42 U.S.C. § 1395w–116 — Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund

(a) Establishment and operation of Account.

(1) Establishment. The law creates an account within the Federal Supplementary Medical Insurance Trust Fund established by section 1395t. The account is called the “Medicare Prescription Drug Account^*,” or the “Account.”

(2) Funding. The Account consists of gifts and bequests made under section 401(i)(1), interest earned on Account balances, and amounts deposited in or appropriated to the Account under this part.

(3) Separate from the rest of the Trust Fund. Money provided under this part for the Account must be kept separate from the other money in the Trust Fund. It must nevertheless be invested, and investments must be redeemed, in the same way as other Trust Fund money and investments.

(b) Payments from Account.

(1) The Managing Trustee must periodically pay from the Account the amounts the Secretary^* certifies are needed to operate this program, including—

(A) low-income subsidy payments under section 1395w–114;

(B) subsidy and fallback-plan payments under section 1395w–115;

(C) payments to qualified retiree prescription drug plan^* sponsors under section 1395w–132(a);

(D) administrative-expense payments under this part and section 401(g); and

(E) selected drug^* subsidy payments under section 1395w–114d.

(2) Transfers to the Medicaid account. The Managing Trustee must periodically transfer to the Grants to States for Medicaid account the amounts the Secretary certifies are due to increased payments resulting from section 1396u–5(b).

(3) Withheld premiums. The Managing Trustee must pay the relevant PDP sponsor^* or MA organization the premiums, including the applicable part of late-enrollment penalties, collected as described in section 1395w–24(d)(2)(A) and payable under that sponsor’s or organization’s plan.

(4) Treatment^* in relation to part B premiums. Amounts payable from the Account must not be counted when actuarial rates or premiums are calculated under section 1395r.

(c) Deposits into Account.

(1) Low-income transfer. Amounts paid under section 1396u–5(c), including amounts collected or offset under paragraph (1)(C) of that section, are deposited into the Account.

(2) Amounts withheld. Amounts withheld and allocated to the Account under sections 1395w–113(c) and 1395w–24(d), as those provisions apply under this part, are deposited into the Account.

(3) Appropriations for Government contributions. Money may be appropriated from the Treasury to the Account from time to time in an amount equal to the payments made from the Account, plus the amount the Managing Trustee certifies is needed for an appropriate contingency margin, minus the amounts deposited under paragraph (1) or subsection (a)(2).

(4) Initial funding and reserve. To ensure prompt payment of benefits and early administrative expenses and to create an initial contingency reserve, money may be appropriated to the Account in the amount the Secretary certifies is needed, but not more than 10 percent of the Account’s estimated total 2006 expenditures.

(5) Remaining Transitional Assistance Account balance. Any balance transferred from the Transitional Assistance Account under section 1395w–141(k)(5) must be deposited into the Account.