the following: "and in clause (2) of subsection (c) of this section"; by amending the last sentence thereof to read as follows: "The amounts appropriated by clauses (3) and (4) shall be transferred from time to time from the general fund in the Treasury to the Federal Old-Age and Survivors Insurance Trust Fund, the amounts appropriated by clauses (1) and (2) of subsection (b) shall be transferred from time to time from the general fund in the Treasury to the Federal Disability Insurance Trust Fund, and the amounts appropriated by clauses (1) and (2) of subsection (c) shall be transferred from time to time from the general fund in the Treasury to the Federal Medical Insurance Trust Fund, such amounts to be determined on the basis of estimates by the Secretary of the Treasury of the taxes, specified in clauses (3) and (4) of this subsection, paid to or deposited into the Treasury; and proper adjustments shall be made in amounts subsequently transferred to the extent prior estimates were in excess of or were less than the taxes specified in such clauses (3) and (4) of this subsection.

(3) Section 201 of such Act is further amended by redesignating subsections (c), (d), (e), (f), (g), and (h) as (d), (e), (f), (g), (h), and (i), respectively.

(4) Section 201 of such Act is further amended by adding after subsection (b) the following new subsection:

"(c) There is hereby created on the books of the Treasury of the United States a trust fund to be known as the 'Federal Medical Insurance Trust Fund'. The Federal Medical Insurance Trust Fund shall consist of such amounts as may be appropriated to, or deposited in, such fund as provided in this section. There is hereby appropriated to the Federal Medical Insurance Trust Fund for the fiscal year ending June 30, 1962, and for each fiscal year thereafter, out of any moneys in the Treasury not otherwise appropriated, amounts equivalent to 100 per centum of—

"(1) (A) one-half of 1 per centum of the wages (as defined in section 3121 of the Internal Revenue Code of 1954) paid after December 31, 1961, and before January 1, 1972, and reported to the Secretary of the Treasury or his delegate pursuant to subtitle F of the Internal Revenue Code of 1954, which wages shall be certified by the Secretary of Health, Education, and Welfare on the basis of the records of wages established and maintained by such Secretary in accordance with such reports; and

"(B) three-fourths of 1 per centum of the wages (as defined in section 3121 of the Internal Revenue Code of 1954) paid after December 31, 1971, and reported to the Secretary of the Treasury or his delegate pursuant to subtitle F of the Internal Revenue Code of 1954, which wages shall be certified by the Secretary of Health, Education, and Welfare on the basis of the records of wages established and maintained by such Secretary in accordance with such reports; and

"(2) (A) three-eighths of 1 per centum of the amount of self-employment income (as defined in section 1402 of the Internal Revenue Code of 1954) reported to the Secretary of the Treasury or his delegate on tax returns under subtitle F of the Internal Revenue Code of 1954 for any taxable year beginning after December 31, 1961, and before January 1, 1972, which self-employment income shall be certified by the Secretary of Health, Education, and Welfare on the basis of the records of self-employment income established and maintained by the Secretary of Health, Education, and Welfare in accordance with such returns; and

"(B) nine-sixteenths of 1 per centum of the amount of self-employment income (as defined in section 1402 of the Internal Revenue Code of 1954) reported to the Secretary of the Treasury or his delegate on tax returns under subtitle F of the Internal Revenue Code of 1954 for any taxable year beginning after December 31, 1971, which self-employment income shall be certified by the Secretary of Health, Education, and Welfare on the basis of the records of self-employment income established and maintained by the Secretary of Health, Education, and Welfare in accordance with such returns." (5) Subsection (d) of section 201 of such Act, as redesignated by paragraph (3) of this subsection, 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 Medical Insurance Trust Fund".

(6) Subsection (g) of section 201 of such Act, as redesignated by paragraph (3) of this subsection, is amended to read as follows:

"(g) The interest on, and the proceeds from the sale or redemption of, any obligations held in the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, and the Federal Medical Insurance Trust Fund shall be credited to and form a part of the Federal Old-Age and Sur

vivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, and the Federal Medical Insurance Trust Fund, respectively."

(7) Subsection (h) of section 201 of such Act, as redesignated by paragraph (3) of this subsection, is amended by striking out in the third sentence of paragraph (1) thereof "either or both" and inserting in lieu thereof "any or all"; by striking out in the fourth sentence of such paragraph "from one to the other of" and inserting in lieu thereof "among"; by striking out in the fifth sentence of such paragraph "from one to the other of" and inserting in lieu thereof "among".

(8) The last sentence of paragraph (2) of subsection (h), as redesignated by paragraph (3) of this subsection, is amended to read as follows: "Payments pursuant to the first sentence of this paragraph shall be made from the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, and the Federal Medical Insurance Trust Fund in the ratio in which amounts were appropriated to such trust funds under clause (3) of subsection (a) of this section, clause (1) of subsection (b) of this section, and clause (1) of subsection (c) of this section."

(9) Subsection (i) of section 201 of the Social Security Act, as redesignated by paragraph (3) of this subsection, is amended by inserting after the first sentence the following sentence: "Payments required to be made under section 226 shall be made only from the Federal Medical Insurance Trust Fund."

(10) Subsection (h)(1) of section 218 of such Act is amended by striking out "and (b) (1)" and inserting in lieu thereof ", (b)(1), and (c)(1)”.

(11) Subsection (b) of section 1106 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 Medical Insurance Trust Fund".

EFFECTIVE DATE

(c) Payments pursuant to section 226 of the Social Security Act, as added to such Act by subsection (a) of this section shall be made only with respect to hospital services nursing home services, home health services, diagnostic outpatient services furnished or very expensive drugs purchased after dates to be fixed by the Secretary, but such dates shall be, in the case of (1) hospital services, not earlier than July 1, 1962, or later than January 1, 1963, (2) nursing home services, not earlier than January 1, 1964, or later than July 1, 1964, (3) home health services, not earlier than January 1, 1963, or later than July 1, 1963, (4) diagnostic outpatient services, not earlier than July 1, 1962, or later than January 1, 1963, and (5) the purchase of very expensive drugs, not earlier than July 1, 1963, or later than January 1, 1964. The terms used in this section shall have the meaning assigned to them in title II of the Social Security Act.

TITLE II-MEDICAL BENEFITS FOR RETIRED AGED NOT ELIGIBLE FOR BENEFITS UNDER TITLE II OF THE SOCIAL SECURITY ACT SEC. 201. (a) The Social Security Act is further amended by adding after title XV thereof the following new title:

"TITLE XVI-MEDICAL BENEFITS FOR THE RETIRED AGED NOT ELIGIBLE FOR BENEFITS UNDER TITLE II

"SEC. 1601. (a) (1) Every individual who

(A) has attained retirement age (as defined in section 216(a)),

"B) is retired (as defined in paragraph (3)),

(C) has resided in the United States continuously for a period of not less than five years and the day on which he attains retirement age occurs, in or prior to the beginning of, such period, and

"(D) is not eligible to receive medical insurance benefits under section 226, shall be eligible to receive medical benefits. Payment of medical benefits shall be made in accordance with the provisions of this section, but only if application is filed for such payment in such form and in such manner and by such person as the Secretary may by regulation prescribe. The provisions of clause (B) shall not apply to any person (i) who is the husband or wife of an individual eligible to receive medical benefits and (ii) who was receiving more than one-half of his or her support from such individual for one year provided such year began no earlier than the calendar year preceding the year such person attained retirement age. "(2) Medical benefits shall be the payments made under this section for hospital services, nursing home services, home health services, diagnostic outpatient serv

ices, and very expensive drugs (as defined in section 226(c)) furnished in the United States.

"(3) For purposes of paragraph (1)—

"(A) Except as may be provided in subparagraph (B), an individual shall be retired with respect to the period for which he files for payment of medical benefits if

"(i) he had total earnings (as defined in section 203 (e)) of less than $2,400 in any calendar year preceding the year in which the first day of such period occurs, provided such calendar year is no earlier than the year preceding the year in which he attained retirement age, or

"(ii) he did not render services for wages of more than $100, and did not engage in self-employment in each of at least three months in any calendar year, provided such third month preceded the first day of such period and such calendar year is no earlier than the year preceding the year in which he attained retirement age, or

"(iii) he attained the age of seventy-two in a month prior to such period.

"(B) For the purposes of benefits for very expensive drugs, an individual shall be retired if on the first day of the month in which he incurs the cost of such drugs he meets the provisions of clause (i), (ii), or (iii) of subparagraph (A). Such first day shall be deemed the first day of the period for which he files for the payment of medical benefits.

For purposes of subparagraph (A)(ii), an individual shall be presumed not to have engaged in self-employment with respect to any month if, by applying the provisions of section 203 (e) and the regulations issued thereunder, the Secretary determines that such individual did not engage in self-employment in such month. "(4) Payment of medical benefits which an individual is eligible to receive may be made for

"(A) hospital services furnished to such individual for a total of not more than ninety days in any calendar year;

"(B) nursing home services furnished to such individual for a total of not more than one hundred and eighty days in any calendar year;

"(C) home health services furnished to such individual for a total of not more than two hundred and forty days;

"(D) diagnostic outpatient services but only to the extent as the Secretary, after consultation with the advisory council, established pursuant to subsection 226 (f), may by regulation specify;

"(E) expensive drugs furnished such individual, but only to the extent the Secretary, after consultation with such advisory council, may by regulation specify.

The maximum of any combination of hospital services, nursing home services, and home health services for which payment may be made for such services furnished, during any calendar year, to any individual eligible to receive medical benefits shall not exceed ninety units of services. For the purpose of the preceding sentence, one "unit of services” equals (i) one day of hospital services, (ii) two days of nursing home services, or (iii) two and two-thirds days of home health services.

"(5) Notwithstanding the previous provisions of this subsection, no individual shall be eligible to receive medical benefits insofar as they relate to hospital services, nursing home services, or home health services, unless such services are rendered after referral by a physician, and such physician certifies in writing that such hospital services, nursing home services, or home health services are or were required for his medical treatment except that such referral shall not be required for hospital services in case of an emergency which makes such referral impracticable. Periodic recertification that medical treatment which extends over a period of time is required shall be a condition of continuing eligibility to receive such benefits during the period such services are furnished.

"(6) (A) An application for the payment of medical benefits shall be valid, with respect to a period during which one or more of the services described in section 226(c) are furnished, if such application is filed no earlier than the first day of the third month preceding the month in which the first day of such period occurs or no later than the last day of the twelfth month succeeding the month in which the first day of such period occurs. An application for the payment of medical benefits shall be valid with respect to the cost incurred for a very expensive drug if such application is filed within such time as the Secretary may by regulations prescribe,

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"(B) For purposes of this section, a period during which—

"(i) hospital or nursing home services (or both) are furnished means a consecutive number of days (including only one day) in which such services are furnished;

"(ii) home health services are furnished means one or more days (but not exceeding two hundred and forty days in any calendar year) in which such services are furnished, but only if the number of days elapsing between any two days in which such services are furnished does not exceed thirty;

"(iii) diagnostic outpatient services are furnished means one or more days (but not exceeding in any calendar year the number of days specified by the Secretary pursuant to paragraph (4) (D) of this subsection) in which such services are furnished but only if the number of days elapsing between any two days in which such services are furnished does not exceed fourteen.

"DETERMINATIONS OF ELIGIBILITY

"(b) The provisions of section 205 relating to the making and review of determinations shall be applicable to determinations as to (i) whether an individual is eligible to receive medical benefits, and (ii) the numbes of days, in any calendar year for which an individual is eligible to receive such benefits.

"INCORPORATION OF CERTAIN PROVISIONS OF SECTION 226

"(c) For the purposes of administering this title, the provisions of section 266 (d), (e), (f), (g), and (h) shall be applicable to this title, and for such purposes references in such subsections of section 226 to title II, medical insurance benefits, and section 226 (or any subsection, paragraph, or subparagraph thereunder) shall be deemed to refer to this title, medical benefits for which payment may be made under this section, and this section, respectively.

"CERTIFYING AND DISBURSING OFFICERS

"(d) (1) No individual designated by the Secretary pursuant to an agreement under this section as a certifying officer shall, in the absence of gross negligence or intent to defraud the United States, be liable with respect to any payments certified by him under this section.

"(2) No disbursing officer shall, in the absence of gross negligence or intent to defraud the United States, be liable with respect to any payment by him under this section if it was based upon a voucher signed by a certifying officer designated as provided in paragraph (1).

"APPROPRIATION

"SEC. 1602. There are hereby authorized to be appropriated to the Federal Medical Insurance Trust Fund for each fiscal year, beginning with the fiscal year ending June 30, 1963, out of any moneys in the Treasury not otherwise appropriated, such sums as the Secretary determines to be necessary to meet the payments made from such Trust Fund pursuant to this title with respect to individuals who are eligible to receive medical benefits under this title, plus interest accruing on such sums at the rate of for each such fiscal year equal to the average rate of interest (as determined by the managing trustee) earned on the invested assets of such Trust Fund during the preceding fiscal year.

"PAYMENTS

"SEC. 1603. Payments required to be made under this title, as provided in section 1601, shall be made from the Federal Medical Insurance Trust Fund.

"NONAPPLICABILITY OF THIS TITLE

"SEC. 1604. The provisions of this title shall not apply to any services furnished to an individual if such individual (a) is, or upon filing application would be, entitled to an annuity or a pension under the Railroad Retirement Act, (b) is receiving, or is eligible to receive, an annuity under a retirement system established by a law of the United States or by an instrumentality thereof, (c) is a doctor of medicine or a Christian Science practitioner, or (d) is receiving, or is eligible to receive benefits under a pension, annuity, retirement, or similar fund or system established by a State or by a political subdivision thereof if the insurance system established by title II had been extended to the services performed by such in

dividual under such system pursuant to section 218 (d) or section 218(k) (2) of the Social Security Act, or (e) who is the dependent wife or husband of an individual described in clause (a), (b), (c), or (d).”

EFFECTIVE DATE

(b) Payments pursuant to subsection (a) of this section shall be made only with respect to hospital services, nursing home services, home health services, diagnostic outpatient services furnished, or very expensive drugs purchased after dates to be fixed by the Secretary, but such dates shall be, in the case of (1) hospital services, not earlier than July 1, 1962, or later than January 1, 1963, (2) nursing home services, not earlier than January 1, 1964, or later than July 1, 1964, (3) home health nursing services, not earlier than January 1, 1963, or later than July 1, 1963, (4) diagnostic outpatient services, not earlier than July 1, 1962, or later than January 1, 1963, and (5) the purchase of very expensive drugs, not earlier than July 1, 1963, or later than January 1, 1964. The terms used in this section shall have the meaning assigned to them in title II of the Social Security Act. TITLE III—AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1954

CHANGES IN TAX SCHEDULES

SELF-EMPLOYMENT INCOME TAX

SEC. 301. (a) Section 1401 of the Internal Revenue Code of 1954 (relating to 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, 1960, and before January 1, 1962, the tax shall be equal to 41⁄2 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, 1961, and before January 1, 1963, the tax shall be equal to 4% 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, 1962, and before January 1, 1966, the tax shall be equal to 5% percent of the amount of the self-employment income for such taxable year;

"(4) in the case of any taxable year beginning after December 31, 1965, and before January 1, 1969, the tax shall be equal to 6% percent of the amount of the self-employment income for such taxable year;

"(5) in the case of any taxable year beginning after December 31, 1968, and before January 1, 1972, the tax shall be equal to 7% percent of the amount of the self-employment income for such taxable year; and

"(6) in the case of any taxable year beginning after December 31, 1971, the tax shall be equal to 716 percent of the amount of the self-employment income for such taxable year.'

TAX ON EMPLOYEES

(b) Section 3101 of such Code (relating to 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 year 1961, the rate shall be 3 percent;

"(2) with respect to wages received during the calendar year 1962, the rate shall be 34 percent;

"(3) with respect to wages received during the calendar years 1963 to 1965, both inclusive, the rate shall be 34 percent;

"(4) with respect to wages received during the calendar years 1966 to 1968, both inclusive, the rate shall be 44 percent;