clause (1) of subsection (b), and clause (1) of subsection (c)".

(e) The subsection of such section herein redesignated as subsection (i) is amended by adding at the end thereof the following new sentence: "Payments required to be made under title XVII shall be made only from the Federal Health Insurance Trust Fund."

(f) Section 218(h) (1) of such Act is amended by striking out "and (b) (1)" and inserting in lieu thereof ", (b) (1), and (c) (1)".

(g) Section 221(e) of such Act is amended

(A) by striking out "Trust Funds" wherever that appears and inserting in lieu there of "Trust Funds (except the Federal Health Insurance Trust Fund)";

(B) by striking out "subsection (g) of section 201" and inserting in lieu thereof "subsection (h) of section 201"; and

(C) by inserting "under this title" before the period at the end thereof. (h) Section 1106(b) of such Act is amended by striking out "and the Federal Disability Insurance Trust Fund" and inserting in lieu thereof ", the Federal Disability Insurance Trust Fund, and the Federal Health Insurance Trust Fund".

INCREASE IN EARNINGS BASE
Definition of Wages

SEC 203. (a) (1) Paragraph (3) of section 209 (a) of the Social Security Act is amended by inserting "and prior to 1963" after "1958".

(2) Such section 209(a) is further amended by adding at the end thereof the following new paragraph:

"(4) That part of remuneration which, after remuneration (other than remuneration referred to in the succeeding subsections of this section) equal to $5,200 with respect to employment has been paid to an individual during any calendar year after 1962, is paid to such individual during such calendar year;".

Definition of Self-Employment Income (b) (1) Subparagraph (C) of section 211 (b) (1) of such Act is amended by inserting "and prior to 1963" after "1958"; and by striking out "; or" and inserting in lieu thereof "; and".

(2) Such section 211(b) (1) is further amended by adding at the end thereof the following new subparagraph:

"(D) For any taxable year ending after 1962, (i) $5,200, minus (ii) the amount of wages paid to such individual during the taxable year; or".

Definitions of Quarter and Quarter of
Coverage

(c) (1) Clause (ii) of section 213 (a) (2) of such Act is amended by striking out "1958" and inserting in lieu thereof "1958 and before 1963, or $5,200 in the case of a calendar year after 1962".

(2) Clause (iii) of section 213(a) (2) of such Act is amended by striking out "1958" and inserting in lieu thereof "1958 and before 1963, or $5,200 in the case of a taxable year ending after 1962". 72100-S J-87-2-25

Table for Determining Primary Insurance

Amount

(d) (1) The table in section 215(a) of such Act is amended by striking out all the figures in columns II, III, IV, and V beginning with the line which reads

"105.50 102.30 315 319 109 254.00" and down through the line which reads "399 400 127 254.00" and inserting in lieu thereof the following:

"101.50 102.30 315 319 109 255.20 102.40 103.20 320 323 110 258.40 103.30 104.20 324 328 111 262.40 104.30 105.10 329 333 112 266.40 105.20 106.00 334 337 113 268.00 106.10 107.00 338 342 114 268.00 107.10 107.90 343 347 115 268.00 108.00 108.50 348 351 116 268.00 352 356 117 268.00 357 361 118 268.00 362 365 119 268.00 366 370 120 268.00 371 375 121 268.00 376 379 122 268.00 380 384 123 268.00 385 389 124 268.00 390 393 125 268.00 394 398 126 268.00 399 403 127 268.00 404 407 128 268.00 408 412 129 268.00 413 417 130 268.00

418 421 131 268.00

422 426 132 268.00

427 431 133 268.00

432 433 134 268.00".

(2) The amendment made by paragraph (1) shall be applicable with respect to monthly insurance benefits under title II of such Act for months after December 1962 and with respect to lump-sum death payments in the case of deaths after December 1962.

Average Monthly Wage

(e) Paragraph (1) of section 215(e) of such Act is amended by striking out "and the excess of over $4,800 in the case of any calendar year after 1958" and inserting in lieu thereof "the excess over $4,800 in the case of any calendar year after 1958 and before 1963, and the excess over $5,200 in the case of a calendar year after 1962".

TECHNICAL AMENDMENTS
Suspension In Case of Aliens

SEC. 204. (a) Subsection (t) of section 202 of such Act is amended by adding at the end thereof the following new paragraph:

"(9) No payments shall be made under title XVI with respect to services furnished to an individual in any month for which the prohibition in paragraph (1) against payment of benefits to him is applicable (or would be if he were entitled to any such benefits)."

Persons Convicted of Subversive Activities

(b) Subsection (u) of such section is amended by striking out "and" before the phrase "in determining the amount of any such benefit payable to such individual for any such month," and inserting after such phrase "and in deter

mining whether such individual is entitled to health insurance benefits under title XVII for any such month,".

Advisory Council on Social Security
Financing

(c) (1) Subsection (a) of section 116 of the Social Security Amendments of 1956 is amended by striking out "and of the Federal Disability Insurance Trust Fund" and inserting in lieu thereof ", of the Federal Disability Insurance Trust Fund, and of the Federal Health Insurance Trust Fund". Such subsection is further amended by inserting before the period at the end thereof "and the health insurance benefits program".

(2) Subsection (d) of such section is amended by striking out "and the Federal Disability Insurance Trust Fund" and inserting in lieu thereof ", the Federal Disability Insurance Trust Fund, and the Federal Health Insurance Trust Fund".

(3) Subsection (f) of such section is amended by striking out ", the adequacy of benefits under the program, and all other aspects of the program" and inserting in lieu thereof "and the health insurance benefits program, the adequacy of benefits under the program, and all other aspects of the program". PART B-AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1954

CHANGES IN TAX SCHEDULES
Self-Employment Income Tax

SEC. 211. (a) Section 1401 of the Internal Revenue Code of 1954 (relating to the rate of tax on self-employment income) is amended to read as follows:

"Sec. 1401. Rate of tax.

"In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax as follows

"(1) in the case of any taxable year beginning after December 31, 1962, and before January 1, 1964, the tax shall be equal to 5.4 percent of the amount of the self-employment income for such taxable year;

"(2) in the case of any taxable year beginning after December 31, 1963, and before January 1, 1966, the tax shall be equal to 5.8 percent of the amount of the self-employment income for such taxable year;

"(3) in the case of any taxable year beginning after December 31, 1965, and before January 1, 1968, the tax shall be equal to 6.6 percent of the amount of the self-employment income for such taxable year; and

"(4) in the case of any taxable year beginning after December 31, 1967, the tax shall be equal to 7.3 percent of the amount of the self-employment income for such taxable year."

Tax on Employees

(b) Section 3101 of such Code (relatto rate of tax on employees under the Federal Insurance Contributions Act) is amended to read as follows: "Sec. 3101. Rate of tax.

"In addition to other taxes, there is hereby imposed on the income of every

individual a tax equal to the following percentages of the wages (as defined in section 3121 (a)) received by him with respect to employment (as defined in section 3121(b)

"(1) with respect to wages received during the calendar years 1963, the rate shall be 3% percent;

"(2) with respect to wages received during the calendar years 1964 and 1965, the rate shall be 37 percent;

"(3) with respect to wages received during the calendar years 1966 and 1967, the rate shall be 4% percent; and "(4) with respect to wages received after December 31, 1967, the rate shall be 47% percent."

Tax on Employers

(c) Section 3111 of such Code (relating to rate of tax on employers under the Federal Insurance Contributions Act) is amended to read as follows: "Sec. 3111. Rate of tax.

"In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the following percentages of the wages (as defined in section 3121(a)) paid by him with respect to employment (as defined in section 3121(b))

“(1) with respect to wages paid during the calendar year 1963, the rate shall be 3% percent;

"(2) with respect to wages paid during calendar years 1964 and 1965, the rate shall be 3% percent;

"(3) with respect to wages paid during the calendar years 1966 and 1967, the rate shall be 4% percent; and

“(4) with respect to wages paid after December 31, 1967, the rate shall be 4% percent."

Effective Dates

(d) The amendment made by subsection (a) shall apply with respect to taxable years beginning after December 31, 1962. The amendments made by subsections (b) and (c) shall apply with respect to remuneration paid after December 31, 1962.

INCREASE IN TAX BASE

Definition of Self-Employment Income SEC. 212. (a) (1) Subparagraph (C) of section 1402(b)(1) of the Internal Revenue Code of 1954 is amended by adding "and before 1963" after "1958"; and by striking out "or" and inserting in lieu thereof "and".

(2) Such section 1402(b) (1) is further amended by adding at the end thereof the following new subparagraph:

"(D) for any taxable year ending after 1962, (1) $5.200 minus (i) the amount of the wages paid to such individuals during the taxable year; or". Definition of Wages

(b) Section 3121(a)(1) of such Code is amended by striking out "$4.800" wherever it appears and inserting in lieu thereof "$5,200".

Federal Service

(c) Section 3122 of such Code is amended by striking out "$4,800" and inserting in lieu thereof "$5,200".

Returns in the Case of Governmental Em

ployees in Guam and American Samoa (d) Section 3125 of such Code is amended by striking out "$4,800" whereever it appears and inserting in lieu thereof "$5,200".

Special Refunds of Employment Taxes (e) (1) Section 6413(c)(1) of such Code is amended—

(A) by inserting "and prior to the calendar year 1963" after "the calendar year 1958":

(B) by inserting "or (C) during any calendar year after the calendar year 1962, the wages received by him during such year exceed $5,200," after "exceed $4,800"; and

(C) by inserting before the period at the end thereof "and before 1963, or which exceeds the tax with respect to the first $5,200 of such wages received in such calendar year after 1962".

(2) Section 6413(c) (2) (A) of such Code is amended by striking out "or $4,800 for any calendar year after 1958" and inserting in lieu thereof "$4,800 for the calendar year 1959, 1960, 1961, or 1962, or $5,200 for any calendar year after 1962".

Effective Date

(f) The amendments made by subsections (b), (c), and (d) shall be applicable with respect to remuneration paid

after 1962.

Technical Amendment

SEC. 213. Section 3121(1) (6) of the Internal Revenue Code of 1954 is amended by striking out “and the Federal disability Insurance Trust Fund", and inserting in lieu thereof ", the Federal Disability Insurance Trust Fund, and the Federal Health Insurance Trust Fund.". The amendment made by this section shall be effective January 1, 1963. PART C-RAILROAD RETIREMENT AMENDMENTS Health Insurance Benefits for the Aged

SEC. 221. (a) The Railroad Retirement Act of 1937 is amended by adding after section 20 of such Act the following new section:

"Health Insurance Benefits for the Aged

"SEC. 21. (a) For the purposes of this section, and subject to the conditions hereinafter provided, the Board shall have the same authority to determine the rights of individuals described in subsection (b) of this section to have payments made on their behalf for health insurance benefits consisting of inpatient hospital services, skilled nursing facility services, home health services, and outpatient hospital diagnostic services within the meaning of title XVII of the Social Security Act as the Secretary of Health, Education, and Welfare has under such title XVII with respect to individuals to whom such title applies. The rights of individuals described in subsection (b) of this section to have payment made on their behalf for the services referred to in the next preceding sentence shall be the same as those of individuals to whom title XVII of the Social Security Act applies and this section shall be administered by the

Board as if the provisions of such title XVII were applicable, references to the Secretary of Health, Education, and Welfare were to the Board, references to the Federal Social Insurance Trust Fund were to the Railroad Retirement Account, references to the United States or a State included Canada or a subdivision thereof, and the provisions of sections 1707 and 1712 of such title XVII were not included in such title. For purposes of section 11. a determination with respect to the rights of an individual under this section shall, except in the case of a provider of services, be considered to be a decision with respect to an annuity.

"(b) Except as otherwise provided in this section, every individual who—

"(A) has attained age sixty-five and "(B) (1) is entitled to an annuity, or (ii) would be entitled to an annuity had he ceased compensated service and, in the case of a spouse, had such spouse's husband or wife ceased compensated service, or (iii) had been awarded a pension under section 6, or (iv) bears a relationship to an employee which, by reason of section 3(e), has been, or would be, taken into account in calculating the amount of an annuity of such employee or his survivor.

shall be entitled to have payment made for the services referred to in subsection (a), and in accordance with the provisions of such subsection. The payments for services herein provided for shall be made from the Railroad Retirement Account (in accordance with, and subject to, the conditions applicable under section 10(b) in making payment of other benefits) to the hospital, skilled nursing facility, or home health agency providing such services, including such services provided in Canada to individuals to whom this subsection applies but only to the extent that the amount of payments for services otherwise hereunder provided for an individual exceeds the amount payable for like services provided pursuant to the law in effect in the place in Canada where such services are furnished.

"(c) No individual shall be entitled to have payment made for the same services, which are provided for in this section, under both this section and title XVII of the Social Security Act, and no individual shall be entitled to have payment made under both this section and such title XVII for more than ninety days of inpatient hospital services or more than one hundred and eighty days of skilled nursing facility services or more than one hundred and fifty units of such services during any benefit period, or more than two hundred and forty visits in any calendar year in which home health services are furnished. In any case in which an individual would, but for the preceding sentence, be entitled to have payment for such services made under both this section and such title XVII, payment for such services to which such individual is entitled shall be made in accordance with the procedures established pursuant to the next succeeding sentence, upon certification by the Board

or by the Secretary of Health, Education, and Welfare. It shall be the duty of the Board and such Secretary with respect to such cases jointly to establish procedures designed to minimize duplications of requests for payment for services and determinations and to assign administrative functions between them so as to promote the greatest facility, efficiency, and consistency of administration of this section and title XVII of the Social Security Act; and, subject to the provisions of this subsection to assure that the rights of individuals under this section or title XVII of the Social Security Act shall not be impaired or diminished by reason of the administration of this section and title XVII of the Social Security Act. The procedures so established may be included in regulations issued by the Board and by the Secretary of Health, Education, and Welfare to implement this section and such title XVII, respectively.

"(d) Any agreement entered into by the Secretary of Health, Education, and Welfare pursuant to title XVII of the Social Security Act shall be entered into on behalf of both such Secretary and the Board. The preceding sentence shall not be construed to limit the authority of the Board to enter on its own behalf into any such agreement relating to services provided in Canada or in any facility devoted primarily to railroad employees.

"(e) A request for payment for services filed under this section shall be deemed to be a request for payment for services filed as of the same time under title XVII of the Social Security Act, and a request for payment for services filed under such title shall be deemed to be a request for payment for services filed as of the same time under this section.

"(f) The Board and the Secretary of Health, Education, and Welfare shall furnish each other with such information, records, and documents as may be considered necessary to the administration of this section or title XVII of the Social Security Act."

Amendment Preserving Relationship Between Railroad Retirement and Old-Age, Survivors, Disability, and Health Insurance Systems

(b) Section (1) (q) of such Act is amended by striking out "1961" and inserting in lieu thereof "1962".

Financial Interchange Between Railroad Retirement Account and Federal Health Insurance Trust Fund

(c) (1) Section 5 (k) (2) of such Act is amended

(A) by striking out subparagraphs (A) and (B) and redesignating subparagraphs (C), (D), and (E) as subparagraphs (A), (B), and (C), respectively;

(B) by striking out the second sentence and the last sentence of the subparagraph redesignated as subparagraph (A) by subparagraph (A) of this paragraph;

(C) by adding at the end of the subparagraph redesignated as subparagraph (A) by subparagraph (A) of

this paragraph the following new subsection:

"(iii) At the close of the fiscal year ending June 30, 1963, and each fiscal year thereafter, the Board and the Secretary of Health, Education, and Welfare shall determine the amount, if any, which, if added to or subtracted from the Federal Health Insurance Trust Fund would place such fund in the same position in which it would have been if service as an employee after December 31, 1936, had been included in the term 'employment' as defined in the Social Security Act and in the Federal Employment Contributions Act. Such determination shall be made no later than June 15 following the close of the fiscal year. If such amount is to be added to the Federal Health Insurance Trust Fund the Board shall, within ten days after the determination, certify such amount to the Secretary of the Treasury for transfer from the Retirement Account to the Federal Health Insurance Trust Fund; if such amount is to be subtracted from the Federal Health Insurance Trust Fund the Secretary of Health, Education, and Welfare shall, within ten days after the determination, certify such amount to the Secretary of the Treasury for transfer from the Federal Health Insurance Trust Fund to the Retirement Account. The amount so certified shall further include interest (at the rate determined under subparagraph (B) for the fiscal year under consideration) payable from the close of such fiscal year until the date of certification.';

(D) by striking out "subparagraph (B) and (C)" where it appears in the subparagraph redesignated as subparagraph (B) by subparagraph (A) of this paragraph and inserting in lieu thereof "subparagraph (A)"; and

(E) by amending the subparagraph redesignated as subparagraph (C) by subparagraph (A) of this paragraph to read as follows:

"(C) The Secretary of the Treasury is authorized and directed to transfer to the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, or the Federal Health Insurance Trust Fund from the Retirement Account or to the Retirement Account from the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, or the Federal Health Insurance Trust Fund, as the case may be, such amounts as, from time to time, may be determined by the Board and the Secretary of Health, Education, and Welfare pursuant to the provisions of subparagraph (A), and certified by the Board or the Secretary of Health, Education, and Welfare for transfer from the Retirement Account or from the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, or the Federal Health Insurance Trust Fund."

(2) The amendments made by paragraph (1) of this subsection shall be effective January 1, 1963. Such amendments and the amendments made by section 202(a) shall not be construed to increase or diminish the sums to be transferred, under the provisions of section 5(k) (2) of the Railroad Retirement Act before their amendment by paragraph (1) of this subsection, between the Railroad Retirement Account and the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund.

Tax on Employees

SEC. 222. (a) Section 3201 of the Railroad Retirement Tax Act is amended by striking out ": Provided" and inserting With in lieu thereof the following: ". respect to compensation paid for services rendered after the date with respect to which the rates of taxes imposed by section 3101 of the Federal Insurance Contributions Act are increased with respect to wages by section 220 (b) of the Act which amended the Social Security Act by adding title XVII the rates of tax imposed by this section shall be increased, with respect only to compensation paid for services rendered before January 1, 1965, by the number of percentage points (including fractional points) that the rates of taxes imposed by such section 3101 are so increased with respect to wages: Provided".

Tax on Employee Representatives (b) Section 3211 of the Railroad Retirement Tax Act is amended by striking ": Provided" and inserting in lieu thereof the following: ". With respect to compensation paid for services rendered after the date with respect to which the rates of taxes imposed by section 3101 of the Federal Insurance Contributions Act are increased with respect to wages by section 220 (b) of the Act which amended the Social Security Act by adding title XVII the rates of tax imposed by this section shall be increased with respect only to compensation paid for services rendered before January 1, 1965, by twice the number of percentage points (including fractional points) that the rates of taxes imposed by such section 3101 are so increased with respect to wages: Provided".

Tax on Employers

(c) Section 3221 of the Railroad Retirement Tax Act is amended by inserting after "$400" the first time it appears the following: ". With respect to compensation paid for services rendered after the date with respect to which the rates of taxes imposed by section 3111 of the Federal Insurance Contributions Act are increased with respect to wages by section 220 (c) of the Act which amended the Social Security Act by adding title XVII the rates of tax imposed by this section shall be increased, with respect only to compensation paid for services rendered before January 1, 1965, by the number of percentage points (including fractional points) that the rates of taxes imposed by such section 3111 are so increased with respect to wages".

PART D-HEALTH INSURANCE BENEFITS FOR PRESENTLY UNINSURED INDIVIDUALS

COVERAGE PROVISIONS

SEC. 231. Anyone who

(1) has attained the age of 65, (2) (A) attained such age before 1967, or (B) has not less than 3 quarters of coverage (as defined in title II of the Social Security Act or section 5(1) of the Railroad Retirement Act of 1937), whenever acquired, for each calendar year elapsing after 1964 and before the year in which he attained such age,

(3) is not, and upon filing application therefor would not be, entitled to monthly insurance benefits under section 202 of the Social Security Act and does not meet the requirements set forth in subparagraph (B) of section 21(b) of the Railroad Retirement Act of 1937, and

(a) payments made from such Trust Fund under title XVII of such Act with respect to individuals who are entitled to health insurance benefits solely by reason of this part,

(b) the additional administrative expenses resulting therefrom, and

(c) any loss in interest to such Trust Fund resulting from the payment of such amounts.

in order to place such Trust Fund in the same position in which it would have been if sections 231 and 232 of this Act had not been enacted.

PART E-MISCELLANEOUS PROVISIONS

STUDIES AND RECOMMENDATIONS

SEC. 241. The Secretary of Health, Education and Welfare shall carry on studies and develop recommendations to be submitted from time to time to the Congress relating to (1) the adequacy of existing

(4) has filed an application under facilities for health care for purposes of

this section at such time, in such manner, and in accordance with such other requirements as may be prescribed in regulations of the Secretary. shall (subject to the limitations in the part) be deemed, solely for purposes of section 1705 of the Social Security Act, to be entitled to monthly insurance benefits under such section 202 for each month, beginning with the first month in which he meets the requirements of this subsection and ending with the month in which he dies or, if earlier, the month before the month in which he becomes entitled to monthly insurance benefits under such section 202 or meets the requirements set forth in subparagraph (B) of section 21(b) of the Railroad Retirement Act of 1937.

LIMITATIONS

SEc. 232. (a) The provisions of section 231 shall apply only in the case of an individual who

(1) is a resident of the United States (as defined in section 210 of the Social Security Act), and

(2) is a citizen of the United States or has resided in the United States (as so defined continuously for not less than 10 years.

(b) The provisions of section 231 shall not apply to any individual who

(1) is a member of any organization referred to in section 210(a) (17) of the Social Security Act,

(2) has been convicted of any offense listed in section 202(u) of the Social Security Act.

the program established by this Act; (2) methods for encouraging the further development of efficient and economical forms of health care which are a constructive alternative to inpatient hospital care; (3) the feasibility of providing additional types of health insurance benefits within the financial resources provided by this Act; and (4) the effects of the deductibles and use of the option upon beneficiaries, hospitals, and the flnancing of the program.

Make appropriate changes in the table of contents.

Insert the following:

On page 1, line 4, strike out "Public Welfare Amendments of 1962" and insert in lieu thereof Public Welfare and Health Insurance for the Aged Amendments of 1962

On page 100, line 16, strike out "II" and insert in lieu thereof III

On page 100, line 18, strike out "201" and insert in lieu thereof 301

On page 100, line 23, strike out "202" and insert in lieu thereof 302

On page 100, between line 15 and 16, insert the following:

TITLE II-HEALTH INSURANCE FOR THE

AGED

Sec. 201. This title may be cited as the "Health Insurance for the Aged Act." Sec. 202. The Social Security Act-is hereby amended by adding after title XVI the following new title:

"TITLE XVII-MEDICAL BENEFITS FOR THE AGED APPROPRIATION "Sec. 1701. For the purpose of assisting the States to improve the health care (3) is an employee of the United of aged individuals of low incomes by States, or

(4) is eligible for the benefits of the Federal Employees Health Benefits Act of 1959 or the Retired Federal Employees Health Benefits Act.

PAYMENTS TO TRUST FUND

SEC. 233. There are hereby authorized to be appropriated to the Federal Health Insurance Trust Fund (established by section 201 of the Social Security Act) from time to time such sums as the Secretary deems necessary, on account of

enabling them to secure, at cost reasonably related to their incomes, protection either against the expenses of preventive and diagnostic services and shortterm illness treatment or against longterm illness expenses, there are hereby authorized to be appropriated for each fiscal year such sums as the Congress may determine. The sums made available under this section shall be used for making payments to States with State plans submitted by them and approved under this title.

"State Plans

"Sec. 1702. The Secretary shall approve a State plan under this title which—

"(a) provides for establishment or designation of a single State agency to administer or supervise the administration of the State plan;

"(b) provides that each eligible individual (as defined in section 1705(a)) who applies therefor (and only such an individual) shall be furnished whichever of the following he may elect:

"(1) preventive, diagnostic, and short-term illness benefits, which, for the purposes of this title, shall consist of payment on behalf of an eligible individual of the cost incurred by him for the following medical services rendered to him to the extent determined by the attending physician to be medically necessary (but subject to the limitations in section 1706)

"(A) inpatient hospital services for not to exceed twenty-one days in any enrollment year, except that at the request of the individual days of skilled nursinghome services may be substituted for any or all of such days of inpatient hospital services at the rate of three days of skilled nursing-home care for one day of inpatient hospital services;

"(B) physicians' services furnished outside of a hospital or skilled nursing home, on not more than twelve days during any enrollment year;

"(C) ambulatory diagnostic laboratory and X-ray services furnished outside of a hospital or skilled nursing home to the extent the cost thereof is not in excess of $100 in any enrollment year;

"(D) organized home health care services for not more than twenty-four days in any enrollment year; and

"(E) such additional medical services as the State may elect (subject to the limitations in clauses (E) (vi) and (vii) of paragraph (2) and to the limitations in section 1708); or

"(2) long-term illness benefits, which, for purposes of this title, shall consist of payment on behalf of an eligible individual of 80 per centum of the cost above the deductible amount incurred by him for the following services (hereinafter in this title referred to as 'medical services') rendered to him to the extent determined by the attending physician to be medically necessary (but subject to the limitations in section 1706)—

"(A) inpatient hospital services for not to exceed one hundred and twenty days in any enrollment year;

"(B) surgical services provided to inpatients in a hospital;

"(v) dental treatment;

"(vi) laboratory and X-ray services to the extent the cost thereof is not in excess of $200 in any enrollment year;

"(vii) prescribe drugs to the extent the cost thereof is not in excess of $350 in any enrollment year; and

"(viii) inpatient hospital services in excess of one hundred

and twenty days in any enrollment year; or

"(3) private insurance benefits, which, for purposes of this title, shall consist of payment on behalf of such individual of one-half of the premiums of a private health insurance policy for him up to a maximum payment for any year of $60;

"(c) provides for granting an opportunity for a fair hearing before the State agency to any individual whose claim for benefits under the plan has been denied;

"(d) provides for payment of enrollment fees, payable annually or more frequently, as the State may determine by eligible individuals applying for long-term illness benefits or diagnostic and short-term illness benefits under the plan, the amounts of such fees to be determined by a schedule established by the State and approved by the Secretary as providing fees the lowest of which is equal to not less than 10 per centum of the per capita cost for the enrollment year involved of the benefits provided and the remainder of which vary in relation to the income (as defined in section 1705(b)) of the individuals;

"(e) includes provisions for individuals who, for the enrollment year involved, would not be eligible individuals but for the provisions of section 1705(a) (2);

"(f) includes such methods of administration as are found by the Secretary to be necessary for the proper and efficient operation of the plan, including

"(1) methods relating relating to the establishment and maintenance of personnel standards on a merit basis, except that the Secretary shall exercise no authority with respect to the selection, tenure of office, or compensation of any individual employed in accordance with such methods;

"(2) methods to assure that the applications of all individuals apply

ing for benefits under the plan will be acted upon with reasonable promptness;

"(3) methods relating to collection of enrollment fees for long-term illness benefits or diagnostic and short-term illness benefits under the plan, except that the State may not utilize the services of any nonpublic agency or organization in the collection of such fees, and

"(4) methods for determining—
"(A) rates of payment for in-
stitutional services, and

"(B) schedules of fees or rates of payment for other medical services,

for which expenditures are made under the plan;

"(g) sets forth criteria, not inconsistent with the provisions of this title, for approval by the State agency, for purposes of the plan, of private health insurance policies;

"(h) provides that no benefits will be furnished any individual under the plan with respect to any period with respect to which he is receiving oldage assistance under the State plan approved under section 2, aid to dependent children under the State plan approved under section 402, aid to the blind under the State plan approved under section 1002, aid to the permanently and totally disabled under the State plan approved under section 1402, or aid or assistance under a State plan approved under title XVI (and for purposes of this paragraph an individual shall not be deemed to have received such assistance or aid with respect to any month unless he received such assistance or aid in the form of money payments for such month, or in the form of medical or any other type of remedial care in such month (without regard to when the expenditures in the form of such care were made));

"(i) provides safeguards which restrict the use or disclosure of information concerning applicants for and recipients of benefits under the plan to purposes directly connected with the administration of the plan;

"(j) includes (1) provisions, conforming to regulations of the Secretary, with respect to the time within which individuals desiring benefits under the plan may elect for any enrollment year between the types of benefits available under the plan and may apply for the benefits so elected for such year and (2) to the extent required by regulations of the Secretary, provisions, conforming to such regulations, with respect to the furnishing of benefits described in paragraph (1) or (2) of subsection (d) to eligible individuals during temporary absences from the State;

"(k) provides for establishment or designation of a State authority or authorities which shall be responsible for establishing and maintaining standards for any persons, institutions, and agencies, providing medical services for which expenditures are made under the plan: and

"(1) provides that the State agency will make such reports, in such form and containing such information, as the Secretary may from time to time require, and comply with such provisions as the Secretary may from time to time find necessary to assure the correctness and verification of such reports. Notwithstanding the preceding provisions of this section, the Secretary shall not approve any State plan under this title unless the State has established to his satisfaction that the medical or any other type of remedial care, together with the amounts, if any, included in old-age assistance in the form of money payments on account of their medical needs, for recipients of old-age assistance under the State plan approved under title I will be at least as great in amount, duration, and scope as the diagnostic and short-term illness benefits included under the State plan under this title;

"(m) makes provision (1) authorizing employees' pension or welfare funds to contribute to the payment of enrollment fees under the plan for or on behalf of eligible members or beneficiaries of such funds, (2) authorizing employers (including the State or any political subdivision thereof when acting as an employer) to contribute to the payment of their employees' enrollment fees under the plan, and (3) permitting any employee, or member or beneficiary of an employees' pension or welfare fund, to authorize his employer (including the State or any political subdivision thereof when acting as an employer) or trustee or other governing body of such fund to deduct from his wages or from such fund, as the case may be, an amount equal to his enrollment fees under the plan and to pay the same to the State agency administering the plan.

"Payments

"Sec. 1703. (a) From the sums appropriated therefor, each State which has a plan approved under section 1702 shall be entitled to receive, for each calendar quarter beginning with the quarter commencing July 1, 1963, an amount equal to (1) the Federal share for such State of the total amounts expended during such quarter by the State under the plan as long-term illness, diagnostic and short-term illness, or private insurance benefits, plus (2) one-half of the total of the sums expended during such quarter as found necessary by the Secretary for the proper and efficient administration of the State plan.

"(b) Payment of the amounts due a State under subsection (a) shall be made in advance thereof on the basis of estimates made by the Secretary, with such adjustments as may be necessary on account of overpayments or underpayments during prior quarters; and such payments may be made in such installments as the Secretary may determine. Adjustments under the preceding sentence shall include decreases in estimates equal to the pro rata share to which the United States is equitably entitled, as determined by the Secretary, of the net