenrolling under
this subsection if the individual is eligible 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 Notwithstanding any other
provision of law, (1) the following:
`(2) DISPLACED WORKERS AND SPOUSES- In the case of individuals eligible
to enroll under this 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 January 2002, the enrollment period shall
begin on November 1, 2001, and shall end on February 28, 2002. Any such
enrollment before January 1, 2002, is conditioned upon compliance with the
conditions of eligibility for January 2002.
`(B) SUBSEQUENT PERIODS- If the individual is eligible to enroll under
such section for a month after January 2002, 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 subparagraph (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 62 FOR DISPLACED WORKERS AND SPOUSES- In the case of an
individual enrolled under this part pursuant to section 1859(c), subject
to subsection (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
INSURANCE PROGRAM FOR INDIVIDUALS UNDER 62 YEARS OF AGE- In the case of an
individual who has not attained 62 years of age, the individual is covered
(or eligible for coverage) as a participant or beneficiary under a group
health plan or under a Federal health insurance program.';
(5) in subsection (d)(2), by amending subparagraph (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 becomes
entitled to benefits under part A or enrolled for benefits under part
B.
`(ii) DISPLACED WORKERS- The termination of a coverage period under
paragraph (1)(B)(ii) shall take effect as of the first day of the month
in which the individual attains 62 years of age, unless the individual
has enrolled under this part pursuant 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 termination 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 INDIVIDUALS UNDER 62 YEARS OF AGE- A
base monthly premium for individuals under 62 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 subsection:
`(d) BASE MONTHLY PREMIUM FOR INDIVIDUALS UNDER 62 YEARS OF AGE-
`(1) NATIONAL, PER CAPITA AVERAGE FOR AGE GROUPS-
`(A) ESTIMATE OF AMOUNT- 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(c)(1)(A) within each of the age cohorts
established under subparagraph (B) as if all such individuals within such
cohort were eligible 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 of age and a separate cohort
for individuals who have attained 60 years of age.
`(2) GEOGRAPHIC ADJUSTMENT- The Secretary 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 adjustments under subsection (b)(2).
`(3) BASE ANNUAL PREMIUM- The base annual premium under this subsection
for months in a year for individuals in an age cohort under paragraph (1)(B)
in a premium area is equal to 165 percent of the average, annual per capita
amount estimated 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 coverage 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:
`(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 enrollment 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
pursuant to section 1859(b) in order to continue entitlement to benefits
under this title after attaining 62 years of age.
`(2) ARRANGEMENTS WITH STATES FOR DETERMINATIONS RELATING TO
UNEMPLOYMENT COMPENSATION ELIGIBILITY- The Secretary may provide 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'.
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 BENEFICIARY; AND SUBSTANTIAL REDUCTION
DEFINED- Section 607 of such Act (29 U.S.C. 1167) is amended--
(i) in subparagraph (A), by inserting `except as otherwise provided
in this paragraph,' after `means,'; and
(ii) by adding at the end the following new
subparagraph:
`(D) SPECIAL RULE FOR QUALIFYING RETIREES 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 described 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'--
`(A) means, as determined under regulations 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, copayments, and
coinsurance, or any combination thereof), since the date of commencement
of coverage of the beneficiary by reason of the retirement of the covered
employee (or, if later, January 6, 2001), 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 adjustment to
permit comparison of values over time); and
`(B) includes an increase in premiums required 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)';
(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 following new clause:
`(v) 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 603(7), in the case of a qualified
beneficiary 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
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
`(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 COVERAGE- 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 regulations 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 described in such sentence, or (at the option 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 602(3) of such Act (29
U.S.C. 1162(3)) is amended 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 paragraph to `102 percent of the applicable premium' is deemed a
reference to `125 percent of the applicable premium for employed individuals
(and their dependents, if applicable) for the coverage option referred to in
paragraph (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 qualifying event
described in section 603(7) shall be provided at least 90 days before the date
of the qualifying event.'.
(1) IN GENERAL- The amendments made by this section (other than
subsection (e)(2)) shall apply to qualifying events occurring on or after
January 6, 2001. In the case of a qualifying event occurring 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 termination in the case of a covered employee who is a qualified
retiree.'.
(2) QUALIFIED RETIREE; QUALIFIED BENEFICIARY; AND SUBSTANTIAL REDUCTION
DEFINED- Section 2208 of such Act (42 U.S.C. 300bb-8) is amended--
(i) in subparagraph (A), by inserting `except as otherwise provided
in this paragraph,' after `means,'; and
(ii) by adding at the end the following new
subparagraph:
`(C) SPECIAL RULE FOR QUALIFYING RETIREES AND DEPENDENTS- In the case
of a qualifying event described in section 2203(6), 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:
`(5) QUALIFIED RETIREE- The term `qualified retiree' means, with respect
to a qualifying event described 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 regulations of the Secretary of Labor
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, copayments,
and coinsurance, or any combination thereof), since the date of
commencement of coverage of the beneficiary by reason of the retirement of
the covered employee (or, if later, January 6, 2001), 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 adjustment to permit comparison of values over time);
and
`(B) includes an increase in premiums required 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 beneficiary 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
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
`(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 COVERAGE- 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 regulations 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 coverage described in such sentence, or (at the
option 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 coverage by reason of a
qualifying event described in section 2203(6), any reference in subparagraph
(A) of this paragraph to `102 percent of the applicable premium' is deemed a
reference to `125 percent of the applicable premium for employed individuals
(and their dependents, if applicable) for the coverage option referred to in
paragraph (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 qualifying event
described in section 2203(6) shall be provided at least 90 days before the
date of the qualifying event.'.
(1) IN GENERAL- The amendments made by this section (other than
subsection (e)(2)) shall apply to qualifying events occurring on or after
January 6, 2001. In the case of a qualifying event occurring 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 inserting after subparagraph (F) the following new
subparagraph:
`(G) The termination or substantial reduction in benefits (as defined
in subsection (g)(6)) 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 BENEFICIARY; AND SUBSTANTIAL REDUCTION
DEFINED- Section 4980B(g) of such Code is amended--
(i) in subparagraph (A), by inserting `except as otherwise provided
in this paragraph,' after `means,'; and
(ii) by adding at the end the following new
subparagraph:
`(E) SPECIAL RULE FOR QUALIFYING RETIREES 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
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 described 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 regulations of the Secretary of Labor
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, copayments,
and coinsurance, or any combination thereof), since the date of
commencement of coverage of the beneficiary by reason of the retirement of
the covered employee (or, if later, January 6, 2001), 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 adjustment to permit comparison of values over time);
and
`(B) includes an increase in premiums required to an amount that
exceeds the premium level described in the fourth sentence of subsection
(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 subclause (VI);
(4) by redesignating subclause (V) as subclause (IV) and by moving such
clause to immediately follow subclause (III); and
(5) by inserting after such subclause (IV) the following new
subclause:
`(V) 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 paragraph (3)(G), 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 COVERAGE- Section 4980B(f)(2)(A) of such Code is amended--
(1) by striking `The coverage' and inserting the following:
`(i) IN GENERAL- Except as provided 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 paragraph (3)(G), in applying the first sentence of clause (i) and
the fourth sentence of subparagraph (C), the coverage offered that is
the most prevalent coverage option (as determined under regulations 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 coverage described in such sentence, or
(at the option 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 4980B(f)(2)(C) of such
Code is amended 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 paragraph (3)(G), any reference in clause (i) of this
subparagraph to `102 percent of the applicable premium' is deemed a reference
to `125 percent of the applicable premium for employed individuals (and their
dependents, if applicable) for the coverage option referred to in subparagraph
(A)(ii)'.'.
(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.'.
(1) IN GENERAL- The amendments made by this section (other than
subsection (e)(2)) shall apply to qualifying events occurring on or after
January 6, 2001. In the case of a qualifying event occurring 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.
TITLE IV--50 PERCENT CREDIT AGAINST INCOME TAX FOR MEDICARE BUY-IN
PREMIUMS AND FOR CERTAIN COBRA CONTINUATION COVERAGE PREMIUMS
SEC. 401. 50 PERCENT INCOME TAX CREDIT FOR MEDICARE BUY-IN PREMIUMS AND FOR
CERTAIN COBRA CONTINUATION COVERAGE PREMIUMS.
(a) IN GENERAL- Subpart A of part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is
amended by inserting after section 25A the following new section:
`SEC. 25B. MEDICARE BUY-IN PREMIUMS AND CERTAIN COBRA CONTINUATION COVERAGE
PREMIUMS.
`(a) IN GENERAL- In the case of an individual, there shall be allowed as a
credit against the tax imposed by this chapter for the taxable year an amount
equal to 50 percent of the amount paid during such year as--
`(1) qualified continuation health coverage premiums, and
`(2) medicare buy-in coverage premiums.
`(b) DEFINITIONS- For purposes of this section--
`(1) QUALIFIED CONTINUATION HEALTH COVERAGE PREMIUMS- The term
`qualified continuation health coverage premiums' means, for any period,
premiums paid for continuation coverage (as defined in section 4980B(f))
under a group health plan for such period but only if failure to offer such
coverage to the taxpayer for such period would constitute a failure by such
health plan to meet the requirements of section 4980B(f) and only if the
continuation coverage is provided because of a qualifying event described in
section 4980B(f)(3)(G).
`(2) MEDICARE BUY-IN COVERAGE PREMIUMS- The term `medicare buy-in
coverage premiums' means premiums paid under part D of title XVIII of the
Social Security Act.'
(b) CLERICAL AMENDMENT- The table of sections for subpart A of part IV of
subchapter A of chapter 1 of such Code is amended by inserting after the item
relating to section 25A the following new item:
`Sec. 25B. Medicare buy-in premiums and certain COBRA continuation coverage
premiums.'
(c) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after December 31, 2002.
END