II 110th CONGRESS 1st Session S. 173 IN THE SENATE OF THE UNITED STATES January 4, 2007 Mr. Inhofe (for himself and Mr. DeMint) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title XVIII of the Social Security Act to establish Medicare Health Savings Accounts.

1.

Short title

This Act may be cited as the Medicare Health Savings Accounts Act of 2007.

2.

Establishment of medicare health savings accounts

(a)

Establishment

(1)

In general

Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is amended— (A)by redesignating part E as part F; and (B)by inserting after part D the following new part: E

Medicare health savings accounts

1860E–1.

Entitlement to elect to receive benefits under medicare health savings accounts

(a)

In general

The Secretary shall establish procedures under which each eligible beneficiary (as defined in subsection (b)) shall be entitled to elect to receive benefits under a Medicare Health Savings Account under this part instead of benefits under parts A, B, or D. (b)

Eligible beneficiary described

An eligible beneficiary described in this subsection is an individual who— (1)is entitled to benefits under part A or enrolled under part B; (2)has a health savings account (as defined in subsection (d) of section 223 of the Internal Revenue Code of 1986), or certifies that they will use funds provided under this part to establish such an account; and (3)is enrolled under a high deductible health plan (as defined in subsection (c)(2) of such section, except that section 223(c)(2)(A)(ii)(I) of such Code shall be applied by substituting the amount in effect under clause (i)(I) for $5,000). (c)

Benefits To be available in 2008

The Secretary shall establish the procedures under subsection (a) in a manner such that Medicare Health Savings Accounts are available for years beginning on or after January 1, 2008. (d)

Preservation of original medicare fee-for-service benefits

Nothing in this part shall be construed to limit the right of an individual who is entitled to benefits under part A or enrolled under part B to receive benefits under such part (or under part C or D) if an election to receive benefits under Medicare Health Savings Accounts under this part is not in effect with respect to such individual. (e)

Rule of construction

Nothing in this part shall be construed as preventing an individual from depositing personal funds (subject to the contribution limitations under section 223 of the Internal Revenue Code of 1986) into a Medicare Health Savings Account.

1860E–2.

Medicare Health Savings Accounts program

(a)

In general

The Secretary shall establish a program to be known as the Medicare Health Savings Accounts program (in this part referred to as the Medicare HSA program). (b)

Amount provided to enrollees

(1)

Amount

The Secretary shall establish procedures to ensure that, for each plan year an individual is enrolled in the Medicare HSA program, the Secretary shall provide to such individual an amount that is equal to 95 percent of the annual MA capitation rate (as calculated under section 1853(c)(1)) with respect to that individual for the Medicare Advantage payment area the individual is in. (2)

Permissible use of amount

The Secretary shall establish procedures to ensure that the amount provided under paragraph (1) is used only for the following purposes: (A)As a contribution into a health savings account established by such individual, as described in paragraph (2) of section 1860E–1(b). (B)For payment of premiums for enrollment of such individual under a high deductible health plan described in paragraph (3) of such section. (3)

Notification of amount provided

The Secretary shall ensure that, not later than the date that is 90 days before the date on which payment of the amount provided under paragraph (1) is made to an individual enrolled in the Medicare HSA program, such individual receives notification of such amount. Such information shall be made available on the website of the Centers for Medicare & Medicaid Services (based on the age and geographic location of the beneficiary) and through 1–800–MEDICARE. (4)

Payment

Payment of the amount provided under paragraph (1) shall be made from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund (including the Medicare Prescription Drug Account within such Trust Fund) in such proportion as the Secretary determines appropriate. (5)

Recovery of amount provided in case of termination

(A)

In general

In the case of a termination of an election to receive benefits under this part as of a month before the end of a plan year, the Secretary shall provide for a procedure for the recovery of amounts provided attributable to the remaining months in such year. (B)

Penalty

(i)

In general

In addition to the amount recovered under subparagraph (A), if the Secretary determines there was fraud involved in such termination, the Secretary may apply a civil money penalty of not more than 25 percent of the amount recovered. (ii)

Civil money penalty

The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under this subparagraph in the same manner as they apply to a civil money penalty or proceeding under section 1128A(a). (c)

Payment for items and services

The Secretary shall establish procedures under which providers of services and suppliers (as defined in sections 1861(u) and 1861(d), respectively) are required to accept as payment for items and services provided to an individual enrolled in the Medicare HSA program under this part the amount that would otherwise be paid under the original Medicare fee-for-service program under parts A and B.

1860E–3.

Election of benefits under Medicare HSA program; termination of election

The Secretary shall establish procedures for the election of benefits, and the termination of such election, as appropriate, under the Medicare HSA program.

. (2)

Conforming references to previous part E

Any reference in law (in effect before the date of the enactment of this Act) to part E of title XVIII of the Social Security Act is deemed a reference to part F of such title (as in effect after such date). (b)

Amendment of Internal Revenue Code of 1986

(1)

In general

Paragraph (7) of section 223(b) of the Internal Revenue Code of 1986 (relating to medicare eligible individuals) is amended to read as follows: (7)

Medicare eligible individuals

The limitation under this subsection for any month with respect to an individual shall be zero for any month such individual is entitled to benefits under part A, B, or D of title XVIII of the Social Security Act. . (2)

Effective date

The amendment made by this subsection shall apply to taxable years beginning on or after January 1, 2008. (c)

Sunset of MSA provisions

Section 1851(a)(2)(B) of the Social Security Act (42 U.S.C. 1395w–21(a)(2)(B)) is amended— (1)by striking MSA.— An MSA plan, and inserting the following: “MSA.— (i)Subject to clause (ii), an MSA plan, ; and (2)by inserting after clause (i), as added by paragraph (1), the following new clause: (ii)Beginning on January 1, 2008, the plan described in clause (i) shall not be available as a Medicare Advantage plan under this part. .