SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Care Assurance for Retired 
Employees Act of 1996''.

SEC. 2. ADVANCE NOTICE OF MATERIAL REDUCTIONS IN COVERED SERVICES UNDER 
              GROUP HEALTH PLANS.

    (a) Advance Notice.--
            (1) In general.--Section 104(b)(1) of the Employee 
        Retirement Income Security Act of 1974 (as amended by section 
        101(c)(1)(B) of the Health Insurance Portability and 
        Accountability Act of 1996 (Public Law 104-191)) is amended--
                    (A) by redesignating subparagraphs (A) and (B) as 
                clauses (i) and (ii), respectively;
                    (B) by striking ``(1) The administrator'' and 
                inserting ``(1)(A) The administrator'';
                    (C) by striking ``The administrator'' the second 
                place it appears and inserting the following:
    ``(B) The administrator'';
                    (D) by striking ``If there is a modification'' and 
                inserting the following:
    ``(C) If there is a modification''; and
                    (E) by adding at the end the following new 
                subparagraph:
    ``(D) Notwithstanding subparagraph (C), a modification or change 
described in section 102(a)(1) in covered services or benefits provided 
in the case of a group health plan (as defined in section 706(a)(1))) 
relating to retiree health benefits, a summary description of such 
modification or change shall be furnished to participants and 
beneficiaries not later than 180 days before the effective date of the 
modification or change. In any case in which an individual first 
becomes a participant under a group health plan during any such 180-day 
period with respect to such a modification or change or (in the case of 
any other beneficiary under the plan) first receives benefits under the 
plan during such 180-day period, the requirements of the preceding 
sentence may be met by providing the summary description of such 
modification or change not later than the date on which such individual 
first becomes a participant or such other beneficiary first receives 
benefits under the plan.''.
            (2) Determination by Secretary.--Section 104 of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1024) is further amended by redesignating subsection (d) as 
        subsection (e) and by inserting after subsection (c) the 
        following new subsection:
    ``(d) A change or modification in covered services or benefits 
provided in the case of a group health plan relating to retiree health 
benefits that is subject to the requirements of subsection (b)(1)(D) 
may not take effect until after the Secretary determines that such 
change or modification does not violate the plan, including collective 
bargaining agreements.''.
            (3) Advance notice to secretary.--Section 104(a)(1)(D) of 
        the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1024(a)(1)(D)) is amended by inserting before the period the 
        following: ``, or in the case of any such modifications and 
        changes in covered services or benefits provided in the case of 
        a group health plan relating to retiree health benefits, not 
        later than 180 days before the effective date of such 
        modification or change.''.
            (4) Civil penalty.--Section 502(c)(1) of such Act (29 
        U.S.C. 1132(c)(1)) is amended by striking ``or section 
        101(e)(1)'' and inserting ``, section 101(e)(1), or section 
        104(b)(1)(D)''.
    (b) Enforcement.--
            (1) Requirements.--Section 4980B of the Internal Revenue 
        Code of 1986 is amended by redesignating subsection (g) as 
        subsection (h) and by inserting after subsection (f) the 
        following new subsection:
    ``(g) Notice of change or modification in health benefits.--
            ``(1) In general.--A group health plan meets the 
        requirements of this subsection if--
                    ``(A) the plan sponsor complies with section 
                104(b)(1)(D) of the Employee Retirement Income Security 
                Act of 1974 (relating to providing advance notice of 
                modification or change in retiree health benefits 
                provided under a group health plan); and
                    ``(B) such modification or change in retiree health 
                benefits in a group health plan takes effect after the 
                Secretary of Labor makes the determination required by 
                section 104(d) of such Act that such change or 
                modification does not violate the plan, including 
                collective bargaining agreements.
            ``(2) Noncompliance period.--For the purposes of subsection 
        (b), the noncompliance period with respect to this subsection 
        shall be determined without regard to paragraph (2)(B)(ii) of 
        subsection (b).''.
            (2) Conforming amendments.--
                    (A) Subsection (a) of section 4980B of such Code is 
                amended by striking ``subsection (f)'' and inserting 
                ``subsections (f) and (g)''.
                    (B) Clause (iv)(II) of section 4980B(f)(2)(B) of 
                such Code is amended by striking ``subsection 
                (g)(1)(D)'' and inserting ``subsection (h)(1)(D)''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to plan years ending after August 1, 1996.

SEC. 3. CONTINUATION OF COVERAGE FOR PERSONS 55 AND OLDER UNTIL 
              ELIGIBLE FOR MEDICARE.

    (a) In General.--Section 4980B(f)(2) of the Internal Revenue Code 
of 1986 is amended by adding at the end the following:
                    ``(F) Coverage for persons 55 and older until 
                eligible for medicare.--In the case of a covered 
                employee who has attained the age of 55 before a 
                qualifying event described in paragraph (3)(B)--
                            ``(i) in no event shall the period of 
                        continued coverage under subparagraph (B)(i) 
                        with respect to such event end before the 
                        applicable date under subparagraph (B)(iv), and
                            ``(ii) the premium requirements for any 
                        period of continuation of coverage solely be 
                        reason of clause (i) shall be determined by 
                        substituting `110 percent' for `102 percent' in 
                        subparagraph (C)(i), unless the last sentence 
                        of subparagraph (C) otherwise applies.''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to plan years ending after August 1, 1996.

SEC. 4. PROTECTIONS UNDER THE MEDICARE PROGRAM FOR RETIRED WORKERS WHO 
              LOSE RETIREE HEALTH BENEFITS.

    (a) No Premium Penalty for Late Enrollment.--The second sentence of 
section 1839(b) of the Social Security Act (42 U.S.C. 1395r(b)) is 
amended by inserting ``and not pursuant to a special enrollment period 
under section 1837(i)(4)'' after ``section 1837)''.
    (b) Special Medicare Enrollment Period.--
            (1) In general.--Section 1837(i) of such Act (42 U.S.C. 
        1395p(i)) is amended by adding at the end the following new 
        paragraph:
    ``(4)(A) In the case of an individual who--
            ``(i) at the time the individual first satisfies paragraph 
        (1) or (2) of section 1836--
                    ``(I) is enrolled in a group health plan described 
                in section 1862(b)(1)(A)(v) by reason of the 
                individual's (or the individual's spouse's) current 
                employment or otherwise, and
                    ``(II) has elected not to enroll (or to be deemed 
                enrolled) under this section during the individual's 
                initial enrollment period; and
            ``(ii) whose continuous enrollment under such group health 
        plan is involuntarily terminated at a time when the enrollment 
        under the plan is not by reason of the individual's (or the 
        individual's spouse's) current employment,
there shall be a special enrollment period described in subparagraph 
(B).
    ``(B) The special enrollment period referred to in subparagraph (A) 
is the 6-month period beginning on the date of the enrollment 
termination described in subparagraph (A)(ii).''.
            (2) Coverage period.--Section 1838(e) of such Act (42 
        U.S.C. 1395q(e)) is amended--
                    (A) by inserting ``or 1837(i)(4)(B)'' after 
                ``1837(i)(3)'' the first place it appears, and
                    (B) by inserting ``or specified in section 
                1837(i)(4)(A)(i)'' after ``1837(i)(3)'' the second 
                place it appears''.
    (c) Providing for Medigap Open Enrollment Period.--Section 
1882(s)(2)(A) of such Act (42 U.S.C. 1395ss(s)(2)(A)) is amended--
            (1) by inserting ``(i)'' after ``during'', and
            (2) by inserting before the period at the end the 
        following: ``or (ii) in the case of an individual who enrolls 
        in part B pursuant to a special enrollment period provided 
        under section 1837(i)(4), the 6-month period beginning with the 
        first month as of the first day of which the individual is 
        enrolled under part B pursuant to such enrollment''.
    (d) Effective Date.--
            (1) In general.--Subject to paragraph (2), the amendments 
        made by this section shall take effect on the date of the 
        enactment of this Act and apply to involuntary terminations of 
        coverage under a group health plan occurring on or after August 
        1, 1996.
            (2) Transition.--In the case of an involuntary termination 
        of coverage under a group health plan that occurred during the 
        period beginning on August 1, 1996, and ending on the date of 
        the enactment of this Act, the special enrollment period under 
        section 1837(i)(4)(B) of the Social Security Act (as amended by 
        subsection (b)) is deemed to begin as of the date of the 
        enactment of this Act.
Health Care Assurance for Retired Employees Act of 1996 - Amends the Employee Retirement Income Security Act of 1974, as amended by the Health Insurance Portability and Accountability Act of 1996, to require advance notice to participants and the Secretary of Labor of material reductions in group health plan covered services.  Prohibits any such change from taking effect until the Secretary determines that it does not violate the plan, including collective bargaining agreements. 
Amends the Internal Revenue Code to require qualified pension plans to provide qualifying persons 55 years of age or older a coverage continuation option until they are eligible for Medicare.  Amends title XVIII (Medicare) of the Social Security Act to provide retired workers who lose their retiree health benefits with specified Medicare enrollment and coverage protections.
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