[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4684 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 4684

   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 be 
fully funded through premiums and anti-fraud provisions, to amend title 
  XIX of the Social Security Act to provide financial assistance for 
  those individuals who are too poor to afford the premiums, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 8, 2002

 Mr. Pallone 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 be 
fully funded through premiums and anti-fraud provisions, to amend title 
  XIX of the Social Security Act to provide financial assistance for 
  those individuals who are too poor to afford the premiums, 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 ``Early Medicare 
Access and Affordability Act of 2002''.
    (b) Table of Contents.--

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--FINANCING

Sec. 401. Reference to financing provisions.
  TITLE V--PROVISION OF PREMIUM ASSISTANCE FOR LOW-INCOME INDIVIDUALS 
          PURCHASING EARLY COVERAGE UNDER THE MEDICARE PROGRAM

Sec. 501. Provision of premium assistance for low-income individuals 
                            purchasing early coverage under the 
                            Medicare program.

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 (42 U.S.C. 
1395 et seq.) 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).
    ``(b) Enrollment Periods.--
            ``(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 July 2003, 
                the enrollment period shall begin on May 1, 2003, and 
                shall end on August 31, 2003. Any such enrollment 
                before July 1, 2003, is conditioned upon compliance 
                with the conditions of eligibility for July 2003.
                    ``(B) Subsequent periods.--If the individual is 
                eligible to enroll under such section for a month after 
                July 2003, 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 July 1, 2003:
                    ``(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:
                    ``(A) General provisions.--
                            ``(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 2002), 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 2002), 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 2003, 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.--
            ``(1) Rate of payment.--
                    ``(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.
            ``(3) Transfer of savings from new fraud and abuse 
        initiatives.--
                    ``(A) In general.--There is hereby transferred to 
                the Trust Fund from the Federal Hospital Insurance 
                Trust Fund and from the Federal Supplementary Medical 
                Insurance Trust Fund amounts equivalent to the amounts 
                (specified under subparagraph (B)) of the reductions in 
                expenditures under such respective trust fund as may be 
                attributable to the enactment of the Medicare Fraud and 
                Overpayment Act of 2002.
                    ``(B) Use of cbo estimates.--For each fiscal year 
                during the 10-fiscal-year period beginning with fiscal 
                year 2003, the amounts under subparagraph (A) shall be 
                the amounts described in such subparagraph as 
                determined by the Congressional Budget Office at the 
time of, and in connection with, the enactment of the Early Medicare 
Access and Affordability Act of 2002. For subsequent fiscal years, the 
amounts under subparagraph (A) shall be the amount determined under 
this subparagraph for the previous fiscal year increased by the same 
percentage as the percentage increase in aggregate expenditures under 
this title from the second previous fiscal year to the previous fiscal 
year.
    ``(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 of such Act)'' 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 of such Act)'' 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 January 1, 2002. 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)--
                    (A) by striking ``and'' at the end of paragraph 
                (1),
                    (B) by striking the period at the end of paragraph 
                (2) and inserting ``; and'', and
                    (C) 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 July 
                2003, the enrollment period shall begin on May 1, 2003, 
                and shall end on August 31, 2001. Any such enrollment 
                before July 1, 2003, is conditioned upon compliance 
                with the conditions of eligibility for July 2003.
                    ``(B) Subsequent periods.--If the individual is 
                eligible to enroll under such section for a month after 
                July 2001, 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 ages 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--
                    (A) in paragraph (3)--
                            (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, 2002), 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.''.
    (f) Effective Dates.--
            (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, 2002. 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--
                    (A) in paragraph (3)--
                            (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, 2002), 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.''.
    (f) Effective Dates.--
            (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, 2002. 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--
                    (A) in paragraph (1)--
                            (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, 
                2002), 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.''.
    (f) Effective Dates.--
            (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, 2002. 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--FINANCING

SEC. 401. REFERENCE TO FINANCING PROVISIONS.

    Any increase in payments under the medicare program under title 
XVIII of the Social Security Act that results from the enactment of 
this Act shall be offset by reductions in payments under such program 
pursuant to the anti-fraud and anti-abuse provisions enacted as part of 
the Medicare Fraud and Overpayment Act of 1998.

  TITLE V--PROVISION OF PREMIUM ASSISTANCE FOR LOW-INCOME INDIVIDUALS 
          PURCHASING EARLY COVERAGE UNDER THE MEDICARE PROGRAM

SEC. 501. PROVISION OF PREMIUM ASSISTANCE FOR LOW-INCOME INDIVIDUALS 
              PURCHASING EARLY COVERAGE UNDER THE MEDICARE PROGRAM.

    (a) In General.--Section 1902(a)(10) of the Social Security Act (42 
U.S.C. 1396a(a)(10)) is amended--
            (1) in subparagraph (E)--
                    (A) by striking ``and'' at the end of clause (iii), 
                and
                    (B) by adding at the end the following new clause:
                    ``(v) for making medical assistance available 
                consistent with section 1916(d)(2) for medicare cost-
                sharing described in section 1905(p)(3)(A)(iii) for 
                individuals who have enrolled for benefits under part D 
                of title XVIII, whose income (as determined in the same 
                manner as income is determined under section 1905(p) 
                for qualified medicare beneficiaries) does not exceed 
                200 percent of the official poverty line (referred to 
                in such section) applicable to a family of the size 
                involved, and who are not otherwise entitled to medical 
                assistance under the plan;''; and
            (2) in the matter following subparagraph (G)--
                    (A) by striking ``and'' before ``(XIV)'', and
                    (B) by inserting before the semicolon at the end 
                the following: ``, and (XV) the medical assistance made 
                available to an individual described in subparagraph 
                (E)(v) shall be limited to medical assistance for 
                medicare cost-sharing described in the last sentence of 
                section 1905(p)(3)''.
    (b) Sliding Scale for Benefits.--Section 1916(d) of such Act (42 
U.S.C. 1396o(d)) is amended--
            (1) by inserting ``(1)'' after ``(d)'', and
            (2) by adding at the end the following:
    ``(2) With respect to an individual described in section 
1902(a)(10)(E)(v), the State plan of a State shall provide for the 
charging of a premium (expressed as a percentage of the medicare cost-
sharing described in the last sentence of paragraph (3) of section 
1905(p)(3) provided with respect to the individual) according to a 
sliding scale under which such percentage increases from 10 percent to 
100 percent, in reasonable increments (as determined by the Secretary), 
as the individual's income increases from 100 percent of the official 
poverty line (referred to in such section) to 200 percent of such 
poverty line.''.
    (c) 100 Percent Federal Medical Assistance Percentage.--The first 
sentence of section 1905(b) of such Act (42 U.S.C. 1396d(b)) is 
amended--
            (1) by striking ``and'' before ``(4)'', and
            (2) by inserting before the period at the end the 
        following: ``, and (5) the Federal medical assistance 
        percentage shall be 100 percent with respect to medical 
        assistance provided under section 1902(a)(10)(E)(v)''.
    (d) Medicare Cost-Sharing Including Buy-In Premium.--Section 
1905(p)(3) of such Act (42 U.S.C. 1396d(p)(3)) is amended by adding at 
the end the following: ``Such term also includes premiums under part D 
of title XVIII but only with respect to individuals described in 
section 1902(a)(10)(E)(v).''.
    (e) Treatment of Territories.--Section 1108(g) of such Act (42 
U.S.C. 1308(g)) is amended by adding at the end the following new 
paragraph:
    ``(3) Notwithstanding the preceding provisions of this subsection, 
with respect to fiscal year 2003 and any fiscal year thereafter, the 
amount otherwise determined under this subsection (and subsection (f)) 
for the fiscal year for a Commonwealth or territory shall be increased 
by the ratio (as estimated by the Secretary) of--
            ``(A) the aggregate amount of payments made to the 50 
        States and the District of Columbia for the fiscal year under 
        title XIX that are attributable to the amendments made by the 
        Early Medicare Access and Affordability Act of 2002; to
            ``(B) the aggregate amount of total payments made to such 
        States and District for the fiscal year under such title.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to premiums for months beginning with July 2003.
                                 <all>