[Congressional Record Volume 147, Number 42 (Tuesday, March 27, 2001)]
[Senate]
[Pages S2983-S2989]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER (for himself, Mr. Daschle, Mr. Kennedy, and 
        Mr. Sarbanes):
  S. 623. 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; to the 
Committee on Finance.
  Mr. ROCKEFELLER. Mr. President, the problem of the uninsured 
continues to plague our Nation, and it is particularly severe for older 
Americans who are facing the loss of health coverage but who are not 
yet eligible for Medicare. Today, over 40 million Americans are without 
health insurance.
  Adults between the ages of 55 to 65 are the fastest growing group of 
uninsured. Individuals 55 and older who have been laid off or retire 
early are particularly vulnerable to loss of health insurance. They 
have a difficult time buying health insurance on their own because they 
tend to have more chronic health problems that can result in either the 
denial of coverage, limited coverage, or very expensive policies.
  This is the age group where early detection and access to 
preventative care become crucial. For example, only 16 percent of 
uninsured women report having had a mammogram in the past year, 
compared to 42 percent of insured women. Because regular preventative 
care is not received, the uninsured are more likely to be diagnosed at 
a more advanced stage of cancer, over 40 percent more likely to be 
diagnosed with late stage breast and prostate cancer, and more than 
twice as likely to be diagnosed with late stage melanoma than the 
insured.
  The uninsured are more likely than those with insurance to be 
hospitalized for conditions that could have been avoided, such as 
pneumonia and uncontrolled diabetes. Delaying or not receiving 
treatment can lead to more serious illness and avoidable health 
problems, which has a direct impact on the health care needs of this 
segment of the population as they become old enough for Medicare 
coverage.
  Lack of insurance and gaps in coverage affect more than just those 
without insurance. There is a cost to society, as well. When an 
uninsured person goes to a public hospital or clinic, and emergency 
room, or a private physician for care and cannot pay the full cost, 
some of the bill is passed on to those who do pay, through higher 
insurance premiums and in the form of taxes supporting our public 
insurance programs. One way or another, we all pay indirectly for 
having a large and growing uninsured population.
  With the aging of the baby boom generation, this particularly 
vulnerable age group is expected to increase significantly. In 1999, 
there were 23.1 million Americans in this age group. This is expected 
to increase to 35 million Americans by the year 2020. Unless we effect 
positive change to address the barriers facing the growing number of 
uninsured in this age group, this problem will only get worse.
  I join Senators Kennedy, Daschle, and Sarbanes, and Representatives. 
Stark, Brown, Gephardt, Rangel, Dingell, and a number of their 
colleagues today to introduce an improved version of the Medicare Early 
Access Act. Our legislation will create an opportunity for people 
between ages 55 and 64 to purchase Medicare coverage, which is really 
the only affordable option for this group, because of their age and the 
likelihood of chronic and/or preexisting conditions.
  The Medicare Early Access and Tax Credit Act would reduce the number 
of uninsured Americans by more than 500,000. This bill provides new 
insurance coverage options through a Medicare buy-in for people aged 55 
through 64 or through a special COBRA continuation program for workers 
aged 55 through 64 whose employers reneged on the promise of retiree 
health coverage.
  This legislation improves upon the existing Medicare Early Access Act 
by adding a new 50 percent federal tax credit to the program to make it 
more affordable for people age 55 and over to obtain health insurance 
coverage. By including a tax credit, we are making this option 
available to a broader range of people.
  A survey released last session by the Commonwealth Fund finds that 
one in five people from age 50-64 reported a period of time when they 
were without health insurance coverage since turning age 50. Access to 
employer insurance is reduced as people approach age sixty-five and 
retire. Consequently, older Americans rely most heavily on individual 
insurance, which is expensive and limited for people with serious 
health problems. Because average health expenses increase sharply with 
age, people closest to age sixty-five face the greatest risk of being 
uninsured and being charged the highest premiums in the individual 
market. Clearly, we need to take real steps to address the needs of 
this population.
  The Commonwealth survey also found that, when asked what source they 
would trust more to provide health insurance for adults ages 50 to 64, 
Medicare outranked employer-sponsored coverage and direct purchase of 
private individual health insurance. Half of uninsured adults ages 50-
64 said they would trust Medicare the most as a source of coverage.
  The Medicare Early Access and Tax Credit Act provides an insurance 
option for people who are unable to purchase health insurance in the 
private market either because of pre-existing conditions, age related 
premium increases, or both.
  The Medicare Early Access and Tax Credit Act is not the solution to 
solving America's health insurance coverage problems. But, it is a 
simple and obvious step to take to open new doors to a vulnerable 
segment of our population who are lacking affordable coverage 
elsewhere, and who need the opportunity to buy in to Medicare. I urge 
my colleagues to join us in making health insurance a reality for 
people in their later years of life, who are not yet eligible for the 
safety net of Medicare.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 623

       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''.
       (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.

[[Page S2984]]

``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).
       ``(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 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:
       ``(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.

[[Page S2985]]

       ``(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.--
       ``(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.
       ``(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.

[[Page S2986]]

     ``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

[[Page S2987]]

     (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 
     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, 
     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.''.

[[Page S2988]]

       (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, 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--
       (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, 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.''.
       (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, 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--
       (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

[[Page S2989]]

       ``(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.''.
       (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, 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.
                                 ______