IMPOSITION OF SUPPLEMENTAL MEDICARE PREMIUM.

SEC. 111. IMPOSITION OF SUPPLEMENTAL MEDICARE PREMIUM. (a) General Rule.—Subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to determination of tax liability) is amended by adding at the end thereof the following new part: 102 STAT. 690 “PART VIII—SUPPLEMENTAL MEDICARE PREMIUM “Sec. 59B. Supplemental medicare premium. “SEC. 59B. SUPPLEMENTAL MEDICARE PREMIUM. “(a) Imposition of Premium.—In the case of an individual to whom this section applies, there is hereby imposed (in addition to any other amount imposed by this subtitle) for each taxable year a supplemental premium equal to the annual premium for such year determined under subsection (c). “(b) Individuals Subject to Premium.—This section shall apply to an individual for any taxable year if— “(1) such individual is a medicare-eligible individual for more than 6 full months beginning in the taxable year, and “(2) such individual’s adjusted income tax liability for the taxable year equals or exceeds $150. “(c) Determination of Amount of Supplemental Premium.— For purposes of this section— “(1) In general.— Except as otherwise provided in this subsection, the annual premium determined under this subsection with respect to any individual for any taxable year shall be equal to the product of— “(A) the supplemental premium ate determined under subsection (d) or (e) (whichever applies) for the taxable year, multiplied by “(B) the amount determined by dividing— “(i) the individual’s adjusted income tax liability for the taxable year, by “(ii) $150. “(2) Limitation on annual premium.— “(A) Years before 1994.—In the case of any taxable year beginning before 1994, the annual premium determined under this subsection with respect to any individual shall not exceed the limitation determined under the following table: “In the case of taxable years beginning in: The limitation is: 1989. $800 1990 850 1991. 900 1992. 950 1993. 1,050. “(B) Years after 1993.— In the case of any taxable year beginning in a calendar year after 1993, the annual premium determined under this subsection with respect to any individual shall not exceed— “(i) the limitation which would be in effect under this paragraph for taxable years beginning in the preceding calendar year without regard to the last sentence of this subparagraph, increased by “(ii) the percentage (if any) by which— “(I) the medicare-part B value for the 2nd preceding calendar year, exceeds “(II) such value for the 3rd preceding calendar year. 102 STAT. 691 If the limitation determined under the preceding sentence is not a multiple of $50, such limitation shall be rounded to the nearest multiple of $50. “(C) Medicare-part b value.— “(i) In general.—For purposes of subparagraph (B), the term ‘medicare-part B value’ means, with respect to any calendar year, an amount equal to the excess of— “(I) the average per capita part B outlays for the year, over “(II) 12 times the monthly premium for months in such calendar year established under section 1839 of such Act (without regard to subsections (b), (0, (g)(4), and (g)(5) thereof. “(ii) Average per capita part b outlays.— For purposes of clause (i), the term ‘average per capita part B outlays’ means, with respect to a calendar year— “(I) the outlays under part B of title XVIII of the Social Security Act for the year, divided by “(II) the average number of individuals covered under such part during the year. “(iii) Special rule for covered outpatient drugs.— In applying the limitation under subparagraph (B) with respect to taxable years beginning in any calendar year before 1998, for purposes of this subparagraph— “(I) the term ‘outlays’ does not include outlays for covered outpatient drugs (as defined in section 1861(t)(2) of the Social Security Act), and “(II) the monthly premium shall be computed under clause (i)(II) excluding premiums under section 1839(g) of such Act attributable to the prescription drug monthly premium. “(3) Tables.—The annual premium shall be determined under tables which shall be prescribed by the Secretary. Such tables shall be based on the foregoing provisions of this subsection; except that such tables may nave adjusted income tax liability brackets of less than $150. “(d) Determination of Supplemental Premium Rate for Years Before 1994.—In the case of any taxable year beginning before 1994, the supplemental premium rate determined under this subsection shall be the sum of the catastrophic coverage premium rate and the prescription drug premium rate determined under the following table: “In the case of any taxable year beginning in: The catastrophic coverage premium rate is: The prescription drug premium rate is: 1989 $22.50 $0 1990 27.14 $10.36 1991 30.17 8.83 1992 30.55 9.95 1993 29.55 12.45. “(e) Supplemental Premium Rate for Years After 1993.— “(1) In general.— In the case of any taxable year beginning in a calendar year after 1993, except as provided in paragraph (2), the supplemental premium rate determined under this subsection shall be the sum of— “(A) the catastrophic coverage premium rate (which would be in effect under this section for taxable years 102 STAT. 692 beginning in the preceding calendar year if paragraph (2) did not apply to any preceding calendar year) adjusted by the percentage determined under paragraph (3) for the calendar year in which the taxable year begins, and “(B) the prescription drug premium rate (which would be in effect under this section for taxable years beginning in the preceding calendar year if paragraph (2) did not apply to any preceding calendar year) adjusted by the percentage determined under paragraph (4) for the calendar year in which the taxable year begins. “(2) Supplemental premium rate cannot go down, and cannot go up by more than $1.50.— “(A) In general.— In no event shall the supplemental premium rate determined under this subsection for any taxable year beginning in a calendar year after 1993— “(i) be less than, or “(ii) exceed by more than $1.50, the supplemental premium rate in effect under this section for taxable years beginning in the preceding calendar year. “(B) Determination of component rates where subparagraph (a) applies.—If subparagraph (A) affects the supplemental premium rate determined under this subsection for taxable years beginning in any calendar year, the supplemental premium rate determined after the application of subparagraph (A) shall be allocated between the catastrophic coverage premium rate and the prescription drug premium rate on the basis of the respective amounts of such rates without regard to the application of subparagraph (A). “(3) Percentage adjustment for catastrophic coverage premium rate.— “(A) In general.—The percentage determined under this paragraph for any calendar year shall be the sum of— “(i) the outlay-premium percentage, and “(ii) the reserve account percentage. For purposes of the preceding sentence, negative percentages shall be taken into account as negatives. “(B) Outlay-premium percentage.— “(i) In general.— Except as otherwise provided in this subparagraph, the outlay-premium percentage for any calendar year is— “(I) the percentage by which the per capita catastrophic outlays in the 2nd preceding calendar year exceed such outlays in the 3rd preceding calendar year, reduced (including below zero) by “(II) the percentage by which the per capita catastrophic coverage premium liability for the 2nd preceding calendar year exceeds such liability for the 3rd preceding calendar year (determined as if the catastrophic coverage premium rate for the 2nd preceding calendar year were the same as the rate in effect for the 3rd preceding calendar year). If there is no excess described in subclause (I) or (II), such subclause shall be applied by substituting ‘is less than’ for ‘exceeds’ and the percentage determined with such substitution shall be taken into account as a negative percentage. 102 STAT. 693 “(ii) Adjustment for more recent increases in cost-of-living.— If— “(I) the percentage increase in the CPI for the 12-month period ending with May of the preceding calendar year, exceeds (or is less than) “(II) such increase for the 12-month period ending with May of the 2nd preceding calendar year, by at least 1 percentage point, the percentage determined under clause (i) for the calendar year shall be adjusted up (or down, respectively) by ½ of the amount by which such excess (or shortage, respectively) exceeds 1 percent. “(C) Reserve account percentage.— “(i) In general.—The reserve account percentage for any calendar year is the percentage which the rate change determined under clause (ii) is of the catastrophic coverage premium rate which would be in effect under this section for taxable years beginning in the preceding calendar year if paragraph (2) did not apply to any preceding calendar year. If there is an excess determined under clause (iii), the percentage determined under the preceding sentence shall be taken into account as a negative percentage. “(ii) Determination of rate change.—The rate change determined under this clause for any calendar year is the adjustment in the catastrophic coverage premium rate (otherwise in effect for taxable years beginning in the 2nd preceding calendar year) which the Secretary determines would have resulted in an aggregate increase (or decrease) in the premiums imposed by this section for such taxable years equal to 63 percent of the shortfall or excess determined under clause (iii) for the calendar year. “(iii) Determination of shortfall or excess.— The shortfall (or excess) determined under this clause for any calendar year is the amount by which— “(I) 20 percent of the outlays during the 2nd preceding calendar year from the Medicare Catastrophic Coverage Account created under section 1841B of the Social Security Act, exceeds (or is less than) “(II) the balance in such Account as of the close of such 2nd preceding calendar year (determined by taking into account previous premium increases by reason of the reserve account percentage under this subsection or by reason of section 1839(g)(2) of the Social Security Act but not credited to the Account). “(D) Definitions.— For purposes of this paragraph— “(i) Per capita catastrophic outlays.— The term ‘per capita catastrophic outlays’ means, with respect to any calendar year, the amount (as determined by the Secretary of Health and Human Services) equal to— “(I) the outlays during such year from the Medicare Catastrophic Coverage Account created under section 1841B of the Social Security Act, divided by 102 STAT. 694 “(II) the average number of individuals entitled to receive benefits under part A of title )(VIII of the Social Security Act during such calendar year, “(ii) Per capita catastrophic coverage premium liability.— The term ‘per capita catastrophic coverage premium liability’ means, with respect to any calendar year, the amount (as determined by the Secretary) equal to— “(I) the aggregate premiums imposed by this section for taxable years beginning in such calendar year to the extent attributable to the catastrophic coverage premium rate, divided by “(II) the number of individuals who had premium liability under this section for such taxable years. “(iii) Percentage increase in cpi.—The percentage increase in the CPI for any 12-month period shall be the percentage by which the Consumer Price Index (as defined in section 1(f)(5)) for the last month of such period exceeds such Index for the last month of the preceding 12-month period. “(4) Percentage adjustment for prescription drug premium rate.— The percentage determined under this paragraph for any calendar year shall be determined under rules similar to the rules of paragraph (3); except that— “(A) in determining the prescription drug premium rate for any calendar year before 1998, the following percentages shall be substituted for 20 percent in paragraph (3)(C)(iii)(I): “In the case of calendar year: The percentage is: 1994 75 1995 50 1996 25 1997 25, (B) no adjustment by reason of the outlay-premium percentage shall be made for any calendar year before 1998, “(C) any reference to the Medicare Catastrophic Coverage Account shall be treated as a reference to the Federal Catastrophic Drug Insurance Trust Fund, and “(D) any reference to the catastrophic coverage premium rate shall be treated as a reference to the prescription drug premium rate. “(f) Definitions and Special Rules.— “(1) Medicare-eligible individual.— For purposes of this section— “(A) In general.—Except as otherwise provided in this paragraph, the term ‘medicare-eligible individual’ means, with respect to any month, any individual who is entitled to (or, on application without the payment of an additional premium, would be entitled to) benefits under part A of title XVIII of the Social Security Act for such month. “(B) Exceptions.— The term ‘medicare-eligible individual’ shall not include for any month— “(i) any individual who is entitled to benefits under part A of title )(VIII of the Social Security Act for such month solely by reason of the payment of a premium under section 1818 of such Act, or 102 STAT. 695 “(ii) any qualified nonresident. “(2) Special rules for joint returns.— In the case of a joint return— “(A) Where premium applies to both spouses.— If both spouses meet the requirements of subsection (b)(1) for the taxable year— “(i) such spouses shall be treated as 1 individual for purposes of applying this section, except that “(ii) the limitation of subsection (c)(2) shall be twice the amount which would otherwise apply. “(B) Where premium applies to only 1 spouse.— If only 1 spouse meets the requirements of subsection (b)(1) for the taxable year— “(i) this section shall be applied separately with respect to such spouse, and “(ii) the adjusted income tax liability of such spouse shall be determined under paragraph (4)— “(I) by taking into account one-half of the income tax liability determined with respect to the joint return, and “(II) by taking into account under clause (ii) of paragraph (4)(C) only amounts attributable to such spouse. “(3) Separate returns by married individuals.— If an individual is married as of the close of the taxable year (within the meaning of section 7703) but does not file a joint return for the taxable year and such individual does not live apart from his spouse at all times during the taxable year— “(A) the limitation of subsection (c)(2) shall be twice the amount which would otherwise apply if both the individual and the spouse of the individual meet the requirements of subsection (b)(1) with respect to the calendar year in which the taxable year begins (determined without regard to subparagraph (B) of this paragraph), “(B) if such individual does not otherwise meet the requirements of subsection (b)(1), such individual shall be treated as meeting the requirements of subsection (b)(1) for the taxable year if the spouse of such individual meets such requirements with respect to the calendar year in which the taxable year begins, and “(C) in applying subparagraph (Q of paragraph (4)— “(i) the dollar limitation of clause (i) thereof shall be ½ of the amount which applies to a joint return where both spouses meet the requirements of subsection (b)(1), and “(ii) the individual shall be deemed to receive social security benefits during the taxable year in an amount not less than % of the aggregate social security benefits received by such individual and his spouse during the taxable year. “(4) Adjusted income tax liability.— For purposes of this section— “(A) In general.— The term ‘adjusted income tax liability’ means an amount equal to the income tax liability, reduced by the excess (if any) of— 102 STAT. 696 “(i) 15 percent of the governmental retiree exclusion amount (if any) determined under subparagraph (C) for the taxable year, over “(ii) the amount of the credit allowable under section 22 for the taxable year. “(B) Income tax liability.— The term ‘income tax liability’ means— “(i) the tax imposed by this chapter (determined without regard to this section), reduced by “(ii) the credits allowed under part IV of this subchapter (other than under sections 31, 33, and 34). “(C) Governmental retiree exclusion amount.— The governmental retiree exclusion amount for any taxable year is the lesser of— “(i) $6,000 ($9,000 in the case of a joint return where both spouses meet the requirements of subsection (b)(1) for the taxable year), or “(ii) the amount which is received as an annuity (whether for a period certain or during 1 or more lives) under a governmental plan (as defined in the 1st sentence of section 414(d)) and which is includible in gross income under section 72 for the taxable year. The amount determined under the preceding sentence shall be reduced by the social security benefits (as defined in section 86(d)) received during the taxable year. “(D) Indexing.— In the case of any taxable year beginning in a calendar year after 1989, subparagraph (C)(i) shall be applied by substituting for each dollar amount contained in such subparagraph an amount equal to— “(i) the dollar amount which would be in effect under subparagraph (C)(i) for taxable years beginning in the preceding calendar year without regard to the last sentence of this subparagraph, increased by “(ii) the cost-of-living adjustment determined under section 215(i) of the Social Security Act for the calendar year in which the taxable year begins. Any amount determined under the preceding sentence shall be rounded to the nearest multiple of $50. “(5) Qualified nonresident.— “(A) In general.— For purposes of paragraph (1), the term ‘qualified nonresident’ means, with respect to any month during the taxable year, any individual if— “(i) such individual is not furnished during such taxable year or any of the 4 preceding taxable years any service for which a claim for payment is made under part A of title )(VIII of the Social Security Act, “(ii) such individual is not entitled to benefits under part B of title)(VIII of the Social Security Act at any time during such taxable year or any of the 4 preceding taxable years, and “(iii) such individual is present in a foreign country or countries for at least 330 full days during— “(I) the 12-month period ending at the close of the taxable year, and “(II) each of the 4 consecutive preceding 12-month periods. 102 STAT. 697 “(B) Special rule for individuals who die during the taxable year.—An individual who dies during the taxable year shall be treated as meeting the requirement of subparagraph (A)(iii)(I) if such individual is present in a foreign country or countries for at least a number of full days equal to 90 percent of the days during such taxable year before the date of death. “(6) Coordination with other provisions.— “(A) Not treated as medical expense.—For purposes of section 213, the supplemental premium imposed by this section for any taxable year shall not be treated as an expense paid for medical care. “(B) Not treated as tax for certain purposes.— The supplemental premium imposed by this section shall not be treated as a tax imposed by this chapter for purposes of determining— “(i) the amount of any credit allowable under this chapter, or “(ii) the amount of the minimum tax imposed by section 55. “(C) Treated as tax for subtitle f.—For purposes of subtitle F, the supplemental premium imposed by this section shall be treated as if it were a tax imposed by section 1. “(D) Section 15 not to apply.—Section 15 shall not apply to the supplemental premium imposed by this section. “(7) Section not to affect liability to possessions, etc.—This section shall not apply for purposes of determining liability to any possession of the United States. For purposes of sections 932 and 7654, the supplemental premium imposed by this section shall not be treated as a tax imposed by this chapter. “(8) Short taxable years.—In the case of a taxable year of less than 12 months, this section shall be applied under regulations prescribed by the Secretary.” (b) Information Reporting.— (1) Subsection (a) of section 6050F of such Code is amended by striking “and” at the end of paragraph (1), by redesignating paragraph (2) as paragraph (3), and by inserting after paragraph (1) the following new paragraph: “(2) whether any individual meets the requirements of section 59B(b)(1) with respect to the calendar year (determined without regard to section 59B(f)(1)(B)(ii)), and”. (2) Section 6050F(b) of such Code is amended— (A) by inserting “or making the determination under subsection (a)(2)” after “payments” in paragraph (1), and (B) by inserting “and the information required under subsection (a)(2),” after “reductions,” in paragraph (2). (3) Section 6050F(c)(1)(A) of such Code is amended by inserting “and the information required under subsection (a)(2)” after “section 86(d)(1)(A)”. (c) Clerical Amendment.—The table of parts for subchapter A of chapter 1 of such Code is amended by adding at the end thereof the following new item: “Part VIII. Supplemental medicare premium.” (d) Announcement of Supplemental Premium Rate.—In the case of calendar year 1993 or any calendar year thereafter— 102 STAT. 698 (1) not later than July 1 of such calendar year, the Secretary of the Treasury or his delegate shall make an announcement of the estimated supplemental premium rate under section 59B of the Internal Revenue Code of 1986 for taxable years beginning in the following calendar year, and (2) not later than October 1 of such calendar year, the Secretary of the Treasury or his delegate shall make an announcement of the actual supplemental premium rate under such section for such taxable years. (e) Effective Date.— (1) In general.—The amendments made by this section shall apply to taxable years beginning after December 31, 1988. (2) Waiver of estimated tax requirement for years beginning in 1989.—In the case of a taxable year beginning in 1989, the premium imposed by section 59B of the Internal Revenue Code of 1986 (as added by this section) shall not be treated as a tax for purposes of applying section 6654 of such Code.