II 

110TH CONGRESS 

1ST SESSION S. 95 

To amend titles XIX and XXI of the Social Security Act to ensure that 

every uninsured child in America has health insurance coverage, and 

for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 4, 2007 

Mr. KERRY (for himself, Mr. KENNEDY, Ms. CANTWELL, Ms. LANDRIEU, Mr. 

LAUTENBERG, and Mrs. MURRAY) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To amend titles XIX and XXI of the Social Security Act 

to ensure that every uninsured child in America has 

health insurance coverage, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Kids Come First Act of 2007’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 


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TITLE I—EXPANDED COVERAGE OF CHILDREN UNDER MEDICAID 

AND SCHIP 

Sec. 101. State option to receive 100 percent FMAP for medical assistance for 

children in poverty in exchange for expanded coverage of children in working poor families under Medicaid or SCHIP. 

Sec. 102. Elimination of cap on SCHIP funding for States that expand eligibility for children. 

TITLE II—STATE OPTIONS FOR INCREMENTAL CHILD COVERAGE 

EXPANSIONS 

Sec. 201. State option to provide wrap-around SCHIP coverage to children who 

have other health coverage. 

Sec. 202. State option to enroll low-income children of State employees in 

SCHIP. 

Sec. 203. Optional coverage of legal immigrant children under Medicaid and 

SCHIP. 

Sec. 204. State option for passive renewal of eligibility for children under Medicaid and SCHIP. 

TITLE III—TAX INCENTIVES FOR HEALTH INSURANCE 

COVERAGE OF CHILDREN 

Sec. 301. Refundable credit for health insurance coverage of children. 

Sec. 302. Forfeiture of personal exemption for any child not covered by health 

insurance. 

TITLE IV—MISCELLANEOUS 

Sec. 401. Requirement for group market health insurers to offer dependent coverage option for workers with children. 

Sec. 402. Effective date. 

TITLE V—REVENUE PROVISION 

Sec. 501. Partial repeal of rate reduction in the highest income tax bracket. 

1 SEC. 2. FINDINGS. 

2 Congress makes the following findings: 

3 (1) NEED FOR UNIVERSAL COVERAGE.— 

4 (A) Currently, there are 9,000,000 chil5 dren under the age of 19 that are uninsured. 

6 One out of every 8 children are uninsured while 

7 1 in 5 Hispanic children and 1 in 7 African 

8 American children are uninsured. Three-quar9 ters, approximately 6,800,000, of these children 


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1 are eligible but not enrolled in the Medicaid 

2 program or the State Children’s Health Insur3 ance Program (SCHIP). Long-range studies 

4 found that 1 in 3 children went without health 

5 insurance for all or part of 2002 and 2003. 

6 (B) Low-income children are 3 times as 

7 likely as children in higher income families to 

8 be uninsured. It is estimated that 65 percent of 

9 uninsured children have at least 1 parent work10 ing full time over the course of the year. 

11 (C) It is estimated that 50 percent of all 

12 legal immigrant children in families with in13 come that is less than 200 percent of the Fed14 eral poverty line are uninsured. In States with15 out programs to cover immigrant children, 57 

16 percent of noncitizen children are uninsured. 

17 (D) Children in the Southern and Western 

18 parts of the United States were nearly 1.7 

19 times more likely to be uninsured than children 

20 in the Northeast. In the Northeast, 9.4 percent 

21 of children are uninsured while in the Midwest, 

22 8.3 percent are uninsured. The South’s rate of 

23 uninsured children is 14.3 percent while the 

24 West has an uninsured rate of 13 percent. 


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1 (E) Children’s health care needs are ne2 glected in the United States. One out of every 

3 5 children has problems accessing needed care 

4 and one-quarter of young children in the United 

5 States are not fully up to date on their basic 

6 immunizations. One-third of children with 

7 chronic asthma do not get a prescription for the 

8 necessary medications to manage the disease 

9 and 1 out of every 4 children do not receive an10 nual dental exams. 

11 (F) Children without health insurance are 

12 twice as likely as insured children to not receive 

13 any medical care in a given year. According to 

14 the Centers for Disease Control and Prevention, 

nearly 1 15 ⁄2 of all uninsured children have not had 

16 a well-child visit in the past year. One in 6 un17 insured children had a delayed or unmet med18 ical need in the past year. Minority children are 

19 less likely to receive proven treatments such as 

20 prescription medications to treat chronic dis21 ease. 

22 (G) There are 7,600,000 young adults be23 tween the ages of 19 and 20. In the United 

24 States, approximately 28 percent, or 2,100,000 

25 individuals, of this group are uninsured. 


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1 (H) Chronic illness and disability among 

2 children are on the rise. Children most at risk 

3 for chronic illness and disability are children 

4 who are most likely to be poor and uninsured. 

5 (2) ROLE OF THE MEDICAID AND STATE CHIL6 DREN’S HEALTH INSURANCE PROGRAMS.— 

7 (A) The Medicaid program and SCHIP 

8 serve as a crucial health safety net for 

9 30,000,000 children. During the recent eco10 nomic downturn and the highest number of un11 insured individuals ever recorded in the United 

12 States, the Medicaid program and SCHIP off13 set losses in employer-sponsored coverage. 

14 While the number of children living in low-in15 come families increased between 2000 and 

16 2005, the number of uninsured children fell due 

17 to the Medicaid program and SCHIP. 

18 (B) 28,000,000 children are enrolled today 

in the Medicaid program, accounting for 1 19 ⁄2 of 

20 all enrollees and only 18 percent of total pro21 gram costs. 

22 (C) The Medicaid program and SCHIP do 

23 more than just fill in the gaps. Gains in public 

24 coverage have reduced the percentage of low-income uninsured children by 1 25 ⁄3 from 1997 to 


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1 2005. In addition, a study found that publicly2 insured children are more likely to obtain med3 ical care, preventive care, and dental care than 

4 similar low-income privately-insured children. 

5 (D) Publicly funded programs such as the 

6 Medicaid program and SCHIP actually improve 

7 children’s health. Children who are currently in8 sured by public programs are in better health 

9 than they were a year ago. Expansion of cov10 erage for children and pregnant women under 

11 the Medicaid program and SCHIP reduces 

12 rates of avoidable hospitalizations by 22 percent 

13 and has been proven to reduce childhood 

14 deaths, infant mortality rates, and the incidence 

15 of low birth weight. 

16 (E) Studies have found that children en17 rolled in public insurance programs experienced 

18 a 68-percent improvement in measures of school 

19 performance. 

20 (F) Despite the success of expansions in 

21 general under the Medicaid program and 

22 SCHIP, due to current budget constraints, 

23 many States have stopped doing aggressive out24 reach and have raised premiums and cost-shar25 ing requirements on families under these proVerDate Aug 31 2005 15:01 Jan 08, 2007 Jkt 059200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S95.IS S95

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1 grams. In addition, 8 States stopped enrollment 

2 in SCHIP for a period of time between April 

3 2003 and July 2004. As a result, SCHIP en4 rollment fell by 200,000 children for the first 

5 time in the program’s history. 

6 (G) It is estimated that nearly 50 percent 

7 of children covered through SCHIP do not re8 main in the program due to reenrollment bar9 riers. A recent study found that between 10 and 

10 40 percent of these children are ‘‘lost’’ in the 

11 system. Difficult renewal policies and reenroll12 ment barriers make seamless coverage in 

13 SCHIP unattainable. Studies indicate that as 

14 many as 67 percent of children who were eligi15 ble but not enrolled for SCHIP had applied for 

16 coverage but were denied due to procedural 

17 issues. 

18 (H) While the Medicaid program and 

19 SCHIP expansions to date have done much to 

20 offset what otherwise would have been a signifi21 cant loss of coverage among children because of 

22 declining access to employer coverage, the 

23 shortcomings of previous expansions, such as 

24 the failure to enroll all eligible children and 


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1 caps on enrollment in SCHIP because of under2 funding, also are clear. 

3 TITLE I—EXPANDED COVERAGE 

4 OF CHILDREN UNDER MED5 ICAID AND SCHIP 

6 SEC. 101. STATE OPTION TO RECEIVE 100 PERCENT FMAP 

7 FOR MEDICAL ASSISTANCE FOR CHILDREN 

8 IN POVERTY IN EXCHANGE FOR EXPANDED 

9 COVERAGE OF CHILDREN IN WORKING POOR 

10 FAMILIES UNDER MEDICAID OR SCHIP. 

11 (a) STATE OPTION.—Title XIX of the Social Security 

12 Act (42 U.S.C. 1396 et seq.) is amended by redesignating 

13 section 1939 as section 1940, and by inserting after sec14 tion 1938 the following: 

15 ‘‘STATE OPTION FOR INCREASED FMAP FOR MEDICAL AS16 SISTANCE FOR CHILDREN IN POVERTY IN EXCHANGE

17 FOR EXPANDED COVERAGE OF CHILDREN IN WORK18 ING POOR FAMILIES UNDER THIS TITLE OR TITLE

19 XXI

20 ‘‘SEC. 1939. (a) 100 PERCENT FMAP.— 

21 ‘‘(1) IN GENERAL.—Notwithstanding any other 

22 provision of this title, in the case of a State that, 

23 through an amendment to each of its State plans 

24 under this title and title XXI (or to a waiver of ei25 ther such plan), agrees to satisfy the conditions de26 scribed in subsections (b), (c), and (d), the Federal 


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1 medical assistance percentage shall be 100 percent 

2 with respect to the total amount expended by the 

3 State for providing medical assistance under this 

4 title for each fiscal year quarter beginning on or 

5 after the date described in subsection (e) for chil6 dren whose family income does not exceed 100 per7 cent of the poverty line. 

8 ‘‘(2) LIMITATION ON SCOPE OF APPLICATION

9 OF INCREASE.—The increase in the Federal medical 

10 assistance percentage for a State under this section 

11 shall apply only with respect to the total amount ex12 pended for providing medical assistance under this 

13 title for a fiscal year quarter for children described 

14 in paragraph (1) and shall not apply with respect 

15 to— 

16 ‘‘(A) any other payments made under this 

17 title, including disproportionate share hospital 

18 payments described in section 1923; 

19 ‘‘(B) payments under title IV or XXI; or 

20 ‘‘(C) any payments made under this title 

21 or title XXI that are based on the enhanced 

22 FMAP described in section 2105(b). 

23 ‘‘(b) ELIGIBILITY EXPANSIONS.—The condition de24 scribed in this subsection is that the State agrees to do 

25 the following: 


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1 ‘‘(1) COVERAGE UNDER MEDICAID OR SCHIP

2 FOR CHILDREN IN FAMILIES WHOSE INCOME DOES

3 NOT EXCEED 300 PERCENT OF THE POVERTY

4 LINE.— 

5 ‘‘(A) IN GENERAL.—The State agrees to 

6 provide medical assistance under this title or 

7 child health assistance under title XXI to chil8 dren whose family income exceeds the medicaid 

9 applicable income level (as defined in section 

10 2110(b)(4) but by substituting ‘January 1, 

11 2007’ for ‘March 31, 1997’), but does not ex12 ceed 300 percent of the poverty line. 

13 ‘‘(B) STATE OPTION TO EXPAND COV14 ERAGE THROUGH SUBSIDIZED PURCHASE OF

15 FAMILY COVERAGE.—A State may elect to carry 

16 out subparagraph (A) through the provision of 

17 assistance for the purchase of dependent cov18 erage under a group health plan or health in19 surance coverage if— 

20 ‘‘(i) the dependent coverage is con21 sistent with the benefit standards under 

22 this title or title XXI, as approved by the 

23 Secretary; and 

24 ‘‘(ii) the State provides ‘wrap-around’ 

25 coverage under this title or title XXI. 


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1 ‘‘(C) DEEMED SATISFACTION FOR CERTAIN

2 STATES.—A State that, as of January 1, 2007, 

3 provides medical assistance under this title or 

4 child health assistance under title XXI to chil5 dren whose family income is 300 percent of the 

6 poverty line shall be deemed to satisfy this 

7 paragraph. 

8 ‘‘(2) COVERAGE FOR CHILDREN UNDER AGE

9 21.—The State agrees to define a child for purposes 

10 of this title and title XXI as an individual who has 

11 not attained 21 years of age. 

12 ‘‘(3) OPPORTUNITY FOR HIGHER INCOME CHIL13 DREN TO PURCHASE SCHIP COVERAGE.—The State 

14 agrees to permit any child whose family income ex15 ceeds 300 percent of the poverty line to purchase 

16 full or ‘wrap-around’ coverage under title XXI at the 

17 full cost of providing such coverage, as determined 

18 by the State. 

19 ‘‘(4) COVERAGE FOR LEGAL IMMIGRANT CHIL20 DREN.—The State agrees to— 

21 ‘‘(A) provide medical assistance under this 

22 title and child health assistance under title XXI 

23 for alien children who are lawfully residing in 

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1 sponsibility and Work Opportunity Reconcili2 ation Act of 1996) and who are otherwise eligi3 ble for such assistance in accordance with sec4 tion 1903(v)(4) and 2107(e)(1)(F); and 

5 ‘‘(B) not establish or enforce barriers that 

6 deter applications by such aliens, including 

7 through the application of the removal of the 

8 barriers described in subsection (c). 

9 ‘‘(c) REMOVAL OF ENROLLMENT AND ACCESS BAR10 RIERS.—The condition described in this subsection is that 

11 the State agrees to do the following: 

12 ‘‘(1) PRESUMPTIVE ELIGIBILITY FOR CHIL13 DREN.—The State agrees to— 

14 ‘‘(A) provide presumptive eligibility for 

15 children under this title and title XXI in ac16 cordance with section 1920A; and 

17 ‘‘(B) treat any items or services that are 

18 provided to an uncovered child (as defined in 

19 section 2110(c)(8)) who is determined ineligible 

20 for medical assistance under this title as child 

21 health assistance for purposes of paying a pro22 vider of such items or services, so long as such 

23 items or services would be considered child 

24 health assistance for a targeted low-income 

25 child under title XXI. 


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1 ‘‘(2) ADOPTION OF 12-MONTH CONTINUOUS EN2 ROLLMENT.—The State agrees to provide that eligi3 bility for assistance under this title and title XXI 

4 shall not be regularly redetermined more often than 

5 once every year for children. 

6 ‘‘(3) ACCEPTANCE OF SELF-DECLARATION OF

7 INCOME.—The State agrees to permit the family of 

8 a child applying for medical assistance under this 

9 title or child health assistance under title XXI to de10 clare and certify by signature under penalty of per11 jury family income for purposes of collecting finan12 cial eligibility information. 

13 ‘‘(4) ADOPTION OF ACCEPTANCE OF ELIGI14 BILITY DETERMINATIONS FOR OTHER ASSISTANCE

15 PROGRAMS.—The State agrees to accept determina16 tions (made within a reasonable period, as found by 

17 the State, before its use for this purpose) of an indi18 vidual’s family or household income made by a Fed19 eral or State agency (or a public or private entity 

20 making such determination on behalf of such agen21 cy), including the agencies administering the Food 

22 Stamp Act of 1977, the Richard B. Russell National 

23 School Lunch Act, and the Child Nutrition Act of 

24 1966, notwithstanding any differences in budget 


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1 unit, disregard, deeming, or other methodology, but 

2 only if— 

3 ‘‘(A) such agency has fiscal liabilities or 

4 responsibilities affected or potentially affected 

5 by such determinations; and 

6 ‘‘(B) any information furnished by such 

7 agency pursuant to this subparagraph is used 

8 solely for purposes of determining eligibility for 

9 medical assistance under this title or for child 

10 health assistance under title XXI. 

11 ‘‘(5) NO ASSETS TEST.—The State agrees to 

12 not (or demonstrates that it does not) apply any as13 sets or resources test for eligibility under this title 

14 or title XXI with respect to children. 

15 ‘‘(6) ELIGIBILITY DETERMINATIONS AND REDE16 TERMINATIONS.— 

17 ‘‘(A) IN GENERAL.—The State agrees for 

18 purposes of initial eligibility determinations and 

19 redeterminations of children under this title and 

20 title XXI not to require a face-to-face interview 

21 and to permit applications and renewals by 

22 mail, telephone, and the Internet. 

23 ‘‘(B) NONDUPLICATION OF INFORMA24 TION.— 


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1 ‘‘(i) IN GENERAL.—For purposes of 

2 redeterminations of eligibility for currently 

3 or previously enrolled children under this 

4 title and title XXI, the State agrees to use 

5 all information in its possession (including 

6 information available to the State under 

7 other Federal or State programs) to deter8 mine eligibility or redetermine continued 

9 eligibility before seeking similar informa10 tion from parents. 

11 ‘‘(ii) RULE OF CONSTRUCTION.— 

12 Nothing in clause (i) shall be construed as 

13 limiting any obligation of a State to pro14 vide notice and a fair hearing before deny15 ing, terminating, or reducing a child’s cov16 erage based on such information in the 

17 possession of the State. 

18 ‘‘(7) NO WAITING LIST FOR CHILDREN UNDER

19 SCHIP.—The State agrees to not impose any numer20 ical limitation, waiting list, waiting period, or similar 

21 limitation on the eligibility of children for child 

22 health assistance under title XXI or to establish or 

23 enforce other barriers to the enrollment of eligible 

24 children based on the date of their application for 

25 coverage. 


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1 ‘‘(8) ADEQUATE PROVIDER PAYMENT RATES.— 

2 The State agrees to— 

3 ‘‘(A) establish payment rates for children’s 

4 health care providers under this title that are 

5 no less than the average of payment rates for 

6 similar services for such providers provided 

7 under the benchmark benefit packages de8 scribed in section 2103(b); 

9 ‘‘(B) establish such rates in amounts that 

10 are sufficient to ensure that children enrolled 

11 under this title or title XXI have adequate ac12 cess to comprehensive care, in accordance with 

13 the requirements of section 1902(a)(30)(A); 

14 and 

15 ‘‘(C) include provisions in its contracts 

16 with providers under this title guaranteeing 

17 compliance with these requirements. 

18 ‘‘(d) MAINTENANCE OF MEDICAID ELIGIBILITY LEV19 ELS FOR CHILDREN.— 

20 ‘‘(1) IN GENERAL.—The condition described in 

21 this subsection is that the State agrees to maintain 

22 eligibility income, resources, and methodologies ap23 plied under this title (including under a waiver of 

24 such title or under section 1115) with respect to 

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1 bility income, resources, and methodologies applied 

2 with respect to children under this title (including 

3 under such a waiver) as of January 1, 2007. 

4 ‘‘(2) RULE OF CONSTRUCTION.—Nothing in 

5 this section shall be construed as implying that a 

6 State does not have to comply with the minimum in7 come levels required for children under section 

8 1902(l)(2). 

9 ‘‘(e) DATE DESCRIBED.—The date described in this 

10 subsection is the date on which, with respect to a State, 

11 a plan amendment that satisfies the requirements of sub12 sections (b), (c), and (d) is approved by the Secretary. 

13 ‘‘(f) DEFINITION OF POVERTY LINE.—In this sec14 tion, the term ‘poverty line’ has the meaning given that 

15 term in section 2110(c)(5).’’. 

16 (b) CONFORMING AMENDMENTS.— 

17 (1) The third sentence of section 1905(b) of the 

18 Social Security Act (42 U.S.C. 1396d(b)) is amend19 ed by inserting before the period the following: ‘‘, 

20 and with respect to amounts expended for medical 

21 assistance for children on or after the date described 

22 in subsection (e) of section 1939, in the case of a 

23 State that has, in accordance with such section, an 

24 approved plan amendment under this title and title 

25 XXI’’. 


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1 (2) Section 1903(f)(4) of the Social Security 

2 Act (42 U.S.C. 1396b(f)(4)) is amended— 

3 (A) in subparagraph (C), by adding ‘‘or’’ 

4 after ‘‘section 1611(b)(1),’’; and 

5 (B) by inserting after subparagraph (C), 

6 the following: 

7 ‘‘(D) who would not receive such medical assist8 ance but for State electing the option under section 

9 1939 and satisfying the conditions described in sub10 sections (b), (c), and (d) of such section,’’. 

11 SEC. 102. ELIMINATION OF CAP ON SCHIP FUNDING FOR 

12 STATES THAT EXPAND ELIGIBILITY FOR 

13 CHILDREN. 

14 (a) IN GENERAL.—Section 2105 of the Social Secu15 rity Act (42 U.S.C. 1397dd) is amended by adding at the 

16 end the following: 

17 ‘‘(h) GUARANTEED FUNDING FOR CHILD HEALTH

18 ASSISTANCE FOR COVERAGE EXPANSION STATES.— 

19 ‘‘(1) IN GENERAL.—Only in the case of a State 

20 that has, in accordance with section 1939, an ap21 proved plan amendment under this title and title 

22 XIX, any payment cap that would otherwise apply to 

23 the State under this title as a result of having ex24 pended all allotments available for expenditure by 

25 the State with respect to a fiscal year shall not apply 


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1 with respect to amounts expended by the State on 

2 or after the date described in section 1939(e). 

3 ‘‘(2) APPROPRIATION.—There is appropriated, 

4 out of any money in the Treasury not otherwise ap5 propriated, such sums as may be necessary for the 

6 purpose of paying a State described in paragraph 

7 (1) for each quarter beginning on or after the date 

8 described in section 1939(e), an amount equal to the 

9 enhanced FMAP of expenditures described in para10 graph (1) and incurred during such quarter.’’. 

11 (b) CONFORMING AMENDMENTS.—Section 2104 of 

12 the Social Security Act (42 U.S.C. 1397dd) is amended— 

13 (1) in subsection (a), by inserting ‘‘and section 

14 2105(h)’’ after ‘‘subsection (d)’’; 

15 (2) in subsection (b)(1), by striking ‘‘and sub16 section (d)’’ and inserting ‘‘, subsection (d), and sec17 tion 2105(h)’’; and 

18 (3) in subsection (c)(1), by inserting ‘‘and sec19 tion 2105(h)’’ after ‘‘subsection (d)’’. 


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1 TITLE II—STATE OPTIONS FOR 

2 INCREMENTAL CHILD COV3 ERAGE EXPANSIONS 

4 SEC. 201. STATE OPTION TO PROVIDE WRAP-AROUND 

5 SCHIP COVERAGE TO CHILDREN WHO HAVE 

6 OTHER HEALTH COVERAGE. 

7 (a) IN GENERAL.—Section 2110(b) of the Social Se8 curity Act (42 U.S.C. 1397jj(b)) is amended— 

9 (1) in paragraph (1)(C), by inserting ‘‘, subject 

10 to paragraph (5),’’ after ‘‘under title XIX or’’; and 

11 (2) by adding at the end the following new 

12 paragraph: 

13 ‘‘(5) STATE OPTION TO PROVIDE WRAP-AROUND

14 COVERAGE.— 

15 ‘‘(A) IN GENERAL.—A State may waive 

16 the requirement of paragraph (1)(C) that a tar17 geted low-income child may not be covered 

18 under a group health plan or under health in19 surance coverage in order to provide— 

20 ‘‘(i) items or services that are not cov21 ered, or are only partially covered, under 

22 such plan or coverage; or 

23 ‘‘(ii) cost-sharing protection. 

24 ‘‘(B) ELIGIBILITY.—In waiving such re25 quirement, a State may limit the application of 


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1 the waiver to children whose family income does 

2 not exceed a level specified by the State, so long 

3 as the level so specified does not exceed the 

4 maximum income level otherwise established for 

5 other children under the State child health 

6 plan. 

7 ‘‘(C) CONTINUED APPLICATION OF DUTY

8 TO PREVENT SUBSTITUTION OF EXISTING COV9 ERAGE.—Nothing in this paragraph shall be 

10 construed as modifying the application of sec11 tion 2102(b)(3)(C) to a State.’’. 

12 (b) APPLICATION OF ENHANCED MATCH UNDER

13 MEDICAID.—Section 1905 of such Act (42 U.S.C. 1396d) 

14 is amended— 

15 (1) in subsection (b), in the fourth sentence, by 

16 striking ‘‘subsection (u)(3)’’ and inserting ‘‘, (u)(3), 

17 or (u)(4)’’; and 

18 (2) in subsection (u), by redesignating para19 graph (4) as paragraph (5) and by inserting after 

20 paragraph (3) the following: 

21 ‘‘(4) For purposes of subsection (b), the expenditures 

22 described in this paragraph are expenditures for items and 

23 services for children described in section 2110(b)(5).’’. 


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1 (c) APPLICATION OF SECONDARY PAYOR PROVI2 SIONS.—Section 2107(e)(1) of such Act (42 U.S.C. 

3 1397gg(e)(1)) is amended— 

4 (1) by redesignating subparagraphs (B) 

5 through (D) as subparagraphs (C) through (E), re6 spectively; and 

7 (2) by inserting after subparagraph (A) the fol8 lowing new subparagraph: 

9 ‘‘(B) Section 1902(a)(25) (relating to co10 ordination of benefits and secondary payor pro11 visions) with respect to children covered under 

12 a waiver described in section 2110(b)(5).’’. 

13 SEC. 202. STATE OPTION TO ENROLL LOW-INCOME CHIL14 DREN OF STATE EMPLOYEES IN SCHIP. 

15 Section 2110(b)(2) of the Social Security Act (42 

16 U.S.C. 1397jj(b)(2)) is amended— 

17 (1) by redesignating subparagraphs (A) and 

18 (B) as clauses (i) and (ii), respectively and realign19 ing the left margins of such clauses appropriately; 

20 (2) by striking ‘‘Such term’’ and inserting the 

21 following: 

22 ‘‘(A) IN GENERAL.—Such term’’; and 

23 (3) by adding at the end the following: 

24 ‘‘(B) STATE OPTION TO ENROLL LOW-IN25 COME CHILDREN OF STATE EMPLOYEES.—At 


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1 the option of a State, subparagraph (A)(ii) shall 

2 not apply to any low-income child who would 

3 otherwise be eligible for child health assistance 

4 under this title but for such subparagraph.’’. 

5 SEC. 203. OPTIONAL COVERAGE OF LEGAL IMMIGRANT 

6 CHILDREN UNDER MEDICAID AND SCHIP. 

7 (a) MEDICAID PROGRAM.—Section 1903(v) of the 

8 Social Security Act (42 U.S.C. 1396b(v)) is amended— 

9 (1) in paragraph (1), by striking ‘‘paragraph 

10 (2)’’ and inserting ‘‘paragraphs (2) and (4)’’; and 

11 (2) by adding at the end the following: 

12 ‘‘(4)(A) A State may elect (in a plan amendment 

13 under this title) to provide medical assistance under this 

14 title for aliens— 

15 ‘‘(i) who are lawfully residing in the United 

16 States (including battered aliens described in section 

17 431(c) of the Personal Responsibility and Work Op18 portunity Reconciliation Act of 1996); and 

19 ‘‘(ii) who are otherwise eligible for such assist20 ance, within the eligibility category of children (as 

21 defined under such plan), including optional targeted 

22 low-income children described in section 

23 1905(u)(2)(B). 

24 ‘‘(B)(i) In the case of a State that has elected to pro25 vide medical assistance to a category of aliens under subVerDate Aug 31 2005 15:01 Jan 08, 2007 Jkt 059200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\S95.IS S95

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1 paragraph (A), no debt shall accrue under an affidavit of 

2 support against any sponsor of such an alien on the basis 

3 of provision of assistance to such category and the cost 

4 of such assistance shall not be considered as an unreim5 bursed cost. 

6 ‘‘(ii) The provisions of sections 401(a), 402(b), 403, 

7 and 421 of the Personal Responsibility and Work Oppor8 tunity Reconciliation Act of 1996 shall not apply to a 

9 State that makes an election under subparagraph (A).’’. 

10 (b) TITLE XXI.—Section 2107(e)(1) of the Social 

11 Security Act (42 U.S.C. 1397gg(e)(1)), as amended by 

12 section 201(c), is amended redesignating subparagraph 

13 (E) as subparagraph (F) and by inserting after subpara14 graph (D) the following: 

15 ‘‘(E) Section 1903(v)(4) (relating to op16 tional coverage of permanent resident alien chil17 dren), but only if the State has elected to apply 

18 such section to that category of children under 

19 title XIX.’’. 

20 SEC. 204. STATE OPTION FOR PASSIVE RENEWAL OF ELIGI21 BILITY FOR CHILDREN UNDER MEDICAID 

22 AND SCHIP. 

23 (a) IN GENERAL.—Section 1902(l) of the Social Se24 curity Act (42 U.S.C. 1396a(l)) is amended by adding at 

25 the end the following: 


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1 ‘‘(5) Notwithstanding any other provision of this title, 

2 a State may provide that an individual who has not at3 tained 21 years of age who has been determined eligible 

4 for medical assistance under this title shall remain eligible 

5 for medical assistance until such time as the State has 

6 information demonstrating that the individual is no longer 

7 so eligible.’’. 

8 (b) APPLICATION UNDER TITLE XXI.—Section 

9 2107(e)(1) of the Social Security Act (42 U.S.C. 

10 1397gg(e)), as amended by section 201(c) and 203(b), is 

11 amended— 

12 (1) by redesignating subparagraphs (C) through 

13 (F) as subparagraphs (D) through (G), respectively; 

14 and 

15 (2) by inserting after subparagraph (B), the 

16 following: 

17 ‘‘(C) Section 1902(l)(5) (relating to pas18 sive renewal of eligibility for children).’’. 

19 TITLE III—TAX INCENTIVES FOR 

20 HEALTH INSURANCE COV21 ERAGE OF CHILDREN 

22 SEC. 301. REFUNDABLE CREDIT FOR HEALTH INSURANCE 

23 COVERAGE OF CHILDREN. 

24 (a) IN GENERAL.—Subpart C of part IV of sub25 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 (relating to refundable credits) is amended by redes2 ignating section 36 as section 37 and by inserting after 

3 section 35 the following new section: 

4 ‘‘SEC. 36. HEALTH INSURANCE COVERAGE OF CHILDREN. 

5 ‘‘(a) IN GENERAL.—In the case of an individual, 

6 there shall be allowed as a credit against the tax imposed 

7 by this subtitle an amount equal to so much of the amount 

8 paid during the taxable year, not compensated for by in9 surance or otherwise, for qualified health insurance for 

10 each dependent child of the taxpayer, as exceeds 5 percent 

11 of the adjusted gross income of such taxpayer for such 

12 taxable year. 

13 ‘‘(b) DEPENDENT CHILD.—For purposes of this sec14 tion, the term ‘dependent child’ means any child (as de15 fined in section 152(f)(1)) who has not attained the age 

16 of 19 as of the close of the calendar year in which the 

17 taxable year of the taxpayer begins and with respect to 

18 whom a deduction under section 151 is allowable to the 

19 taxpayer. 

20 ‘‘(c) QUALIFIED HEALTH INSURANCE.—For pur21 poses of this section— 

22 ‘‘(1) IN GENERAL.—The term ‘qualified health 

23 insurance’ means insurance, either employer-pro24 vided or made available under title XIX or XXI of 

25 the Social Security Act, which constitutes medical 


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1 care as defined in section 213(d) without regard 

2 to— 

3 ‘‘(A) paragraph (1)(C) thereof, and 

4 ‘‘(B) so much of paragraph (1)(D) thereof 

5 as relates to qualified long-term care insurance 

6 contracts. 

7 ‘‘(2) EXCLUSION OF CERTAIN OTHER CON8 TRACTS.—Such term shall not include insurance if a 

9 substantial portion of its benefits are excepted bene10 fits (as defined in section 9832(c)). 

11 ‘‘(d) MEDICAL SAVINGS ACCOUNT AND HEALTH SAV12 INGS ACCOUNT CONTRIBUTIONS.— 

13 ‘‘(1) IN GENERAL.—If a deduction would (but 

14 for paragraph (2)) be allowed under section 220 or 

15 223 to the taxpayer for a payment for the taxable 

16 year to the medical savings account or health sav17 ings account of an individual, subsection (a) shall be 

18 applied by treating such payment as a payment for 

19 qualified health insurance for such individual. 

20 ‘‘(2) DENIAL OF DOUBLE BENEFIT.—No deduc21 tion shall be allowed under section 220 or 223 for 

22 that portion of the payments otherwise allowable as 

23 a deduction under section 220 or 223 for the taxable 

24 year which is equal to the amount of credit allowed 

25 for such taxable year by reason of this subsection. 


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1 ‘‘(e) SPECIAL RULES.— 

2 ‘‘(1) DETERMINATION OF INSURANCE COSTS.— 

3 The Secretary shall provide rules for the allocation 

4 of the cost of any qualified health insurance for fam5 ily coverage to the coverage of any dependent child 

6 under such insurance. 

7 ‘‘(2) COORDINATION WITH DEDUCTION FOR

8 HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN9 DIVIDUALS.—In the case of a taxpayer who is eligi10 ble to deduct any amount under section 162(l) for 

11 the taxable year, this section shall apply only if the 

12 taxpayer elects not to claim any amount as a deduc13 tion under such section for such year. 

14 ‘‘(3) COORDINATION WITH MEDICAL EXPENSE

15 AND HIGH DEDUCTIBLE HEALTH PLAN DEDUC16 TIONS.—The amount which would (but for this 

17 paragraph) be taken into account by the taxpayer 

18 under section 213 or 223 for the taxable year shall 

19 be reduced by the credit (if any) allowed by this sec20 tion to the taxpayer for such year. 

21 ‘‘(4) DENIAL OF CREDIT TO DEPENDENTS.—No 

22 credit shall be allowed under this section to any indi23 vidual with respect to whom a deduction under sec24 tion 151 is allowable to another taxpayer for a taxVerDate Aug 31 2005 15:01 Jan 08, 2007 Jkt 059200 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 E:\BILLS\S95.IS S95

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1 able year beginning in the calendar year in which 

2 such individual’s taxable year begins. 

3 ‘‘(5) DENIAL OF DOUBLE BENEFIT.—No credit 

4 shall be allowed under subsection (a) if the credit 

5 under section 35 is allowed and no credit shall be al6 lowed under 35 if a credit is allowed under this sec7 tion. 

8 ‘‘(6) ELECTION NOT TO CLAIM CREDIT.—This 

9 section shall not apply to a taxpayer for any taxable 

10 year if such taxpayer elects to have this section not 

11 apply for such taxable year.’’. 

12 (b) INFORMATION REPORTING.— 

13 (1) IN GENERAL.—Subpart B of part III of 

14 subchapter A of chapter 61 of the Internal Revenue 

15 Code of 1986 (relating to information concerning 

16 transactions with other persons) is amended by in17 serting after section 6050V the following new sec18 tion: 

19 ‘‘SEC. 6050W. RETURNS RELATING TO PAYMENTS FOR 

20 QUALIFIED HEALTH INSURANCE. 

21 ‘‘(a) IN GENERAL.—Any governmental unit or any 

22 person who, in connection with a trade or business con23 ducted by such person, receives payments during any cal24 endar year from any individual for coverage of a depend25 ent child (as defined in section 36(b)) of such individual 


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1 under creditable health insurance, shall make the return 

2 described in subsection (b) (at such time as the Secretary 

3 may by regulations prescribe) with respect to each indi4 vidual from whom such payments were received. 

5 ‘‘(b) FORM AND MANNER OF RETURNS.—A return 

6 is described in this subsection if such return— 

7 ‘‘(1) is in such form as the Secretary may pre8 scribe, and 

9 ‘‘(2) contains— 

10 ‘‘(A) the name, address, and TIN of the 

11 individual from whom payments described in 

12 subsection (a) were received, 

13 ‘‘(B) the name, address, and TIN of each 

14 dependent child (as so defined) who was pro15 vided by such person with coverage under cred16 itable health insurance by reason of such pay17 ments and the period of such coverage, and 

18 ‘‘(C) such other information as the Sec19 retary may reasonably prescribe. 

20 ‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur21 poses of this section, the term ‘creditable health insurance’ 

22 means qualified health insurance (as defined in section 

23 36(c)). 

24 ‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID25 UALS WITH RESPECT TO WHOM INFORMATION IS REVerDate Aug 31 2005 15:01 Jan 08, 2007 Jkt 059200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\S95.IS S95

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1 QUIRED.—Every person required to make a return under 

2 subsection (a) shall furnish to each individual whose name 

3 is required under subsection (b)(2)(A) to be set forth in 

4 such return a written statement showing— 

5 ‘‘(1) the name and address of the person re6 quired to make such return and the phone number 

7 of the information contact for such person, 

8 ‘‘(2) the aggregate amount of payments de9 scribed in subsection (a) received by the person re10 quired to make such return from the individual to 

11 whom the statement is required to be furnished, and 

12 ‘‘(3) the information required under subsection 

13 (b)(2)(B) with respect to such payments. 

14 The written statement required under the preceding sen15 tence shall be furnished on or before January 31 of the 

16 year following the calendar year for which the return 

17 under subsection (a) is required to be made. 

18 ‘‘(e) RETURNS WHICH WOULD BE REQUIRED TO BE

19 MADE BY 2 OR MORE PERSONS.—Except to the extent 

20 provided in regulations prescribed by the Secretary, in the 

21 case of any amount received by any person on behalf of 

22 another person, only the person first receiving such 

23 amount shall be required to make the return under sub24 section (a).’’. 

25 (2) ASSESSABLE PENALTIES.— 


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1 (A) Subparagraph (B) of section 

2 6724(d)(1) of such Code (relating to defini3 tions) is amended by striking ‘‘and’’ at the end 

4 of clause (xx) and by inserting at the end the 

5 following new clause: 

6 ‘‘(xxi) section 6050W (relating to re7 turns relating to payments for qualified 

8 health insurance), and’’. 

9 (B) Paragraph (2) of section 6724(d) of 

10 such Code is amended by striking ‘‘or’’ at the 

11 end of the next to last subparagraph, by strik12 ing the period at the end of the last subpara13 graph and inserting ‘‘, or’’, and by adding at 

14 the end the following new subparagraph: 

15 ‘‘(DD) section 6050W(d) (relating to re16 turns relating to payments for qualified health 

17 insurance).’’. 

18 (3) CLERICAL AMENDMENT.—The table of sec19 tions for subpart B of part III of subchapter A of 

20 chapter 61 of such Code is amended by inserting 

21 after the item relating to section 6050V the fol22 lowing new item: 

‘‘Sec. 6050W. Returns relating to payments for qualified health insurance’’. 

23 (c) CONFORMING AMENDMENTS.— 


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1 (1) Paragraph (2) of section 1324(b) of title 

2 31, United States Code, is amended by inserting be3 fore the period ‘‘, or from section 36 of such Code’’. 

4 (2) The table of sections for subpart C of part 

5 IV of subchapter A of chapter 1 of the Internal Rev6 enue Code of 1986 is amended by striking the last 

7 item and inserting the following new items: 

‘‘Sec. 36. Health insurance coverage of children. 

‘‘Sec. 37. Overpayments of tax’’. 

8 (d) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 December 31, 2006. 

11 SEC. 302. FORFEITURE OF PERSONAL EXEMPTION FOR ANY 

12 CHILD NOT COVERED BY HEALTH INSUR13 ANCE. 

14 (a) IN GENERAL.—Section 151(d) of the Internal 

15 Revenue Code of 1986 (relating to exemption amount) is 

16 amended by adding at the end the following new para17 graph: 

18 ‘‘(5) REDUCTION OF EXEMPTION AMOUNT FOR

19 ANY CHILD NOT COVERED BY HEALTH INSUR20 ANCE.— 

21 ‘‘(A) IN GENERAL.—Except as otherwise 

22 provided in this paragraph, the exemption 

23 amount otherwise determined under this sub24 section for any dependent child (as defined in 


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1 section 36(b)) for any taxable year shall be re2 duced by the same percentage as the percentage 

3 of such taxable year during which such depend4 ent child was not covered by qualified health in5 surance (as defined in section 36(c)). 

6 ‘‘(B) FULL REDUCTION IF NO PROOF OF

7 COVERAGE IS PROVIDED.—For purposes of sub8 paragraph (A), in the case of any taxpayer who 

9 fails to attach to the return of tax for any tax10 able year a copy of the statement furnished to 

11 such taxpayer under section 6050W, the per12 centage reduction under such subparagraph 

13 shall be deemed to be 100 percent. 

14 ‘‘(C) NONAPPLICATION OF PARAGRAPH TO

15 TAXPAYERS IN LOWEST TAX BRACKET.—This 

16 paragraph shall not apply to any taxpayer 

17 whose taxable income for the taxable year does 

18 not exceed the initial bracket amount deter19 mined under section 1(i)(1)(B).’’. 

20 (b) EFFECTIVE DATE.—The amendment made by 

21 this section shall apply to taxable years beginning after 

22 December 31, 2006. 


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1 TITLE IV—MISCELLANEOUS 

2 SEC. 401. REQUIREMENT FOR GROUP MARKET HEALTH IN3 SURERS TO OFFER DEPENDENT COVERAGE 

4 OPTION FOR WORKERS WITH CHILDREN. 

5 (a) ERISA.— 

6 (1) IN GENERAL.—Subpart B of part 7 of sub7 title B of title I of the Employee Retirement Income 

8 Security Act of 1974 (29 U.S.C. 1185 et seq.) is 

9 amended by adding at the end the following: 

10 ‘‘SEC. 714. REQUIREMENT TO OFFER OPTION TO PURCHASE 

11 DEPENDENT COVERAGE FOR CHILDREN. 

12 ‘‘(a) REQUIREMENTS FOR COVERAGE.—A group 

13 health plan, and a health insurance issuer providing health 

14 insurance coverage in connection with a group health plan, 

15 shall offer an individual who is enrolled in such coverage 

16 the option to purchase dependent coverage for a child of 

17 the individual. 

18 ‘‘(b) NO EMPLOYER CONTRIBUTION REQUIRED.—An 

19 employer shall not be required to contribute to the cost 

20 of purchasing dependent coverage for a child by an indi21 vidual who is an employee of such employer. 

22 ‘‘(c) DEFINITION OF CHILD.—In this section, the 

23 term ‘child’ means an individual who has not attained 21 

24 years of age.’’. 


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1 (2) CLERICAL AMENDMENT.—The table of con2 tents in section 1 of the Employee Retirement In3 come Security Act of 1974 (29 U.S.C. 1001) is 

4 amended by inserting after the item relating to sec5 tion 713 the following: 

‘‘Sec. 714. Requirement to offer option to purchase dependent coverage for children’’. 

6 (b) PUBLIC HEALTH SERVICE ACT.—Subpart 2 of 

7 part A of title XXVII of the Public Health Service Act 

8 (42 U.S.C. 300gg–4 et seq.) is amended by adding at the 

9 end the following: 

10 ‘‘SEC. 2707. REQUIREMENT TO OFFER OPTION TO PUR11 CHASE DEPENDENT COVERAGE FOR CHIL12 DREN. 

13 ‘‘(a) REQUIREMENTS FOR COVERAGE.—A group 

14 health plan, and a health insurance issuer providing health 

15 insurance coverage in connection with a group health plan, 

16 shall offer an individual who is enrolled in such coverage 

17 the option to purchase dependent coverage for a child of 

18 the individual. 

19 ‘‘(b) NO EMPLOYER CONTRIBUTION REQUIRED.—An 

20 employer shall not be required to contribute to the cost 

21 of purchasing dependent coverage for a child by an indi22 vidual who is an employee of such employer. 


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1 ‘‘(c) DEFINITION OF CHILD.—In this section, the 

2 term ‘child’ means an individual who has not attained 21 

3 years of age.’’. 

4 (c) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply with respect to plan years begin6 ning on or after January 1, 2007. 

7 SEC. 402. EFFECTIVE DATE. 

8 Unless otherwise provided, the amendments made by 

9 this title shall take effect on October 1, 2007, and shall 

10 apply to child health assistance and medical assistance 

11 provided on or after that date without regard to whether 

12 or not final regulations to carry out such amendments 

13 have been promulgated by such date. 

14 TITLE V—REVENUE PROVISION 

15 SEC. 501. PARTIAL REPEAL OF RATE REDUCTION IN THE 

16 HIGHEST INCOME TAX BRACKET. 

17 Section 1(i)(2) of the Internal Revenue Code of 1986 

18 is amended by adding at the end the following flush sen19 tence: 

20

21 ‘‘In the case of taxable years beginning 

22 during calendar year 2007 and thereafter, 

23 the final item in the fourth column in the 

24 preceding table shall be applied by sub25 stituting for ‘‘35.0%’’ a rate equal to the 


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1 lesser of 39.6% or the rate the Secretary 

2 determines is necessary to provide suffi3 cient revenues to offset the Federal outlays 

4 required to implement the provisions of, 

5 and amendments made by, the Kids Come 

6 First Act of 2007.’’. 

Æ 


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