II 

109TH CONGRESS 

1ST SESSION S. 1225 

To expand access to affordable health care and to strengthen the health 

care safety net and make health care services more available in rural 

and underserved areas. 

IN THE SENATE OF THE UNITED STATES 

JUNE 13, 2005 

Ms. COLLINS (for herself and Ms. LANDRIEU) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To expand access to affordable health care and to strengthen 

the health care safety net and make health care services 

more available in rural and underserved areas. 

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 ‘‘Access to Affordable Health Care Act’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—EXPANSION OF ACCESS TO AFFORDABLE HEALTH 

CARE FOR SMALL BUSINESSES 
2 

•S 1225 IS 

Subtitle A—Small Business Tax Credit 

Sec. 101. Credit for employee health insurance expenses. 

Subtitle B—Grants to States for Small Business Purchasing Groups 

Sec. 121. Grants for small employer purchasing groups. 

Sec. 122. Qualified small employer purchasing groups. 

Subtitle C—Health Benefits Information for Small Employers 

Sec. 131. Grant program to facilitate health benefits information for small employers. 

Subtitle D—Grant Program to Encourage State Innovation 

Sec. 141. Grant program to encourage State innovation. 

TITLE II—EXPANSION OF ACCESS TO AFFORDABLE HEALTH 

CARE FOR INDIVIDUALS AND FAMILIES 

Subtitle A—Internal Revenue Code Provisions 

Sec. 201. Refundable health insurance costs credit. 

Sec. 202. Advance payment of credit to issuers of qualified health insurance. 

Subtitle B—FamilyCare 

Sec. 211. Renaming of title XXI program. 

Sec. 212. Familycare coverage of parents under the medicaid program and title 

XXI. 

Sec. 213. Optional coverage of children through age 20 under the medicaid program and title XXI. 

Sec. 214. Elimination of ‘‘dip’’ in CHIP allotments for fiscal years 2003 and 

2004. 

Sec. 215. Additional CHIP revisions. 

Sec. 216. Limitations on conflicts of interest. 

Sec. 217. Technical and conforming amendments to authority to pay medicaid 

expansion costs from title XXI appropriation. 

Subtitle C—Simplified Enrollment 

Sec. 221. Automatic enrollment of children born to title XXI parents. 

Sec. 222. Application of simplified title XXI procedures under the medicaid 

program. 

Sec. 223. Elimination of 100 hour rule and other AFDC-related eligibility restrictions. 

Subtitle D—State Option to Extend Medicaid Coverage to Certain LowIncome Individuals 

Sec. 231. State option to extend medicaid coverage to certain low-income individuals. 

Subtitle E—Improving Welfare-to-Work Transition Under Medicaid 

Sec. 241. Improving welfare-to-work transition under medicaid. 

Subtitle F—Grants to Promote Innovative Outreach and Enrollment Under 

Medicaid and SCHIP 
3 

•S 1225 IS 

Sec. 251. Grants to promote innovative outreach and enrollment under medicaid and SCHIP. 

Sec. 252. State option to provide for simplified determinations of a child’s financial eligibility for medical assistance under medicaid or 

child health assistance under SCHIP. 

Subtitle G—Demonstration Programs to Improve Medicaid and SCHIP 

Outreach to Homeless Individuals and Families 

Sec. 261. Demonstration programs to improve medicaid and SCHIP outreach 

to homeless individuals and families. 

TITLE III—STRENGTHENING THE HEALTH CARE SAFETY NET 

Sec. 301. Increase in funding for the consolidated health centers program. 

TITLE IV—EXPANSION OF ACCESS TO HEALTH CARE IN RURAL 

AND UNDERSERVED AREAS 

Sec. 401. Expansion of funding. 

Sec. 402. Loan repayment and scholarship programs. 

TITLE V—EXPANDED ACCESS TO AFFORDABLE LONG-TERM 

CARE 

Sec. 501. Treatment of premiums on qualified long-term care insurance contracts. 

Sec. 502. Credit for taxpayers with long-term care needs. 

Sec. 503. Additional consumer protections for long-term care insurance. 

TITLE VI—PROMOTING HEALTHIER LIFESTYLES 

Sec. 601. Community partnerships to promote healthy lifestyles. 

Sec. 602. Worksite wellness grant program. 

Sec. 603. Comprehensive school health education. 

TITLE VII—MEDICARE FAIRNESS 

Subtitle A—Medicare Value and Quality Demonstration 

Sec. 701. Findings. 

Sec. 702. Demonstration project to encourage the provision of high-quality, 

cost-effective inpatient hospital services. 

Sec. 703. Demonstration project to encourage the provision of high-quality, 

cost-effective physicians’ services. 

Subtitle B—Graduate Medical Education Demonstration 

Sec. 711. Clinical rotation demonstration project. 
4 

•S 1225 IS 

1 TITLE I—EXPANSION OF ACCESS 

2 TO AFFORDABLE HEALTH 

3 CARE FOR SMALL BUSI4 NESSES 

5 Subtitle A—Small Business Tax 

6 Credit 

7 SEC. 101. CREDIT FOR EMPLOYEE HEALTH INSURANCE EX8 PENSES. 

9 (a) IN GENERAL.—Subpart D of part IV of sub10 chapter A of chapter 1 of the Internal Revenue Code of 

11 1986 (relating to business-related credits) is amended by 

12 inserting after section 45I the following: 

13 ‘‘SEC. 45J. EMPLOYEE HEALTH INSURANCE EXPENSES. 

14 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

15 in the case of an employer, the employee health insurance 

16 expenses credit determined under this section is an 

17 amount equal to the applicable percentage of the amount 

18 paid by the taxpayer during the taxable year for qualified 

19 employee health insurance expenses. 

20 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

21 subsection (a), the applicable percentage is equal to— 

22 ‘‘(1) 50 percent in the case of an employer with 

23 less than 10 employees, and 

24 ‘‘(2) 30 percent in the case of an employer with 

25 more than 9 but less than 26 employees. 
5 

•S 1225 IS 

1 ‘‘(c) PER EMPLOYEE DOLLAR LIMITATION.—The 

2 amount of qualified employee health insurance expenses 

3 taken into account under subsection (a) with respect to 

4 any qualified employee for any taxable year shall not ex5 ceed— 

6 ‘‘(1) $2,000 in the case of self-only coverage, 

7 and 

8 ‘‘(2) $4,000 in the case of family coverage (as 

9 so defined). 

10 ‘‘(d) SPECIAL RULES AND DEFINITIONS.—For pur11 poses of this section— 

12 ‘‘(1) ELIGIBILITY FOR CREDIT.—No credit shall 

13 be allowed under subsection (a) with respect to any 

14 employer which, with respect to the number of em15 ployees employed during any period, employs more 

16 than 20 percent of highly compensated employees 

17 (within the meaning of section 414(q)). 

18 ‘‘(2) DETERMINATION OF EMPLOYMENT.— 

19 ‘‘(A) IN GENERAL.—An employer shall be 

20 considered an employer described in paragraph 

21 (1) or (2) of subsection (b) if such employer 

22 employed an average of the number of employ23 ees described in such paragraph on business 

24 days during either of the 2 preceding calendar 

25 years. For purposes of the preceding sentence, 
6 

•S 1225 IS 

1 a preceding calendar year may be taken into ac2 count only if the employer was in existence 

3 throughout such year. 

4 ‘‘(B) EMPLOYERS NOT IN EXISTENCE IN

5 PRECEDING YEAR.—In the case of an employer 

6 which was not in existence throughout the 1st 

7 preceding calendar year, the determination 

8 under subparagraph (A) shall be based on the 

9 average number of employees that it is reason10 ably expected such employer will employ on 

11 business days in the current calendar year. 

12 ‘‘(3) QUALIFIED EMPLOYEE HEALTH INSUR13 ANCE EXPENSES.— 

14 ‘‘(A) IN GENERAL.—The term ‘qualified 

15 employee health insurance expenses’ means any 

16 amount paid by an employer for health insur17 ance coverage to the extent such amount— 

18 ‘‘(i) is attributable to coverage pro19 vided to any employee while such employee 

20 is a qualified employee; and 

21 ‘‘(ii) is at least 50 percent of the pre22 mium for such coverage. 

23 ‘‘(B) EXCEPTION FOR AMOUNTS PAID

24 UNDER SALARY REDUCTION ARRANGEMENTS.— 

25 No amount paid or incurred for health insur-
7 

•S 1225 IS 

1 ance coverage pursuant to a salary reduction 

2 arrangement shall be taken into account under 

3 subparagraph (A). 

4 ‘‘(C) HEALTH INSURANCE COVERAGE.— 

5 The term ‘health insurance coverage’ has the 

6 meaning given such term by section 9832(b)(1). 

7 ‘‘(4) QUALIFIED EMPLOYEE.— 

8 ‘‘(A) IN GENERAL.—The term ‘qualified 

9 employee’ means, with respect to any period, an 

10 employee of an employer if the total amount of 

11 wages paid or incurred by such employer to 

12 such employee at an annual rate during the 

13 taxable year is not less than $5,000. 

14 ‘‘(B) TREATMENT OF CERTAIN EMPLOY15 EES.—For purposes of subparagraph (A), the 

16 term ‘employee’— 

17 ‘‘(i) shall not include an employee 

18 within the meaning of section 401(c)(1), 

19 but 

20 ‘‘(ii) shall include a leased employee 

21 within the meaning of section 414(n). 

22 ‘‘(C) WAGES.—The term ‘wages’ has the 

23 meaning given such term by section 3121(a) 

24 (determined without regard to any dollar limita25 tion contained in such section). 
8 

•S 1225 IS 

1 ‘‘(e) CERTAIN RULES MADE APPLICABLE.—For pur2 poses of this section, rules similar to the rules of section 

3 52 shall apply. 

4 ‘‘(f) DENIAL OF DOUBLE BENEFIT.—No deduction 

5 or credit under any other provision of this chapter shall 

6 be allowed with respect to qualified employee health insur7 ance expenses taken into account under subsection (a).’’. 

8 (b) CREDIT TO BE PART OF GENERAL BUSINESS

9 CREDIT.—Section 38(b) of the Internal Revenue Code of 

10 1986 (relating to current year business credit) is amended 

11 by striking ‘‘plus’’ at the end of paragraph (18), by strik12 ing the period at the end of paragraph (19) and inserting 

13 ‘‘, plus’’, and by inserting after paragraph (19) the fol14 lowing: 

15 ‘‘(20) the employee health insurance expenses 

16 credit determined under section 45J.’’. 

17 (c) CLERICAL AMENDMENT.—The table of sections 

18 for subpart D of part IV of subchapter A of chapter 1 

19 of the Internal Revenue Code of 1986 is amended by add20 ing at the end the following: 

‘‘Sec. 45J. Employee health insurance expenses.’’. 

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

22 this section shall apply to amounts paid or incurred in tax23 able years beginning after December 31, 2005. 
9 

•S 1225 IS 

1 Subtitle B—Grants to States for 

2 Small Business Purchasing Groups 

3 SEC. 121. GRANTS FOR SMALL EMPLOYER PURCHASING 

4 GROUPS. 

5 (a) IN GENERAL.—The Secretary of Labor (referred 

6 to in this section as the ‘‘Secretary’’) shall award grants 

7 to States to assist such States in planning, developing, and 

8 operating qualified small employer purchasing groups. 

9 (b) APPLICATION REQUIREMENTS.—To be eligible to 

10 receive a grant under this section, a State shall prepare 

11 and submit to the Secretary an application in such form, 

12 at such time, and containing such information, certifi13 cations, and assurances as the Secretary shall reasonably 

14 require. 

15 (c) USE OF FUNDS.—Amounts awarded under this 

16 section may be used to finance the costs associated with 

17 planning, developing, and operating a qualified small em18 ployer purchasing group that meets the requirements of 

19 section 122. Such costs may include the costs associated 

20 with— 

21 (1) engaging in education and outreach efforts 

22 to inform small employers, insurers, and the public 

23 about the small employer purchasing group; 

24 (2) soliciting bids and negotiating with insurers 

25 to make available group health plans; 
10 

•S 1225 IS 

1 (3) preparing the documentation required to re2 ceive certification by the Secretary as a qualified 

3 small employer purchasing group; and 

4 (4) such other activities determined appropriate 

5 by the Secretary. 

6 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

7 are authorized to be appropriated to carry out this section, 

8 such sums as may be necessary for each of fiscal years 

9 2006 through 2010. 

10 SEC. 122. QUALIFIED SMALL EMPLOYER PURCHASING 

11 GROUPS. 

12 (a) QUALIFIED SMALL EMPLOYER PURCHASING

13 GROUPS DESCRIBED.— 

14 (1) IN GENERAL.—A qualified small employer 

15 purchasing group is an entity that— 

16 (A) is a nonprofit entity certified under 

17 State law; 

18 (B) has a membership consisting solely of 

19 small employers; 

20 (C) is administered solely under the au21 thority and control of its member employers; 

22 (D) with respect to each State in which its 

23 members are located, consists of not fewer than 

24 the number of small employers established by 

25 the State as appropriate for such a group; 
11 

•S 1225 IS 

1 (E) offers a program under which group 

2 health plans are offered to eligible employees 

3 and eligible individuals (including the depend4 ents of such employees and individuals) through 

5 its member employers; and 

6 (F) an insurer, agent, broker, or any other 

7 individual or entity engaged in the sale of insur8 ance— 

9 (i) does not form or underwrite; and 

10 (ii) does not hold or control any right 

11 to vote with respect to. 

12 (2) SPECIAL RULE.—Notwithstanding para13 graph (1)(B), an employer member of a small em14 ployer purchasing group that has been certified by 

15 the State as meeting the requirements of paragraph 

16 (1) may retain its membership in the group if the 

17 number of employees of the employer increases such 

18 that the employer is no longer a small employer. 

19 (b) BOARD OF DIRECTORS.—Each qualified small 

20 employer purchasing group established under this section 

21 shall be governed by a board of directors or have active 

22 input from an advisory board consisting of individuals and 

23 businesses participating in the group. 

24 (c) MEMBERSHIP.— 
12 

•S 1225 IS 

1 (1) IN GENERAL.—A qualified small employer 

2 purchasing group shall accept all small employers re3 siding within the area served by the group as mem4 bers if such employers request such membership. 

5 (2) VOTING.—Members of a qualified small em6 ployer purchasing group shall have voting rights 

7 consistent with the rules established by the State. 

8 (d) DUTIES OF QUALIFIED SMALL EMPLOYER PUR9 CHASING GROUPS.—Each qualified small employer pur10 chasing group shall— 

11 (1) enter into agreements with insurers offering 

12 qualified group health plans; 

13 (2) enter into agreements with small employers 

14 for the purchase of health insurance; 

15 (3) enroll only eligible employees, eligible indi16 viduals, and the dependents of such employees and 

17 individuals in group health plans; and 

18 (4) provide enrollee information to the State. 

19 (e) LIMITATION ON ACTIVITIES.—A qualified small 

20 employer purchasing group shall not— 

21 (1) perform any activity involving approval or 

22 enforcement of payment rates for providers; 

23 (2) assume financial risk in relation to any such 

24 health plan; or 
13 

•S 1225 IS 

1 (3) perform other activities identified by the 

2 State as being inconsistent with the performance of 

3 its duties. 

4 (f) RULES OF CONSTRUCTION.— 

5 (1) ESTABLISHMENT NOT REQUIRED.—Nothing 

6 in this section shall be construed as requiring that 

7 a State organize, operate or otherwise establish a 

8 qualified small employer purchasing group, or other9 wise require the establishment of purchasing groups. 

10 (2) VOLUNTARY PARTICIPATION.—Nothing in 

11 this section shall be construed as requiring any indi12 vidual or small employer to purchase a group health 

13 plan exclusively through a qualified small employer 

14 purchasing group. 

15 (g) DEFINITION.—In this subtitle, the term ‘‘small 

16 employer’’ means an employer that employs at least 1, but 

17 not more than 50 employees. Such term shall include sole 

18 proprietorships and self-employed individuals. 

19 Subtitle C—Health Benefits 

20 Information for Small Employers 

21 SEC. 131. GRANT PROGRAM TO FACILITATE HEALTH BENE22 FITS INFORMATION FOR SMALL EMPLOYERS. 

23 (a) IN GENERAL.—The Small Business Administra24 tion shall award grants to 1 or more States, local govern25 ments, and non-profit organizations for the purposes of— 
14 

•S 1225 IS 

1 (1) demonstrating new and effective ways to 

2 provide information about the benefits of health in3 surance to small employers, including tax benefits, 

4 increased productivity of employees, and decreased 

5 turnover of employees; 

6 (2) making small employers aware of their cur7 rent rights in the marketplace under Federal and 

8 State health insurance reform laws; and 

9 (3) making small employers aware of the tax 

10 treatment of insurance premiums. 

11 (b) AUTHORIZATION.—There is authorized to be ap12 propriated to carry out this section, such sums as may 

13 be necessary for each of fiscal years 2006 through 2010. 

14 Subtitle D—Grant Program to 

15 Encourage State Innovation 

16 SEC. 141. GRANT PROGRAM TO ENCOURAGE STATE INNO17 VATION. 

18 (a) IN GENERAL.—The Secretary of Health and 

19 Human Services (in this section referred to as the ‘‘Sec20 retary’’) shall establish a program (in this section referred 

21 to as the ‘‘program’’) to award demonstration grants 

22 under this section to States to allow States to demonstrate 

23 the effectiveness of innovative ways to increase access to 

24 health insurance through market reforms and other inno-
15 

•S 1225 IS 

1 vative means. Such innovative means may include any of 

2 the following: 

3 (1) Alternative group purchasing or pooling ar4 rangements, such as purchasing cooperatives for 

5 small businesses, reinsurance pools, or high risk 

6 pools. 

7 (2) Individual or small group market reforms. 

8 (3) Consumer education and outreach. 

9 (4) Subsidies to individuals, employers, or both, 

10 in obtaining health insurance. 

11 (b) SCOPE; DURATION.—The program shall be lim12 ited to not more than 10 States and to a total period of 

13 5 years, beginning on the date the first demonstration 

14 grant is made. 

15 (c) CONDITIONS FOR DEMONSTRATION GRANTS.— 

16 (1) IN GENERAL.—The Secretary may not pro17 vide for a demonstration grant to a State under the 

18 program unless the Secretary finds that under the 

19 proposed demonstration grant— 

20 (A) the State will provide for demonstrated 

21 increase of access for some portion of the exist22 ing uninsured population through a market in23 novation (other than merely through a financial 

24 expansion of a program initiated before the 

25 date of enactment of this Act); 
16 

•S 1225 IS 

1 (B) the State will comply with applicable 

2 Federal laws; 

3 (C) the State will not discriminate among 

4 participants on the basis of any health status5 related factor (as defined in section 2791(d)(9) 

6 of the Public Health Service Act (42 U.S.C. 

7 300gg–91(d)(9)), except to the extent a State 

8 wishes to focus on populations that otherwise 

9 would not obtain health insurance because of 

10 such factors; and 

11 (D) the State will provide for such evalua12 tion, in coordination with the evaluation re13 quired under subsection (d), as the Secretary 

14 may specify. 

15 (2) APPLICATION.—The Secretary shall not 

16 provide a demonstration grant under the program to 

17 a State unless— 

18 (A) the State submits to the Secretary 

19 such an application, in such a form and man20 ner, as the Secretary specifies; 

21 (B) the application includes information 

22 regarding how the demonstration grant will ad23 dress issues such as governance, targeted popu24 lation, expected cost, and the continuation after 
17 

•S 1225 IS 

1 the completion of the demonstration grant pe2 riod; and 

3 (C) the Secretary determines that the dem4 onstration grant will be used consistent with 

5 this section. 

6 (3) FOCUS.—A demonstration grant proposal 

7 under this section need not cover all uninsured indi8 viduals in a State or all health care benefits with re9 spect to such individuals. 

10 (d) EVALUATION.—The Secretary shall enter into a 

11 contract with an appropriate entity outside the Depart12 ment of Health and Human Services to conduct an overall 

13 evaluation of the program at the end of the program pe14 riod. Such evaluation shall include an analysis of improve15 ments in access, costs, quality of care, or choice of cov16 erage, under different demonstration grants. 

17 (e) OPTION TO PROVIDE FOR INITIAL PLANNING

18 GRANTS.—Notwithstanding the previous provisions of this 

19 section, under the program the Secretary may provide for 

20 a portion of the amounts appropriated under subsection 

21 (f) (not to exceed $5,000,000) to be made available to any 

22 State for initial planning grants to permit States to de23 velop demonstration grant proposals under the previous 

24 provisions of this section. 
18 

•S 1225 IS 

1 (f) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated such sums as may be 

3 necessary to carry out this section. Amounts appropriated 

4 under this subsection shall remain available until ex5 pended. 

6 (g) STATE DEFINED.—In this section, the term 

7 ‘‘State’’ has the meaning given such term for purposes of 

8 title XIX of the Social Security Act (42 U.S.C. 1396 et 

9 seq.). 

10 TITLE II—EXPANSION OF AC11 CESS TO AFFORDABLE 

12 HEALTH CARE FOR INDIVID13 UALS AND FAMILIES 

14 Subtitle A—Internal Revenue Code 

15 Provisions 

16 SEC. 201. REFUNDABLE HEALTH INSURANCE COSTS CRED17 IT. 

18 (a) ALLOWANCE OF CREDIT.— 

19 (1) IN GENERAL.—Subpart C of part IV of sub20 chapter A of chapter 1 of the Internal Revenue Code 

21 of 1986 (relating to refundable personal credits) is 

22 amended by redesignating section 36 as section 37 

23 and inserting after section 35 the following: 
19 

•S 1225 IS 

1 ‘‘SEC. 36. HEALTH INSURANCE COSTS FOR UNINSURED ELI2 GIBLE INDIVIDUALS. 

3 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an un4 insured eligible individual, there shall be allowed as a cred5 it against the tax imposed by this subtitle for the taxable 

6 year an amount equal to the amount paid by the taxpayer 

7 during such taxable year for qualified health insurance for 

8 the taxpayer and the taxpayer’s spouse and dependents. 

9 ‘‘(b) LIMITATIONS.— 

10 ‘‘(1) IN GENERAL.—The amount allowed as a 

11 credit under subsection (a) to the taxpayer for the 

12 taxable year shall not exceed the lesser of— 

13 ‘‘(A) the sum of the monthly limitations 

14 for coverage months during such taxable year 

15 for the individuals referred to in subsection (a) 

16 for whom the taxpayer paid during the taxable 

17 year any amount for coverage under qualified 

18 health insurance, or 

19 ‘‘(B) 90 percent of the amount paid by the 

20 taxpayer during such taxable year for qualified 

21 health insurance for such individuals. 

22 ‘‘(2) MONTHLY LIMITATION.— 

23 ‘‘(A) IN GENERAL.—The monthly limita24 tion for an individual for each coverage month 

25 of such individual during the taxable year is the 

amount equal to 1 26 ⁄12 of— 
20 

•S 1225 IS 

1 ‘‘(i) $1,000 if such individual is the 

2 taxpayer, 

3 ‘‘(ii) $1,000 if— 

4 ‘‘(I) such individual is the spouse 

5 of the taxpayer, 

6 ‘‘(II) the taxpayer and such 

7 spouse are married as of the first day 

8 of such month, and 

9 ‘‘(III) the taxpayer files a joint 

10 return for the taxable year, and 

11 ‘‘(iii) $500 if such individual is an in12 dividual for whom a deduction under sec13 tion 151(c) is allowable to the taxpayer for 

14 such taxable year. 

15 ‘‘(B) LIMITATION TO 2 DEPENDENTS.— 

16 Not more than 2 individuals may be taken into 

17 account by the taxpayer under subparagraph 

18 (A)(iii). 

19 ‘‘(C) SPECIAL RULE FOR MARRIED INDI20 VIDUALS.—In the case of an individual— 

21 ‘‘(i) who is married (within the mean22 ing of section 7703) as of the close of the 

23 taxable year but does not file a joint return 

24 for such year, and 
21 

•S 1225 IS 

1 ‘‘(ii) who does not live apart from 

2 such individual’s spouse at all times during 

3 the taxable year, 

4 the limitation imposed by subparagraph (B) 

5 shall be divided equally between the individual 

6 and the individual’s spouse unless they agree on 

7 a different division. 

8 ‘‘(3) PHASEOUT OF CREDIT.— 

9 ‘‘(A) IN GENERAL.—The amount which 

10 would (but for this paragraph) be taken into ac11 count under subsection (a) shall be reduced 

12 (but not below zero) by the amount determined 

13 under subparagraph (B). 

14 ‘‘(B) AMOUNT OF REDUCTION.—The 

15 amount determined under this subparagraph is 

16 the amount which bears the same ratio to the 

17 amount which would be so taken into account 

18 for the taxable year as— 

19 ‘‘(i) the excess of— 

20 ‘‘(I) the taxpayer’s modified ad21 justed gross income for the preceding 

22 taxable year, over 

23 ‘‘(II) $15,000 ($25,000 in the 

24 case of family coverage), bears to 
22 

•S 1225 IS 

1 ‘‘(ii) $15,000 ($35,000 in the case of 

2 family coverage). 

3 ‘‘(C) MODIFIED ADJUSTED GROSS IN4 COME.—The term ‘modified adjusted gross in5 come’ means adjusted gross income deter6 mined— 

7 ‘‘(i) without regard to this section and 

8 sections 911, 931, and 933, and 

9 ‘‘(ii) after application of sections 86, 

10 135, 137, 219, 221, and 469. 

11 ‘‘(4) COVERAGE MONTH.—For purposes of this 

12 subsection— 

13 ‘‘(A) IN GENERAL.—The term ‘coverage 

14 month’ means, with respect to an individual, 

15 any month if— 

16 ‘‘(i) as of the first day of such month 

17 such individual is covered by qualified 

18 health insurance, and 

19 ‘‘(ii) the premium for coverage under 

20 such insurance for such month is paid by 

21 the taxpayer. 

22 ‘‘(B) EMPLOYER-SUBSIDIZED COV23 ERAGE.— 

24 ‘‘(i) IN GENERAL.—Such term shall 

25 not include any month for which such indi-
23 

•S 1225 IS 

1 vidual is eligible to participate in any sub2 sidized health plan (within the meaning of 

3 section 162(l)(2)) maintained by any em4 ployer of the taxpayer or of the spouse of 

5 the taxpayer. 

6 ‘‘(ii) PREMIUMS TO NONSUBSIDIZED

7 PLANS.—If an employer of the taxpayer or 

8 the spouse of the taxpayer maintains a 

9 health plan which is not a subsidized 

10 health plan (as so defined) and which con11 stitutes qualified health insurance, em12 ployee contributions to the plan shall be 

13 treated as amounts paid for qualified 

14 health insurance. 

15 ‘‘(C) CAFETERIA PLAN AND FLEXIBLE

16 SPENDING ACCOUNT BENEFICIARIES.—Such 

17 term shall not include any month during a tax18 able year if any amount is not includible in the 

19 gross income of the taxpayer for such year 

20 under section 106 with respect to— 

21 ‘‘(i) a benefit chosen under a cafeteria 

22 plan (as defined in section 125(d)), or 

23 ‘‘(ii) a benefit provided under a flexi24 ble spending or similar arrangement. 
24 

•S 1225 IS 

1 ‘‘(D) MEDICARE AND MEDICAID.—Such 

2 term shall not include any month with respect 

3 to an individual if, as of the first day of such 

4 month, such individual— 

5 ‘‘(i) is entitled to any benefits under 

6 title XVIII of the Social Security Act, or 

7 ‘‘(ii) is a participant in the program 

8 under title XIX or XXI of such Act. 

9 ‘‘(E) CERTAIN OTHER COVERAGE.—Such 

10 term shall not include any month during a tax11 able year with respect to an individual if, at any 

12 time during such year, any benefit is provided 

13 to such individual under— 

14 ‘‘(i) chapter 89 of title 5, United 

15 States Code, 

16 ‘‘(ii) chapter 55 of title 10, United 

17 States Code, 

18 ‘‘(iii) chapter 17 of title 38, United 

19 States Code, or 

20 ‘‘(iv) any medical care program under 

21 the Indian Health Care Improvement Act. 

22 ‘‘(F) PRISONERS.—Such term shall not in23 clude any month with respect to an individual 

24 if, as of the first day of such month, such indi-
25 

•S 1225 IS 

1 vidual is imprisoned under Federal, State, or 

2 local authority. 

3 ‘‘(G) INSUFFICIENT PRESENCE IN UNITED

4 STATES.—Such term shall not include any 

5 month during a taxable year with respect to an 

6 individual if such individual is present in the 

7 United States on fewer than 183 days during 

8 such year (determined in accordance with sec9 tion 7701(b)(7)). 

10 ‘‘(5) COORDINATION WITH DEDUCTION FOR

11 HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN12 DIVIDUALS.—In the case of a taxpayer who is eligi13 ble to deduct any amount under section 162(l) for 

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

15 taxpayer elects not to claim any amount as a deduc16 tion under such section for such year. 

17 ‘‘(c) QUALIFIED HEALTH INSURANCE.—For pur18 poses of this section, the term ‘qualified health insurance’ 

19 means health insurance coverage (as defined in section 

20 9832(b)(1)), including coverage under a COBRA continu21 ation provision (as defined in section 9832(d)(1)). 

22 ‘‘(d) ARCHER MSA CONTRIBUTIONS.—If a deduction 

23 would be allowed under section 220 to the taxpayer for 

24 a payment for the taxable year to the Archer MSA of an 
26 

•S 1225 IS 

1 individual, subsection (a) shall not apply to the taxpayer 

2 for such taxable year. 

3 ‘‘(e) SPECIAL RULES.— 

4 ‘‘(1) COORDINATION WITH MEDICAL EXPENSE

5 DEDUCTION.—The amount which would (but for this 

6 paragraph) be taken into account by the taxpayer 

7 under section 213 for the taxable year shall be re8 duced by the credit (if any) allowed by this section 

9 to the taxpayer for such year. 

10 ‘‘(2) DENIAL OF CREDIT TO DEPENDENTS.—No 

11 credit shall be allowed under this section to any indi12 vidual with respect to whom a deduction under sec13 tion 151 is allowable to another taxpayer for a tax14 able year beginning in the calendar year in which 

15 such individual’s taxable year begins. 

16 ‘‘(3) COORDINATION WITH ADVANCE PAY17 MENT.—Rules similar to the rules of section 32(g) 

18 shall apply to any credit to which this section ap19 plies. 

20 ‘‘(f) EXPENSES MUST BE SUBSTANTIATED.—A pay21 ment for insurance to which subsection (a) applies may 

22 be taken into account under this section only if the tax23 payer substantiates such payment in such form as the Sec24 retary may prescribe. 
27 

•S 1225 IS 

1 ‘‘(g) REGULATIONS.—The Secretary shall prescribe 

2 such regulations as may be necessary to carry out the pur3 poses of this section.’’. 

4 (b) INFORMATION REPORTING.— 

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

6 subchapter A of chapter 61 of the Internal Revenue 

7 Code of 1986 (relating to information concerning 

8 transactions with other persons) is amended by in9 serting after section 6050T the following: 

10 ‘‘SEC. 6050U. RETURNS RELATING TO PAYMENTS FOR 

11 QUALIFIED HEALTH INSURANCE. 

12 ‘‘(a) IN GENERAL.—Any person who, in connection 

13 with a trade or business conducted by such person, re14 ceives payments during any calendar year from any indi15 vidual for coverage of such individual or any other indi16 vidual under creditable health insurance, shall make the 

17 return described in subsection (b) (at such time as the 

18 Secretary may by regulations prescribe) with respect to 

19 each individual from whom such payments were received. 

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

21 is described in this subsection if such return— 

22 ‘‘(1) is in such form as the Secretary may pre23 scribe, and 

24 ‘‘(2) contains— 
28 

•S 1225 IS 

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

2 individual from whom payments described in 

3 subsection (a) were received, 

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

5 individual who was provided by such person 

6 with coverage under creditable health insurance 

7 by reason of such payments and the period of 

8 such coverage, 

9 ‘‘(C) the aggregate amount of payments 

10 described in subsection (a), 

11 ‘‘(D) the qualified health insurance credit 

12 advance amount (as defined in section 7528(e)) 

13 received by such person with respect to the indi14 vidual described in subparagraph (A), and 

15 ‘‘(E) such other information as the Sec16 retary may reasonably prescribe. 

17 ‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur18 poses of this section, the term ‘creditable health insurance’ 

19 means qualified health insurance (as defined in section 

20 36(c)). 

21 ‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID22 UALS WITH RESPECT TO WHOM INFORMATION IS RE23 QUIRED.—Every person required to make a return under 

24 subsection (a) shall furnish to each individual whose name 
29 

•S 1225 IS 

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

2 such return a written statement showing— 

3 ‘‘(1) the name and address of the person re4 quired to make such return and the phone number 

5 of the information contact for such person, 

6 ‘‘(2) the aggregate amount of payments de7 scribed in subsection (a) received by the person re8 quired to make such return from the individual to 

9 whom the statement is required to be furnished, 

10 ‘‘(3) the information required under subsection 

11 (b)(2)(B) with respect to such payments, and 

12 ‘‘(4) the qualified health insurance credit ad13 vance amount (as defined in section 7528(e)) re14 ceived by such person with respect to the individual 

15 described in paragraph (2). 

16 The written statement required under the preceding sen17 tence shall be furnished on or before January 31 of the 

18 year following the calendar year for which the return 

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

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

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

22 provided in regulations prescribed by the Secretary, in the 

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

24 another person, only the person first receiving such 
30 

•S 1225 IS 

1 amount shall be required to make the return under sub2 section (a).’’. 

3 (2) ASSESSABLE PENALTIES.— 

4 (A) Subparagraph (B) of section 

5 6724(d)(1) of such Code (relating to defini6 tions) is amended by redesignating clauses (xiii) 

7 through (xviii) as clauses (xiv) through (xix), 

8 respectively, and by inserting after clause (xii) 

9 the following: 

10 ‘‘(xiii) section 6050U (relating to re11 turns relating to payments for qualified 

12 health insurance),’’. 

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

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

15 end of subparagraph (AA), by striking the pe16 riod at the end of the subparagraph (BB) and 

17 inserting ‘‘, or’’, and by adding at the end the 

18 following: 

19 ‘‘(CC) section 6050U(d) (relating to re20 turns relating to payments for qualified health 

21 insurance).’’. 

22 (3) CLERICAL AMENDMENT.—The table of sec23 tions for subpart B of part III of subchapter A of 

24 chapter 61 of such Code is amended by inserting 
31 

•S 1225 IS 

1 after the item relating to section 6050T the fol2 lowing: 

‘‘Sec. 6050U. Returns relating to payments for qualified health 

insurance.’’. 

3 (c) CRIMINAL PENALTY FOR FRAUD.—Subchapter B 

4 of chapter 75 of the Internal Revenue Code of 1986 (relat5 ing to other offenses) is amended by adding at the end 

6 the following: 

7 ‘‘SEC. 7276. PENALTIES FOR OFFENSES RELATING TO 

8 HEALTH INSURANCE TAX CREDIT. 

9 ‘‘Any person who knowingly misuses Department of 

10 the Treasury names, symbols, titles, or initials to convey 

11 the false impression of association with, or approval or en12 dorsement by, the Department of the Treasury of any in13 surance products or group health coverage in connection 

14 with the credit for health insurance costs under section 

15 36 shall on conviction thereof be fined not more than 

16 $10,000, or imprisoned not more than 1 year, or both.’’. 

17 (d) CONFORMING AMENDMENTS.— 

18 (1) Section 162(l) of the Internal Revenue Code 

19 of 1986 is amended by adding at the end the fol20 lowing: 

21 ‘‘(6) ELECTION TO HAVE SUBSECTION

22 APPLY.—No deduction shall be allowed under para23 graph (1) for a taxable year unless the taxpayer 

24 elects to have this subsection apply for such year.’’. 
32 

•S 1225 IS 

1 (2) 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 (3) 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: 

‘‘Sec. 36. Health insurance costs for uninsured eligible individuals. 

‘‘Sec. 37. Overpayments of tax.’’. 

8 (4) The table of sections for subchapter B of 

9 chapter 75 of such Code is amended by adding at 

10 the end the following: 

‘‘Sec. 7276. Penalties for offenses relating to health insurance tax 

credit.’’. 

11 (e) EFFECTIVE DATES.— 

12 (1) IN GENERAL.—Except as provided in para13 graph (2), the amendments made by this section 

14 shall apply to taxable years beginning after Decem15 ber 31, 2005, without regard to whether final regu16 lations to carry out such amendments have been pro17 mulgated by such date. 

18 (2) PENALTIES.—The amendments made by 

19 subsections (c) and (d)(4) shall take effect on the 

20 date of the enactment of this Act. 
33 

•S 1225 IS 

1 SEC. 202. ADVANCE PAYMENT OF CREDIT TO ISSUERS OF 

2 QUALIFIED HEALTH INSURANCE. 

3 (a) IN GENERAL.—Chapter 77 of the Internal Rev4 enue Code of 1986 (relating to miscellaneous provisions) 

5 is amended by inserting after section 7527 the following: 

6 ‘‘SEC. 7527A ADVANCE PAYMENT OF HEALTH INSURANCE 

7 CREDIT FOR PURCHASERS OF QUALIFIED 

8 HEALTH INSURANCE. 

9 ‘‘(a) GENERAL RULE.—Every plan sponsor of a 

10 group health plan providing, or qualified health insurance 

11 issuer of, qualified health insurance to an eligible indi12 vidual shall— 

13 ‘‘(1) make qualified premium payments with re14 spect to such individual in an amount equal to the 

15 qualified health insurance credit advance amount, 

16 and 

17 ‘‘(2) treat such payments in the manner pro18 vided in subsection (g). 

19 ‘‘(b) ELIGIBLE INDIVIDUAL.—For purposes of this 

20 section, the term ‘eligible individual’ means any indi21 vidual— 

22 ‘‘(1) who purchases qualified health insurance 

23 (as defined in section 36(c)), and 

24 ‘‘(2) for whom a qualified health insurance 

25 credit eligibility certificate is in effect. 

26 ‘‘(c) DEFINITIONS.—For purposes of this section— 
34 

•S 1225 IS 

1 ‘‘(1) QUALIFIED HEALTH INSURANCE

2 ISSUER.—The term ‘qualified health insurance 

3 issuer’ means a health insurance issuer described in 

4 section 9832(b)(2) (determined without regard to 

5 the last sentence thereof) offering coverage in con6 nection with a group health plan. 

7 ‘‘(2) GROUP HEALTH PLAN.—The term ‘group 

8 health plan’ has the meaning given such term by 

9 section 5000(b)(1) (determined without regard to 

10 subsection (d) thereof). 

11 ‘‘(3) QUALIFIED PREMIUM PAYMENTS.—The 

12 term ‘qualified premium payments’ means any 

13 amount paid or incurred, cost incurred, or health 

14 coverage value provided, with respect to qualified 

15 health insurance for an eligible individual and the 

16 individual’s spouse and dependents. For purposes of 

17 the preceding sentence, in the case of a group health 

18 plan, the health coverage value is equal to the appli19 cable premium under the plan for the qualified 

20 health insurance coverage provided to an eligible in21 dividual and the individual’s spouse and dependents, 

22 as determined under section 4980B. 

23 ‘‘(d) QUALIFIED HEALTH INSURANCE CREDIT ELI24 GIBILITY CERTIFICATE.—For purposes of this section, a 

25 qualified health insurance credit eligibility certificate is a 
35 

•S 1225 IS 

1 statement furnished by an individual to a plan sponsor 

2 of a group health plan or qualified health insurance issuer 

3 which— 

4 ‘‘(1) certifies that the individual will be eligible 

5 to receive the credit provided by section 36 for the 

6 taxable year, 

7 ‘‘(2) estimates the amount of such credit for 

8 such taxable year, and 

9 ‘‘(3) provides such other information as the 

10 Secretary may require for purposes of this section. 

11 ‘‘(e) QUALIFIED HEALTH INSURANCE CREDIT AD12 VANCE AMOUNT.—For purposes of this section, the term 

13 ‘qualified health insurance credit advance amount’ means, 

14 with respect to any plan sponsor of a group health plan 

15 providing, or qualified health insurance issuer of, qualified 

16 health insurance, the amount of credit allowable under 

17 section 36 to the individual for the taxable year which is 

18 attributable to the insurance provided to the individual by 

19 such sponsor or issuer. 

20 ‘‘(f) REQUIRED DOCUMENTATION FOR RECEIPT OF

21 PAYMENTS OF ADVANCE AMOUNT.—No payment of a 

22 qualified health insurance credit advance amount with re23 spect to any eligible individual may be made under sub24 section (a) unless the plan sponsor of the group health 
36 

•S 1225 IS 

1 plan or qualified health insurance issuer provides to the 

2 Secretary— 

3 ‘‘(1) the qualified health insurance credit eligi4 bility certificate of such individual, and 

5 ‘‘(2) the return relating to such individual 

6 under section 6050U. 

7 ‘‘(g) QUALIFIED PREMIUM PAYMENTS TO BE

8 TREATED AS PAYMENTS OF WITHHOLDING AMOUNTS

9 AND CERTAIN EMPLOYER TAX.— 

10 ‘‘(1) IN GENERAL.—For purposes of this title, 

11 qualified premium payments made or costs incurred 

12 by the sponsor of a group health plan, or any entity 

13 designated by the sponsor to make such payments or 

14 incur such costs— 

15 ‘‘(A) shall not be treated as compensation, 

16 and 

17 ‘‘(B) shall be treated, in such manner as 

18 provided by the Secretary, as made out of— 

19 ‘‘(i) amounts required to be deposited 

20 by the taxpayer as estimated income tax 

21 under section 6654 or 6655, 

22 ‘‘(ii) amounts required to be deducted 

23 and withheld under section 3401 (relating 

24 to wage withholding), 
37 

•S 1225 IS 

1 ‘‘(iii) amounts of the taxes imposed 

2 under section 3111(a) or 50 percent of 

3 taxes imposed under section 1401(a) (re4 lating to FICA employer taxes), or 

5 ‘‘(iv) amounts required to be deducted 

6 under section 3102 with respect to taxes 

7 imposed under section 3101(a) or 50 per8 cent of taxes imposed under section 

9 1401(a) (relating to FICA employee 

10 taxes), 

11 as if such sponsor, or such designated entity, 

12 had paid to the Secretary an amount equal to 

13 such payments. 

14 ‘‘(2) QUALIFIED PREMIUM PAYMENTS EXCEED

15 TAXES DUE.—In the case of any entity, if for any 

16 time period the aggregate qualified premium pay17 ments exceed the amounts described in paragraph 

18 (1)(B), the Secretary shall reduce amounts described 

19 in such paragraph for any succeeding time period as 

20 necessary to reflect such excess. 

21 ‘‘(3) FAILURE TO MAKE QUALIFIED PREMIUM

22 PAYMENTS.—For purposes of this title (including 

23 penalties), failure to make a qualified premium pay24 ment with respect to an eligible individual at the 

25 time provided therefor shall be treated as the failure 
38 

•S 1225 IS 

1 at such time to deduct and withhold under chapter 

2 24 of such Code in an amount equal to the amount 

3 of such qualified premium payments. 

4 ‘‘(h) REGULATIONS.—The Secretary shall prescribe 

5 such regulations as may be necessary to carry out the pur6 poses of this section.’’. 

7 (b) CLERICAL AMENDMENT.—The table of sections 

8 for chapter 77 of the Internal Revenue Code of 1986 is 

9 amended by inserting after the item relating to section 

10 7527 the following: 

‘‘Sec. 7527A. Advance payment of health insurance credit for purchasers of qualified health insurance.’’. 

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

12 this section shall take effect on January 1, 2007, without 

13 regard to whether final regulations to carry out such 

14 amendments have been promulgated by such date. 

15 Subtitle B—FamilyCare 

16 SEC. 211. RENAMING OF TITLE XXI PROGRAM. 

17 (a) IN GENERAL.—The heading of title XXI of the 

18 Social Security Act (42 U.S.C. 1397aa et seq.) is amended 

19 to read as follows: 

20 ‘‘TITLE XXI—FAMILYCARE PROGRAM’’. 

21 (b) PROGRAM REFERENCES.—Any reference in any 

22 provision of Federal law or regulation to ‘‘SCHIP’’ or 

23 ‘‘State children’s health insurance program’’ under title 
39 

•S 1225 IS 

1 XXI of the Social Security Act shall be deemed a reference 

2 to the FamilyCare program under such title. 

3 SEC. 212. FAMILYCARE COVERAGE OF PARENTS UNDER 

4 THE MEDICAID PROGRAM AND TITLE XXI. 

5 (a) INCENTIVES TO IMPLEMENT FAMILYCARE COV6 ERAGE.— 

7 (1) UNDER MEDICAID.— 

8 (A) ESTABLISHMENT OF NEW OPTIONAL

9 ELIGIBILITY CATEGORY.—Section 

10 1902(a)(10)(A)(ii) of the Social Security Act 

11 (42 U.S.C. 1396a(a)(10)(A)(ii)) is amended— 

12 (i) by striking ‘‘or’’ at the end of sub13 clause (XVII); 

14 (ii) by adding ‘‘or’’ at the end of sub15 clause (XVIII); and 

16 (iii) by adding at the end the fol17 lowing: 

18 ‘‘(XIX) who are individuals de19 scribed in subsection (k)(1) (relating 

20 to parents of categorically eligible chil21 dren);’’. 

22 (B) PARENTS DESCRIBED.—Section 1902 

23 of the Social Security Act is further amended 

24 by inserting after subsection (j) the following: 
40 

•S 1225 IS 

1 ‘‘(k)(1)(A) Individuals described in this paragraph 

2 are individuals— 

3 ‘‘(i) who are the parents of an individual who 

4 is under 19 years of age (or such higher age as the 

5 State may have elected under section 1902(l)(1)(D)) 

6 and who is eligible for medical assistance under sub7 section (a)(10)(A); 

8 ‘‘(ii) who are not otherwise eligible for medical 

9 assistance under such subsection, under section 

10 1931, or under a waiver approved under section 

11 1115 or otherwise (except under subsection 

12 (a)(10)(A)(ii)(XIX)); and 

13 ‘‘(iii) whose family income exceeds the income 

14 level applicable under the State plan under part A 

15 of title IV as in effect as of July 16, 1996, but does 

16 not exceed the highest income level applicable to a 

17 child in the family under this title. 

18 ‘‘(B) In establishing an income eligibility level for in19 dividuals described in this paragraph, a State may vary 

20 such level consistent with the various income levels estab21 lished under subsection (l)(2) based on the ages of chil22 dren described in subsection (l)(1) in order to ensure, to 

23 the maximum extent possible, that such individuals shall 

24 be enrolled in the same program as their children. 
41 

•S 1225 IS 

1 ‘‘(C) An individual may not be treated as being de2 scribed in this paragraph unless, at the time of the individ3 ual’s enrollment under this title, the child referred to in 

4 subparagraph (A)(i) of the individual is also enrolled 

5 under this title. 

6 ‘‘(D) In this subsection, the term ‘parent’ includes 

7 an individual treated as a caregiver for purposes of car8 rying out section 1931. 

9 ‘‘(2) In the case of a parent described in paragraph 

10 (1) who is also the parent of a child who is eligible for 

11 child health assistance under title XXI, the State may 

12 elect (on a uniform basis) to cover all such parents under 

13 section 2111 or under this title.’’. 

14 (C) ENHANCED MATCHING FUNDS AVAIL15 ABLE IF CERTAIN CONDITIONS MET.—Section 

16 1905 of the Social Security Act (42 U.S.C. 

17 1396d) is amended— 

18 (i) in the fourth sentence of sub19 section (b), by striking ‘‘or subsection 

20 (u)(3)’’ and inserting ‘‘, (u)(3), or (u)(4)’’; 

21 and 

22 (ii) in subsection (u)— 

23 (I) by redesignating paragraph 

24 (4) as paragraph (6), and 
42 

•S 1225 IS 

1 (II) by inserting after paragraph 

2 (3) the following: 

3 ‘‘(4) For purposes of subsection (b) and section 

4 2105(a)(1): 

5 ‘‘(A) FAMILYCARE PARENTS.—The expendi6 tures described in this subparagraph are the expend7 itures described in the following clauses (i) and (ii): 

8 ‘‘(i) PARENTS.—If the conditions described 

9 in clause (iii) are met, expenditures for medical 

10 assistance for parents described in section 

11 1902(k)(1) and for parents who would be de12 scribed in such section but for the fact that 

13 they are eligible for medical assistance under 

14 section 1931 or under a waiver approved under 

15 section 1115. 

16 ‘‘(ii) CERTAIN PREGNANT WOMEN.—Ex17 penditures for medical assistance for pregnant 

18 women under section 1902(l)(1)(A) in a family 

19 the income of which exceeds the income level 

20 applicable under section 1902(l)(2)(A) to a 

21 family of the size involved as of January 1, 

22 2005. 

23 ‘‘(iii) CONDITIONS.—The conditions de24 scribed in this clause are the following: 
43 

•S 1225 IS 

1 ‘‘(I) The State has a State child 

2 health plan under title XXI which (wheth3 er implemented under such title or under 

4 this title) has an effective income level for 

5 children that is at least 200 percent of the 

6 poverty line. 

7 ‘‘(II) Such State child health plan 

8 does not limit the acceptance of applica9 tions, does not use a waiting list for chil10 dren who meet eligibility standards to 

11 qualify for assistance, and provides bene12 fits to all children in the State who apply 

13 for and meet eligibility standards. 

14 ‘‘(III) The State plans under this title 

15 and title XXI do not provide coverage for 

16 parents with higher family income without 

17 covering parents with a lower family in18 come. 

19 ‘‘(IV) The State does not apply an in20 come level for parents that is lower than 

21 the effective income level (expressed as a 

22 percent of the poverty line) that has been 

23 specified under the State plan under title 

24 XIX (including under a waiver authorized 

25 by the Secretary or under section 
44 

•S 1225 IS 

1 1902(r)(2)), as of January 1, 2005, to be 

2 eligible for medical assistance as a parent 

3 under this title. 

4 ‘‘(iv) DEFINITIONS.—For purposes of this 

5 subsection: 

6 ‘‘(I) The term ‘parent’ has the mean7 ing given such term for purposes of section 

8 1902(k)(1). 

9 ‘‘(II) The term ‘poverty line’ has the 

10 meaning given such term in section 

11 2110(c)(5).’’. 

12 (D) APPROPRIATION FROM TITLE XXI AL13 LOTMENT FOR CERTAIN MEDICAID EXPANSION

14 COSTS.—Subparagraph (B) of section 

15 2105(a)(1) of the Social Security Act, as 

16 amended by section 217(a), is amended to read 

17 as follows: 

18 ‘‘(B) FAMILYCARE PARENTS.—Expendi19 tures for medical assistance that is attributable 

20 to expenditures described in section 

21 1905(u)(4)(A).’’. 

22 (E) ONLY COUNTING ENHANCED PORTION

23 FOR COVERAGE OF ADDITIONAL PREGNANT

24 WOMEN.—Section 1905 of the Social Security 

25 Act (42 U.S.C. 1396d) is amended— 
45 

•S 1225 IS 

1 (i) in the fourth sentence of sub2 section (b), by inserting ‘‘(except in the 

3 case of expenditures described in sub4 section (u)(5))’’ after ‘‘do not exceed’’; and 

5 (ii) in subsection (u), by inserting 

6 after paragraph (4) (as inserted by sub7 paragraph (C)), the following: 

8 ‘‘(5) For purposes of the fourth sentence of sub9 section (b) and section 2105(a), the following payments 

10 under this title do not count against a State’s allotment 

11 under section 2104: 

12 ‘‘(A) REGULAR FMAP FOR EXPENDITURES FOR

13 PREGNANT WOMEN WITH INCOME ABOVE JANUARY

14 1, 2005 INCOME LEVEL AND BELOW 185 PERCENT OF

15 POVERTY.—The portion of the payments made for 

16 expenditures described in paragraph (4)(A)(ii) that 

17 represents the amount that would have been paid if 

18 the enhanced FMAP had not been substituted for 

19 the Federal medical assistance percentage.’’. 

20 (2) UNDER TITLE XXI.— 

21 (A) FAMILYCARE COVERAGE.—Title XXI 

22 of the Social Security Act (42 U.S.C. 1397aa et 

23 seq.) is amended by adding at the end the fol24 lowing: 
46 

•S 1225 IS 

1 ‘‘SEC. 2111. OPTIONAL FAMILYCARE COVERAGE OF PAR2 ENTS OF TARGETED LOW-INCOME CHILDREN. 

3 ‘‘(a) OPTIONAL COVERAGE.—Notwithstanding any 

4 other provision of this title, a State child health plan may 

5 provide for coverage, through an amendment to its State 

6 child health plan under section 2102, of FamilyCare as7 sistance for individuals who are targeted low-income par8 ents in accordance with this section, but only if— 

9 ‘‘(1) the State meets the conditions described in 

10 section 1905(u)(4)(A)(iii); and 

11 ‘‘(2) the State elects to provide medical assist12 ance under section 1902(a)(10)(A)(ii)(XIX), under 

13 section 1931, or under a waiver under section 1115 

14 to individuals described in section 1902(k)(1)(A)(i) 

15 and elects an applicable income level for such indi16 viduals that consistent with paragraphs (1)(B) and 

17 (2) of section 1902(k), ensures to the maximum ex18 tent possible, that those individuals shall be enrolled 

19 in the same program as their children if their chil20 dren are eligible for coverage under title XIX (in21 cluding under a waiver authorized by the Secretary 

22 or under section 1902(r)(2)).’’. 

23 ‘‘(b) DEFINITIONS.—For purposes of this title: 

24 ‘‘(1) FAMILYCARE ASSISTANCE.—The term 

25 ‘FamilyCare assistance’ has the meaning given the 

26 term child health assistance in section 2110(a) as if 
47 

•S 1225 IS 

1 any reference to targeted low-income children were 

2 a reference to targeted low-income parents. 

3 ‘‘(2) TARGETED LOW-INCOME PARENT.—The 

4 term ‘targeted low-income parent’ has the meaning 

5 given the term targeted low-income child in section 

6 2110(b) as if the reference to a child were deemed 

7 a reference to a parent (as defined in paragraph (3)) 

8 of the child; except that in applying such section— 

9 ‘‘(A) there shall be substituted for the in10 come level described in paragraph (1)(B)(ii)(I) 

11 the applicable income level in effect for a tar12 geted low-income child; 

13 ‘‘(B) in paragraph (3), January 1, 2005, 

14 shall be substituted for July 1, 1997; and 

15 ‘‘(C) in paragraph (4), January 1, 2005, 

16 shall be substituted for March 31, 1997. 

17 ‘‘(3) PARENT.—The term ‘parent’ includes an 

18 individual treated as a caregiver for purposes of car19 rying out section 1931. 

20 ‘‘(4) OPTIONAL TREATMENT OF PREGNANT

21 WOMEN AS PARENTS.—A State child health plan 

22 may treat a pregnant woman who is not otherwise 

23 a parent as a targeted low-income parent for pur24 poses of this section but only if the State has estab25 lished an income level under section 1902(l)(2)(A)(i) 
48 

•S 1225 IS 

1 for pregnant women that is at least 185 percent of 

2 the income official poverty line described in such sec3 tion. 

4 ‘‘(c) REFERENCES TO TERMS AND SPECIAL

5 RULES.—In the case of, and with respect to, a State pro6 viding for coverage of FamilyCare assistance to targeted 

7 low-income parents under subsection (a), the following 

8 special rules apply: 

9 ‘‘(1) Any reference in this title (other than sub10 section (b)) to a targeted low-income child is deemed 

11 to include a reference to a targeted low-income par12 ent. 

13 ‘‘(2) Any such reference to child health assist14 ance with respect to such parents is deemed a ref15 erence to FamilyCare assistance. 

16 ‘‘(3) In applying section 2103(e)(3)(B) in the 

17 case of a family provided coverage under this sec18 tion, the limitation on total annual aggregate cost19 sharing shall be applied to the entire family. 

20 ‘‘(4) In applying section 2110(b)(4), any ref21 erence to ‘section 1902(l)(2) or 1905(n)(2) (as se22 lected by a State)’ is deemed a reference to the in23 come level applicable to parents under section 1931 

24 or under a waiver approved under section 1115, or, 

25 in the case of a pregnant woman described in sub-
49 

•S 1225 IS 

1 section (b)(4), the income level established under 

2 section 1902(l)(2)(A). 

3 ‘‘(5) In applying section 2102(b)(3)(B), any 

4 reference to children is deemed a reference to par5 ents.’’. 

6 (B) ADDITIONAL ALLOTMENT FOR STATES

7 PROVIDING FAMILYCARE.— 

8 (i) IN GENERAL.—Section 2104 of the 

9 Social Security Act (42 U.S.C. 1397dd) is 

10 amended by inserting after subsection (c) 

11 the following: 

12 ‘‘(d) ADDITIONAL ALLOTMENTS FOR STATE PRO13 VIDING FAMILYCARE.— 

14 ‘‘(1) APPROPRIATION; TOTAL ALLOTMENT.— 

15 For the purpose of providing additional allotments 

16 to States to provide FamilyCare coverage under sec17 tion 2111, there is appropriated, out of any money 

18 in the Treasury not otherwise appropriated— 

19 ‘‘(A) for fiscal year 2006, $2,000,000,000; 

20 ‘‘(B) for fiscal year 2007, $3,000,000,000; 

21 ‘‘(C) for fiscal year 2008, $3,000,000,000; 

22 ‘‘(D) for fiscal year 2009, $6,000,000,000; 

23 ‘‘(E) for fiscal year 2010, $7,000,000,000; 

24 ‘‘(F) for fiscal year 2011, $8,000,000,000; 

25 ‘‘(G) for fiscal year 2012, $9,000,000,000; 
50 

•S 1225 IS 

1 ‘‘(H) for fiscal year 2013, 

2 $10,000,000,000; and 

3 ‘‘(I) for fiscal year 2014 and each fiscal 

4 year thereafter, the amount of the allotment 

5 provided under this paragraph for the preceding 

6 fiscal year increased by the percentage increase 

7 (if any) in the medical care expenditure cat8 egory of the Consumer Price Index for All 

9 Urban Consumers (United States city average). 

10 ‘‘(2) STATE AND TERRITORIAL ALLOTMENTS.— 

11 ‘‘(A) IN GENERAL.—In addition to the al12 lotments provided under subsections (b) and 

13 (c), subject to paragraphs (3) and (4), of the 

14 amount available for the additional allotments 

15 under paragraph (1) for a fiscal year, the Sec16 retary shall allot to each State with a State 

17 child health plan approved under this title— 

18 ‘‘(i) in the case of such a State other 

19 than a commonwealth or territory de20 scribed in clause (ii), the same proportion 

21 as the proportion of the State’s allotment 

22 under subsection (b) (determined without 

23 regard to subsection (f)) to 98.95 percent 

24 of the total amount of the allotments 

25 under such section for such States eligible 
51 

•S 1225 IS 

1 for an allotment under this subparagraph 

2 for such fiscal year; and 

3 ‘‘(ii) in the case of a commonwealth or 

4 territory described in subsection (c)(3), the 

5 same proportion as the proportion of the 

6 commonwealth’s or territory’s allotment 

7 under subsection (c) (determined without 

8 regard to subsection (f)) to 1.05 percent of 

9 the total amount of the allotments under 

10 such section for commonwealths and terri11 tories eligible for an allotment under this 

12 subparagraph for such fiscal year. 

13 ‘‘(B) AVAILABILITY AND REDISTRIBUTION

14 OF UNUSED ALLOTMENTS.—In applying sub15 sections (e) and (f) with respect to additional 

16 allotments made available under this subsection, 

17 the procedures established under such sub18 sections shall ensure such additional allotments 

19 are only made available to States which have 

20 elected to provide coverage under section 2111. 

21 ‘‘(3) USE OF ADDITIONAL ALLOTMENT.—Addi22 tional allotments provided under this subsection are 

23 not available for amounts expended before October 

24 1, 2005. Such amounts are available for amounts ex25 pended on or after such date for child health assist-
52 

•S 1225 IS 

1 ance for targeted low-income children, as well as for 

2 FamilyCare assistance. 

3 ‘‘(4) REQUIRING ELECTION TO PROVIDE

4 FAMILYCARE COVERAGE.—No payments may be 

5 made to a State under this title from an allotment 

6 provided under this subsection unless the State has 

7 made an election to provide FamilyCare assist8 ance.’’. 

9 (ii) CONFORMING AMENDMENTS.— 

10 Section 2104 of the Social Security Act 

11 (42 U.S.C. 1397dd) is amended— 

12 (I) in subsection (a), by inserting 

13 ‘‘subject to subsection (d),’’ after 

14 ‘‘under this section,’’; 

15 (II) in subsection (b)(1), by in16 serting ‘‘and subsection (d)’’ after 

17 ‘‘Subject to paragraph (4)’’; and 

18 (III) in subsection (c)(1), by in19 serting ‘‘subject to subsection (d),’’ 

20 after ‘‘for a fiscal year,’’. 

21 (C) NO COST-SHARING FOR PREGNANCY22 RELATED BENEFITS.—Section 2103(e)(2) of 

23 the Social Security Act (42 U.S.C. 

24 1397cc(e)(2)) is amended— 
53 

•S 1225 IS 

1 (i) in the heading, by inserting ‘‘AND

2 PREGNANCY-RELATED SERVICES’’ after 

3 ‘‘PREVENTIVE SERVICES’’; and 

4 (ii) by inserting before the period at 

5 the end the following: ‘‘and for pregnancy6 related services’’. 

7 (3) EFFECTIVE DATE.—The amendments made 

8 by this subsection apply to items and services fur9 nished on or after October 1, 2005, whether or not 

10 regulations implementing such amendments have 

11 been issued. 

12 (b) RULES FOR IMPLEMENTATION BEGINNING WITH

13 FISCAL YEAR 2008.— 

14 (1) REQUIRED COVERAGE OF FAMILYCARE PAR15 ENTS.—Section 1902(a)(10)(A)(i) of the Social Se16 curity Act (42 U.S.C. 1396a(a)(10)(A)(i)) is amend17 ed— 

18 (A) by striking ‘‘or’’ at the end of sub19 clause (VI); 

20 (B) by striking the semicolon at the end of 

21 subclause (VII) and insert ‘‘, or’’; and 

22 (C) by adding at the end the following: 

23 ‘‘(VIII) who are described in sub24 section (k)(1) (or would be described 

25 if subparagraph (A)(ii) of such sub-
54 

•S 1225 IS 

1 section did not apply) and who are in 

2 families with incomes that do not ex3 ceed 100 percent of the poverty line 

4 applicable to a family of the size in5 volved;’’. 

6 (2) EXPANSION OF AVAILABILITY OF EN7 HANCED MATCH UNDER MEDICAID FOR PRE-CHIP

8 EXPANSIONS.—Paragraph (4) of section 1905(u) of 

9 the Social Security Act (42 U.S.C. 1396d(u)), as in10 serted by subsection (a)(1)(C), is amended— 

11 (A) by amending clause (ii) of subpara12 graph (A) to read as follows: 

13 ‘‘(ii) CERTAIN PREGNANT WOMEN.—Ex14 penditures for medical assistance for pregnant 

15 women under section 1902(l)(1)(A) in a family 

16 the income of which exceeds the 133 percent of 

17 the income official poverty line.’’; and 

18 (B) by adding at the end the following: 

19 ‘‘(B) CHILDREN IN FAMILIES WITH INCOME

20 ABOVE MEDICAID MANDATORY LEVEL NOT PRE21 VIOUSLY DESCRIBED.—The expenditures described 

22 in this subparagraph are expenditures (other than 

23 expenditures described in paragraph (2) or (3)) for 

24 medical assistance made available to any child who 

25 is eligible for assistance under section 
55 

•S 1225 IS 

1 1902(a)(10)(A) (other than under clause (i)) and 

2 the income of whose family exceeds the minimum in3 come level required under subsection 1902(l)(2) (or, 

4 if higher, the minimum level required under section 

5 1931 for that State) for a child of the age involved 

6 (treating any child who is 19 or 20 years of age as 

7 being 18 years of age).’’. 

8 (3) OFFSET OF ADDITIONAL EXPENDITURES

9 FOR ENHANCED MATCH FOR PRE-CHIP EXPANSION; 

10 ELIMINATION OF OFFSET FOR REQUIRED COVERAGE

11 OF FAMILYCARE PARENTS.— 

12 (A) IN GENERAL.—Section 1905(u)(5) of 

13 the Social Security Act (42 U.S.C. 

14 1396d(u)(5)), as added by subsection (a)(1)(E), 

15 is amended— 

16 (i) by amending subparagraph (A) to 

17 read as follows: 

18 ‘‘(A) REGULAR FMAP FOR EXPENDITURES FOR

19 PREGNANT WOMEN WITH INCOME ABOVE 133 PER20 CENT OF POVERTY.—The portion of the payments 

21 made for expenditures described in paragraph 

22 (4)(A)(ii) that represents the amount that would 

23 have been paid if the enhanced FMAP had not been 

24 substituted for the Federal medical assistance per25 centage.’’; and 
56 

•S 1225 IS 

1 (ii) by adding at the end the fol2 lowing: 

3 ‘‘(B) FAMILYCARE PARENTS UNDER 100 PER4 CENT OF POVERTY.—Payments for expenditures de5 scribed in paragraph (4)(A)(i) in the case of parents 

6 whose income does not exceed 100 percent of the in7 come official poverty line applicable to a family of 

8 the size involved. 

9 ‘‘(C) REGULAR FMAP FOR EXPENDITURES FOR

10 CERTAIN CHILDREN IN FAMILIES WITH INCOME

11 ABOVE MEDICAID MANDATORY LEVEL.—The portion 

12 of the payments made for expenditures described in 

13 paragraph (4)(B) that represents the amount that 

14 would have been paid if the enhanced FMAP had 

15 not been substituted for the Federal medical assist16 ance percentage.’’. 

17 (B) CONFORMING AMENDMENTS.—Sub18 paragraph (B) of section 2105(a)(1) of the So19 cial Security Act, as amended by section 217(a) 

20 and subsection (a)(1)(D), is amended to read as 

21 follows: 

22 ‘‘(B) CERTAIN FAMILYCARE PARENTS AND

23 OTHERS.—Expenditures for medical assistance 

24 that is attributable to expenditures described in 
57 

•S 1225 IS 

1 section 1905(u)(4), except as provided in sec2 tion 1905(u)(5).’’. 

3 (4) EFFECTIVE DATE.—The amendments made 

4 by this subsection apply as of October 1, 2007, to 

5 fiscal years beginning on or after such date and to 

6 expenditures under the State plan on and after such 

7 date, whether or not regulations implementing such 

8 amendments have been issued. 

9 (c) MAKING TITLE XXI BASE ALLOTMENTS PERMA10 NENT.—Section 2104(a) of the Social Security Act (42 

11 U.S.C. 1397dd(a)) is amended— 

12 (1) by striking ‘‘and’’ at the end of paragraph 

13 (9); 

14 (2) by striking the period at the end of para15 graph (10) and inserting ‘‘; and’’; and 

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

17 ‘‘(11) for fiscal year 2008 and each fiscal year 

18 thereafter, the amount of the allotment provided 

19 under this subsection for the preceding fiscal year 

20 increased by the percentage increase (if any) in the 

21 medical care expenditure category of the Consumer 

22 Price Index for All Urban Consumers (United States 

23 city average).’’. 

24 (d) OPTIONAL APPLICATION OF PRESUMPTIVE ELI25 GIBILITY PROVISIONS TO PARENTS.—Section 1920A of 
58 

•S 1225 IS 

1 the Social Security Act (42 U.S.C. 1396r–1a) is amended 

2 by adding at the end the following: 

3 ‘‘(e) A State may elect to apply the previous provi4 sions of this section to provide for a period of presumptive 

5 eligibility for medical assistance for a parent (as defined 

6 for purposes of section 1902(k)(1)) of a child with respect 

7 to whom such a period is provided under this section.’’. 

8 (e) CONFORMING AMENDMENTS.— 

9 (1) ELIGIBILITY CATEGORIES.—Section 

10 1905(a) of the Social Security Act (42 U.S.C. 

11 1396d(a)) is amended, in the matter before para12 graph (1)— 

13 (A) by striking ‘‘or’’ at the end of clause 

14 (xii); 

15 (B) by inserting ‘‘or’’ at the end of clause 

16 (xiii); and 

17 (C) by inserting after clause (xiii) the fol18 lowing: 

19 ‘‘(xiv) who are parents described (or treated as 

20 if described) in section 1902(k)(1),’’. 

21 (2) INCOME LIMITATIONS.—Section 1903(f)(4) 

22 of the Social Security Act (42 U.S.C. 1396b(f)(4)) 

23 is amended— 
59 

•S 1225 IS 

1 (A) effective October 1, 2007, by inserting 

2 ‘‘1902(a)(10)(A)(i)(VIII),’’ after 

3 ‘‘1902(a)(10)(A)(i)(VII),’’; and 

4 (B) by inserting 

5 ‘‘1902(a)(10)(A)(ii)(XIX),’’ after 

6 ‘‘1902(a)(10)(A)(ii)(XVIII),’’. 

7 (3) CONFORMING AMENDMENT RELATING TO

8 NO WAITING PERIOD FOR PREGNANT WOMEN.—Sec9 tion 2102(b)(1)(B) of the Social Security Act (42 

10 U.S.C. 1397bb(b)(1)(B)) is amended— 

11 (A) by striking ‘‘, and’’ at the end of 

12 clause (i) and inserting a semicolon; 

13 (B) by striking the period at the end of 

14 clause (ii) and inserting ‘‘; and’’; and 

15 (C) by adding at the end the following: 

16 ‘‘(iii) may not apply a waiting period 

17 (including a waiting period to carry out 

18 paragraph (3)(C)) in the case of a targeted 

19 low-income parent who is pregnant.’’. 

20 SEC. 213. OPTIONAL COVERAGE OF CHILDREN THROUGH 

21 AGE 20 UNDER THE MEDICAID PROGRAM AND 

22 TITLE XXI. 

23 (a) MEDICAID.— 

24 (1) IN GENERAL.—Section 1902(l)(1)(D) of the 

25 Social Security Act (42 U.S.C. 1396a(l)(1)(D)) is 
60 

•S 1225 IS 

1 amended by inserting ‘‘(or, at the election of a 

2 State, 20 or 21 years of age)’’ after ‘‘19 years of 

3 age’’. 

4 (2) CONFORMING AMENDMENTS.— 

5 (A) Section 1902(e)(3)(A) of the Social Se6 curity Act (42 U.S.C. 1396a(e)(3)(A)) is 

7 amended by inserting ‘‘(or 1 year less than the 

8 age the State has elected under subsection 

9 (l)(1)(D))’’ after ‘‘18 years of age’’. 

10 (B) Section 1902(e)(12) of the Social Se11 curity Act (42 U.S.C. 1396a(e)(12)) is amend12 ed by inserting ‘‘or such higher age as the State 

13 has elected under subsection (l)(1)(D)’’ after 

14 ‘‘19 years of age’’. 

15 (C) Section 1920A(b)(1) of the Social Se16 curity Act (42 U.S.C. 1396r–1a(b)(1)) is 

17 amended by inserting ‘‘or such higher age as 

18 the State has elected under section 

19 1902(l)(1)(D)’’ after ‘‘19 years of age’’. 

20 (D) Section 1928(h)(1) of the Social Secu21 rity Act (42 U.S.C. 1396s(h)(1)) is amended by 

22 inserting ‘‘or 1 year less than the age the State 

23 has elected under section 1902(l)(1)(D)’’ before 

24 the period at the end. 
61 

•S 1225 IS 

1 (E) Section 1932(a)(2)(A) of the Social 

2 Security Act (42 U.S.C. 1396u–2(a)(2)(A)) is 

3 amended by inserting ‘‘(or such higher age as 

4 the State has elected under section 

5 1902(l)(1)(D))’’ after ‘‘19 years of age’’. 

6 (b) TITLE XXI.—Section 2110(c)(1) of the Social 

7 Security Act (42 U.S.C. 1397jj(c)(1)) is amended by in8 serting ‘‘(or such higher age as the State has elected under 

9 section 1902(l)(1)(D))’’. 

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

11 this section take effect on October 1, 2006, and apply to 

12 medical assistance and child health assistance provided on 

13 or after such date, whether or not regulations imple14 menting such amendments have been issued. 

15 SEC. 214. ELIMINATION OF ‘‘DIP’’ IN CHIP ALLOTMENTS 

16 FOR FISCAL YEARS 2003 AND 2004. 

17 Paragraphs (6) and (7) of section 2104(a) of the So18 cial Security Act (42 U.S.C. 1397dd(a)) are amended by 

19 striking ‘‘$3,150,000,000’’ each place it appears and in20 serting ‘‘$4,150,000,000’’. 

21 SEC. 215. ADDITIONAL CHIP REVISIONS. 

22 (a) LIMITING COST-SHARING TO 2.5 PERCENT FOR

23 FAMILIES WITH INCOME BELOW 150 PERCENT OF POV24 ERTY.—Section 2103(e)(3)(A) of the Social Security Act 

25 (42 U.S.C. 1397cc(e)(3)(A)) is amended— 
62 

•S 1225 IS 

1 (1) by striking ‘‘and’’ at the end of clause (i); 

2 (2) by striking the period at the end of clause 

3 (ii) and inserting ‘‘; and’’; and 

4 (3) by adding at the end the following new 

5 clause: 

6 ‘‘(iii) total annual aggregate cost7 sharing described in clauses (i) and (ii) 

8 with respect to all such targeted low-in9 come children in a family under this title 

10 that exceeds 2.5 percent of such family’s 

11 income for the year involved.’’. 

12 (b) REPORTING OF ENROLLMENT DATA.— 

13 (1) QUARTERLY REPORTS.—Section 2107(b)(1) 

14 of such Act (42 U.S.C. 1397gg(b)(1)) is amended by 

15 adding at the end the following: ‘‘In quarterly re16 ports on enrollment required under this paragraph, 

17 a State shall include information on the age, gender, 

18 race, ethnicity, service delivery system, and family 

19 income of individuals enrolled.’’. 

20 (2) ANNUAL REPORTS.—Section 

21 2108(b)(1)(B)(i) of such Act (42 U.S.C. 

22 1397hh(b)(1)(B)(i)) is amended by inserting ‘‘pri23 mary language of enrollees,’’ after ‘‘family income,’’. 
63 

•S 1225 IS 

1 (c) EMPLOYER COVERAGE WAIVER CHANGES.—Sec2 tion 2105(c)(3) of such Act (42 U.S.C. 1397ee(c)(3)) is 

3 amended— 

4 (1) by redesignating subparagraphs (A) and 

5 (B) as clauses (i) and (ii) and indenting appro6 priately; 

7 (2) by designating the matter beginning with 

8 ‘‘Payment may be made’’ as a subparagraph (A) 

9 with the heading ‘‘IN GENERAL’’ and indenting ap10 propriately; 

11 (3) in subparagraph (A) (as so designated)— 

12 (A) in the matter preceding clause (i) (as 

13 redesignated by paragraph (1)), by striking 

14 ‘‘targeted low-income children’’ and inserting ‘‘a 

15 targeted low-income child, a targeted low-in16 come parent, or a pregnant woman who is 

17 treated as a targeted low-income parent under 

18 section 2111(b)(4)’’; 

19 (B) in clause (i) (as so redesignated), by 

20 striking ‘‘children’’ and inserting ‘‘child, tar21 geted low-income parent, or pregnant woman 

22 treated as such a parent’’; and 

23 (C) in clause (ii) (as so redesignated), by 

24 striking ‘‘children’’ and inserting ‘‘child, parent, 

25 or pregnant women’’; and 
64 

•S 1225 IS 

1 (4) by adding at the end the following new sub2 paragraphs: 

3 ‘‘(B) APPLICATION OF REQUIREMENTS.— 

4 In carrying out subparagraph (A)— 

5 ‘‘(i) the Secretary shall not require a 

6 minimum employer contribution level that 

7 is separate from the requirement of cost8 effectiveness under subparagraph (A)(i), 

9 but a State shall identify a reasonable min10 imum employer contribution level that is 

11 based on data demonstrating that such a 

12 level is representative to the employer13 sponsored insurance market in the State 

14 and shall monitor employer contribution 

15 levels over time to determine whether sub16 stitution is occurring and report the find17 ings in annual reports under section 

18 2108(a); 

19 ‘‘(ii) the State shall establish a wait20 ing period of at least 6 months without 

21 group health coverage, but may establish 

22 reasonable exceptions to such period and 

23 shall not apply such a waiting period to a 

24 child who is provided coverage under a 

25 group health plan under section 1906; 
65 

•S 1225 IS 

1 ‘‘(iii) subject to clause (iv), the State 

2 shall provide satisfactory assurances that 

3 the minimum benefits and cost-sharing 

4 protections established under this title are 

5 provided, either through the coverage 

6 under subparagraph (A) or as a supple7 ment to such coverage; and 

8 ‘‘(iv) coverage under such subpara9 graph shall not be considered to violate 

10 clause (iii) because it does not comply with 

11 requirements relating to reviews of health 

12 service decisions if the enrollee involved is 

13 provided the option of being provided bene14 fits directly under this title. 

15 ‘‘(C) ACCESS TO EXTERNAL REVIEW PROC16 ESS.—In carrying out subparagraph (A), if a 

17 State provides coverage under a group health 

18 plan that does not meet the following external 

19 review requirements, the State must give appli20 cants and enrollees (at initial enrollment and at 

21 each redetermination of eligibility) the option to 

22 obtain health benefits coverage other than 

23 through that group health plan: 

24 ‘‘(i) The enrollee has an opportunity 

25 for external review of a— 
66 

•S 1225 IS 

1 ‘‘(I) delay, denial, reduction, sus2 pension, or termination of health serv3 ices, in whole or in part, including a 

4 determination about the type or level 

5 of services; and 

6 ‘‘(II) failure to approve, furnish, 

7 or provide payment for health services 

8 in a timely manner. 

9 ‘‘(ii) The external review is conducted 

10 by the State or a impartial contractor 

11 other than the contractor responsible for 

12 the matter subject to external review. 

13 ‘‘(iii) The external review decision is 

14 made on a timely basis in accordance with 

15 the medical needs of the patient. If the 

16 medical needs of the patient do not dictate 

17 a shorter time frame, the review must be 

18 completed— 

19 ‘‘(I) within 90 calendar days of 

20 the date of the request for internal or 

21 external review; or 

22 ‘‘(II) within 72 hours if the en23 rollee’s physician or plan determines 

24 that the deadline under subclause (I) 

25 could seriously jeopardize the enroll-
67 

•S 1225 IS 

1 ee’s life or health or ability to attain, 

2 maintain, or regain maximum func3 tion (except that a State may extend 

4 the 72-hour deadline by up to 14 days 

5 if the enrollee requests an extension). 

6 ‘‘(iv) The external review decision 

7 shall be in writing. 

8 ‘‘(v) Applicants and enrollees have an 

9 opportunity— 

10 ‘‘(I) to represent themselves or 

11 have representatives of their choosing 

12 in the review process; 

13 ‘‘(II) timely review their files and 

14 other applicable information relevant 

15 to the review of the decision; and 

16 ‘‘(III) fully participate in the re17 view process, whether the review is 

18 conducted in person or in writing, in19 cluding by presenting supplemental 

20 information during the review proc21 ess.’’. 

22 (d) SENSE OF THE SENATE REGARDING AUTHORITY

23 TO USE SCHIP FUNDS TO PURCHASE FAMILY COV24 ERAGE.—It is the sense of the Senate that section 

25 2105(c)(3) of the Social Security Act (42 U.S.C. 
68 

•S 1225 IS 

1 1397ee(c)(3)) permits States to use funds provided under 

2 the State children’s health insurance program established 

3 under title XXI of that Act (42 U.S.C. 1397aa et seq.) 

4 to help low-income working families and pregnant women 

5 eligible for assistance under that program pay their share 

6 of employer-sponsored health insurance coverage. 

7 (e) EFFECTIVE DATE.—The amendments made by 

8 this section apply as of October 1, 2006, whether or not 

9 regulations implementing such amendments have been 

10 issued. 

11 SEC. 216. LIMITATIONS ON CONFLICTS OF INTEREST. 

12 (a) LIMITATION ON CONFLICTS OF INTEREST IN

13 MARKETING ACTIVITIES.— 

14 (1) TITLE XXI.—Section 2105(c) of the Social 

15 Security Act (42 U.S.C. 300aa–5(c)) is amended by 

16 adding at the end the following: 

17 ‘‘(8) LIMITATION ON EXPENDITURES FOR MAR18 KETING ACTIVITIES.—Amounts expended by a State 

19 for the use of an administrative vendor in marketing 

20 health benefits coverage to low-income children 

21 under this title shall not be considered, for purposes 

22 of subsection (a)(2)(D), to be reasonable costs to ad23 minister the plan unless the following conditions are 

24 met with respect to the vendor: 
69 

•S 1225 IS 

1 ‘‘(A) The vendor is independent of any en2 tity offering the coverage in the same area of 

3 the State in which the vendor is conducting 

4 marketing activities. 

5 ‘‘(B) No person who is an owner, em6 ployee, consultant, or has a contract with the 

7 vendor either has any direct or indirect finan8 cial interest with such an entity or has been ex9 cluded from participation in the program under 

10 this title or title XVIII or XIX or debarred by 

11 any Federal agency, or subject to a civil money 

12 penalty under this Act.’’. 

13 (b) PROHIBITION OF AFFILIATION WITH DEBARRED

14 INDIVIDUALS.— 

15 (1) MEDICAID.—Section 1903(i) of the Social 

16 Security Act (42 U.S.C. 1396b(i))is amended— 

17 (A) by striking the period at the end of 

18 paragraph (20) and inserting ‘‘; or’’; and 

19 (B) by inserting after paragraph (20) the 

20 following: 

21 ‘‘(21) with respect to any amounts expended for 

22 an entity that receives payments under the plan un23 less— 

24 ‘‘(A) no person with an ownership or con25 trol interest (as defined in section 1124(a)(3)) 
70 

•S 1225 IS 

1 in the entity is a person that is debarred, sus2 pended, or otherwise excluded from partici3 pating in procurement or non-procurement ac4 tivities under the Federal Acquisition Regula5 tion; and 

6 ‘‘(B) such entity has not entered into an 

7 employment, consulting, or other agreement for 

8 the provision of items or services that are mate9 rial to such entity’s obligations under the plan 

10 with a person described in subparagraph (A).’’. 

11 (2) TITLE XXI.—Section 2107(e)(1) of the So12 cial Security Act (42 U.S.C. 1397gg(e)(1)) is 

13 amended— 

14 (A) in subparagraph (B), by striking ‘‘and 

15 (17)’’ and inserting ‘‘(17), and (21)’’; and 

16 (B) by adding at the end the following: 

17 ‘‘(E) Section 1902(a)(67) (relating to pro18 hibition of affiliation with debarred individ19 uals).’’. 

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

21 this section shall apply to expenditures made on or after 

22 October 1, 2006, whether or not regulations implementing 

23 such amendments have been issued. 
71 

•S 1225 IS 

1 SEC. 217. TECHNICAL AND CONFORMING AMENDMENTS TO 

2 AUTHORITY TO PAY MEDICAID EXPANSION 

3 COSTS FROM TITLE XXI APPROPRIATION. 

4 (a) AUTHORITY TO PAY MEDICAID EXPANSION

5 COSTS FROM TITLE XXI APPROPRIATION.—Section 

6 2105(a) of the Social Security Act (42 U.S.C. 1397ee(a)) 

7 is amended to read as follows: 

8 ‘‘(a) ALLOWABLE EXPENDITURES.— 

9 ‘‘(1) IN GENERAL.—Subject to the succeeding 

10 provisions of this section, the Secretary shall pay to 

11 each State with a plan approved under this title, 

12 from its allotment under section 2104, an amount 

13 for each quarter equal to the enhanced FMAP of the 

14 following expenditures in the quarter: 

15 ‘‘(A) CHILD HEALTH ASSISTANCE UNDER

16 MEDICAID.—Expenditures for child health as17 sistance under the plan for targeted low-income 

18 children in the form of providing medical assist19 ance for expenditures described in the fourth 

20 sentence of section 1905(b). 

21 ‘‘(B) RESERVED.—[reserved]. 

22 ‘‘(C) CHILD HEALTH ASSISTANCE UNDER

23 THIS TITLE.—Expenditures for child health as24 sistance under the plan for targeted low-income 

25 children in the form of providing health benefits 
72 

•S 1225 IS 

1 coverage that meets the requirements of section 

2 2103. 

3 ‘‘(D) ASSISTANCE AND ADMINISTRATIVE

4 EXPENDITURES SUBJECT TO LIMIT.—Expendi5 tures only to the extent permitted consistent 

6 with subsection (c)— 

7 ‘‘(i) for other child health assistance 

8 for targeted low-income children; 

9 ‘‘(ii) for expenditures for health serv10 ices initiatives under the plan for improv11 ing the health of children (including tar12 geted low-income children and other low13 income children); 

14 ‘‘(iii) for expenditures for outreach ac15 tivities as provided in section 2102(c)(1) 

16 under the plan; and 

17 ‘‘(iv) for other reasonable costs in18 curred by the State to administer the plan. 

19 ‘‘(2) ORDER OF PAYMENTS.—Payments under a 

20 subparagraph of paragraph (1) from a State’s allot21 ment for expenditures described in each such sub22 paragraph shall be made on a quarterly basis in the 

23 order of such subparagraph in such paragraph. 

24 ‘‘(3) NO DUPLICATIVE PAYMENT.—In the case 

25 of expenditures for which payment is made under 
73 

•S 1225 IS 

1 paragraph (1), no payment shall be made under title 

2 XIX.’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) SECTION 1905(u).—Section 1905(u)(1)(B) 

5 of the Social Security Act (42 U.S.C. 

6 1396d(u)(1)(B)) is amended by inserting ‘‘and sec7 tion 2105(a)(1)’’ after ‘‘subsection (b)’’. 

8 (2) SECTION 2105(c).—Section 2105(c)(2)(A) of 

9 the Social Security Act (42 U.S.C. 1397ee(c)(2)(A)) 

10 is amended by striking ‘‘subparagraphs (A), (C), 

11 and (D) of’’. 

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

13 this section shall be effective as if included in the enact14 ment of the Balanced Budget Act of 1997 (Public Law 

15 105–33; 111 Stat. 251). 

16 Subtitle C—Simplified Enrollment 

17 SEC. 221. AUTOMATIC ENROLLMENT OF CHILDREN BORN 

18 TO TITLE XXI PARENTS. 

19 Section 2102(b)(1) of the Social Security Act (42 

20 U.S.C. 1397bb(b)(1)) is amended by adding at the end 

21 the following: 

22 ‘‘(C) AUTOMATIC ELIGIBILITY OF CHIL23 DREN BORN TO A PARENT BEING PROVIDED

24 FAMILYCARE.—Such eligibility standards shall 

25 provide for automatic coverage of a child born 
74 

•S 1225 IS 

1 to an individual who is provided assistance 

2 under this title in the same manner as medical 

3 assistance would be provided under section 

4 1902(e)(4) to a child described in such sec5 tion.’’. 

6 SEC. 222. APPLICATION OF SIMPLIFIED TITLE XXI PROCE7 DURES UNDER THE MEDICAID PROGRAM. 

8 (a) APPLICATION UNDER MEDICAID.— 

9 (1) IN GENERAL.—Section 1902(l) of the Social 

10 Security Act (42 U.S.C. 1396a(l)) is amended— 

11 (A) in paragraph (3), by inserting ‘‘subject 

12 to paragraph (5)’’, after ‘‘Notwithstanding sub13 section (a)(17),’’; and 

14 (B) by adding at the end the following: 

15 ‘‘(5) With respect to determining the eligibility of in16 dividuals under 19 years of age (or such higher age as 

17 the State has elected under paragraph (1)(D)) for medical 

18 assistance under subsection (a)(10)(A) and, separately, 

19 with respect to determining the eligibility of individuals 

20 for medical assistance under subsection 

21 (a)(10)(A)(i)(VIII) or (a)(10)(A)(ii)(XIX), notwith22 standing any other provision of this title, if the State has 

23 established a State child health plan under title XXI— 

24 ‘‘(A) the State may not apply a resource stand25 ard; 
75 

•S 1225 IS 

1 ‘‘(B) the State shall use the same simplified eli2 gibility form (including, if applicable, permitting ap3 plication other than in person) as the State uses 

4 under such State child health plan with respect to 

5 such individuals; 

6 ‘‘(C) the State shall provide for initial eligibility 

7 determinations and redeterminations of eligibility 

8 using verification policies, forms, and frequency that 

9 are no less restrictive than the policies, forms, and 

10 frequency the State uses for such purposes under 

11 such State child health plan with respect to such in12 dividuals; and 

13 ‘‘(D) the State shall not require a face-to-face 

14 interview for purposes of initial eligibility determina15 tions and redeterminations unless the State requires 

16 such an interview for such purposes under such child 

17 health plan with respect to such individuals.’’. 

18 (2) EFFECTIVE DATE.—The amendments made 

19 by paragraph (1) apply to determinations of eligi20 bility made on or after the date that is 1 year after 

21 the date of enactment of this Act, whether or not 

22 regulations implementing such amendments have 

23 been issued. 

24 (b) PRESUMPTIVE ELIGIBILITY.— 
76 

•S 1225 IS 

1 (1) IN GENERAL.—Section 1920A(b)(3)(A)(i) of 

2 the Social Security Act (42 U.S.C. 1396r– 

3 1a(b)(3)(A)(i)) is amended by inserting ‘‘a child care 

4 resource and referral agency,’’ after ‘‘a State or trib5 al child support enforcement agency,’’. 

6 (2) APPLICATION TO PRESUMPTIVE ELIGIBILITY

7 FOR PREGNANT WOMEN UNDER MEDICAID.—Section 

8 1920(b) of the Social Security Act (42 U.S.C. 

9 1396r–1(b)) is amended by adding at the end after 

10 and below paragraph (2) the following flush sen11 tence: 

12 ‘‘The term ‘qualified provider’ includes a qualified entity 

13 as defined in section 1920A(b)(3).’’. 

14 (3) APPLICATION UNDER TITLE XXI.— 

15 (A) IN GENERAL.—Section 2107(e)(1)(D) 

16 of the Social Security Act (42 U.S.C. 

17 1397gg(e)(1)) is amended to read as follows: 

18 ‘‘(D) Sections 1920 and 1920A (relating to 

19 presumptive eligibility).’’. 

20 (B) CONFORMING ELIMINATION OF RE21 SOURCE TEST.—Section 2102(b)(1)(A) of such 

22 Act (42 U.S.C. 1397bb(b)(1)(A)) is amended— 

23 (i) by striking ‘‘ and resources (in24 cluding any standards relating to 
77 

•S 1225 IS 

1 spenddowns and disposition of resources)’’; 

2 and 

3 (ii) by adding at the end the fol4 lowing: ‘‘Effective 1 year after the date of 

5 enactment of the Access to Affordable 

6 Health Care Act, such standards may not 

7 include the application of a resource stand8 ard or test.’’. 

9 (c) AUTOMATIC REASSESSMENT OF ELIGIBILITY FOR

10 TITLE XXI AND MEDICAID BENEFITS FOR CHILDREN

11 LOSING MEDICAID OR TITLE XXI ELIGIBILITY.— 

12 (1) LOSS OF MEDICAID ELIGIBILITY.—Section 

13 1902(a) of the Social Security Act (42 U.S.C. 

14 1396a(a)) is amended— 

15 (A) by striking ‘‘and’’ at the end of para16 graph (66): 

17 (B) by striking the period at the end of 

18 paragraph (67) and inserting ‘‘; and’’, and 

19 (B) by inserting after paragraph (67) the 

20 following: 

21 ‘‘(68) provide, in the case of a State with a 

22 State child health plan under title XXI, that before 

23 medical assistance to a child (or a parent of a child) 

24 is discontinued under this title, a determination of 

25 whether the child (or parent) is eligible for benefits 
78 

•S 1225 IS 

1 under title XXI shall be made and, if determined to 

2 be so eligible, the child (or parent) shall be auto3 matically enrolled in the program under such title 

4 without the need for a new application.’’. 

5 (2) LOSS OF TITLE XXI ELIGIBILITY AND CO6 ORDINATION WITH MEDICAID.—Section 2102(b) (42 

7 U.S.C. 1397bb(b)) is amended— 

8 (A) in paragraph (3), by redesignating 

9 subparagraphs (D) and (E) as subparagraphs 

10 (E) and (F), respectively, and by inserting after 

11 subparagraph (C) the following: 

12 ‘‘(D) that before health assistance to a 

13 child (or a parent of a child) is discontinued 

14 under this title, a determination of whether the 

15 child (or parent) is eligible for benefits under 

16 title XIX is made and, if determined to be so 

17 eligible, the child (or parent) is automatically 

18 enrolled in the program under such title with19 out the need for a new application;’’; 

20 (B) by redesignating paragraph (4) as 

21 paragraph (5); and 

22 (C) by inserting after paragraph (3) the 

23 following new paragraph: 

24 ‘‘(4) COORDINATION WITH MEDICAID.—The 

25 State shall coordinate the screening and enrollment 
79 

•S 1225 IS 

1 of individuals under this title and under title XIX 

2 consistent with the following: 

3 ‘‘(A) Information that is collected under 

4 this title or under title XIX which is needed to 

5 make an eligibility determination under the 

6 other title shall be transmitted to the appro7 priate administering entity under such other 

8 title in a timely manner so that coverage is not 

9 delayed and families do not have to submit the 

10 same information twice. Families shall be pro11 vided the information they need to complete the 

12 application process for coverage under both ti13 tles and be given appropriate notice of any de14 terminations made on their applications for 

15 such coverage. 

16 ‘‘(B) If a State does not use a joint appli17 cation under this title and such title, the State 

18 shall— 

19 ‘‘(i) promptly inform a child’s parent 

20 or caretaker in writing and, if appropriate, 

21 orally, that a child has been found likely to 

22 be eligible under title XIX; 

23 ‘‘(ii) provide the family with an appli24 cation for medical assistance under such 

25 title and offer information about what (if 
80 

•S 1225 IS 

1 any) further information, documentation, 

2 or other steps are needed to complete such 

3 application process; 

4 ‘‘(iii) offer assistance in completing 

5 such application process; and 

6 ‘‘(iv) promptly transmit the separate 

7 application under this title or the informa8 tion obtained through such application, 

9 and all other relevant information and doc10 umentation, including the results of the 

11 screening process, to the State agency 

12 under title XIX for a final determination 

13 on eligibility under such title. 

14 ‘‘(C) Applicants are notified in writing 

15 of— 

16 ‘‘(i) benefits (including restrictions on 

17 cost-sharing) under title XIX; and 

18 ‘‘(ii) eligibility rules that prohibit chil19 dren who have been screened eligible for 

20 medical assistance under such title from 

21 being enrolled under this title, other than 

22 provisional temporary enrollment while a 

23 final eligibility determination is being made 

24 under such title. 
81 

•S 1225 IS 

1 ‘‘(D) If the agency administering this title 

2 is different from the agency administering a 

3 State plan under title XIX, such agencies shall 

4 coordinate the screening and enrollment of ap5 plicants for such coverage under both titles. 

6 ‘‘(E) The coordination procedures estab7 lished between the program under this title and 

8 under title XIX shall apply not only to the ini9 tial eligibility determination of a family but also 

10 to any renewals or redeterminations of such eli11 gibility.’’. 

12 (3) EFFECTIVE DATE.—The amendments made 

13 by paragraphs (1) and (2) apply to individuals who 

14 lose eligibility under the medicaid program under 

15 title XIX, or under a State child health insurance 

16 plan under title XXI, respectively, of the Social Se17 curity Act on or after October 1, 2006 (or, if later, 

18 60 days after the date of enactment of this Act), 

19 whether or not regulations implementing such 

20 amendments have been issued. 

21 (d) PROVISION OF MEDICAID AND CHIP APPLICA22 TIONS AND INFORMATION UNDER THE SCHOOL LUNCH

23 PROGRAM.—Section 9(b)(2)(B)(iii) of the Richard B. 

24 Russell National School Lunch Act (42 U.S.C. 
82 

•S 1225 IS 

1 1758(b)(2)(B)(iii)) is amended by adding at the end the 

2 following: 

3 ‘‘(III) NOTICE OF AVAILABLITY

4 OF HEALTH BENEFITS UNDER MED5 ICAID AND CHIP.—Descriptive mate6 rial distributed in accordance with 

7 clause (i) shall also contain informa8 tion (provided on a form separate 

9 from the application form for free and 

10 reduced price lunches) on the avail11 ability of medical assistance under 

12 title XIX of the Social Security Act 

13 (42 U.S.C. 1396 et seq.) and of child 

14 health and FamilyCare assistance 

15 under title XXI of such Act, including 

16 information on how to obtain an ap17 plication for assistance under such 

18 programs.’’. 

19 (e) 12-MONTHS CONTINUOUS ELIGIBILITY.— 

20 (1) MEDICAID.—Section 1902(e)(12) of the So21 cial Security Act (42 U.S.C. 1396a(e)(12)) is 

22 amended— 

23 (A) by striking ‘‘At the option of the State, 

24 the plan may’’ and inserting ‘‘The plan shall’’; 
83 

•S 1225 IS 

1 (B) by striking ‘‘an age specified by the 

2 State (not to exceed 19 years of age)’’ and in3 serting ‘‘19 years of age (or such higher age as 

4 the State has elected under subsection 

5 (l)(1)(D)) or, at the option of the State, who is 

6 eligible for medical assistance as the parent of 

7 such a child’’; and 

8 (C) in subparagraph (A), by striking ‘‘a 

9 period (not to exceed 12 months)’’ and insert10 ing ‘‘the 12-month period beginning on the 

11 date’’. 

12 (2) TITLE XXI.—Section 2102(b)(2) of such 

13 Act (42 U.S.C. 1397bb(b)(2)) is amended by adding 

14 at the end the following: ‘‘Such methods shall pro15 vide 12-months continuous eligibility for children 

16 under this title in the same manner that section 

17 1902(e)(12) provides 12-months continuous eligi18 bility for children described in such section under 

19 title XIX. If a State has elected to apply section 

20 1902(e)(12) to parents, such methods may provide 

21 12-months continuous eligibility for parents under 

22 this title in the same manner that such section pro23 vides 12-months continuous eligibility for parents 

24 described in such section under title XIX.’’. 

25 (3) EFFECTIVE DATE.— 
84 

•S 1225 IS 

1 (A) IN GENERAL.—The amendments made 

2 by this subsection take effect on October 1, 

3 2006 (or, if later, 60 days after the date of en4 actment of this Act), whether or not regulations 

5 implementing such amendments have been 

6 issued. 

7 SEC. 223. ELIMINATION OF 100 HOUR RULE AND OTHER 

8 AFDC-RELATED ELIGIBILITY RESTRICTIONS. 

9 (a) IN GENERAL.—Section 1931(b)(1)(A)(ii) of the 

10 Social Security Act (42 U.S.C. 1396u–1(b)(1)(A)(ii)) is 

11 amended by inserting ‘‘other than the requirement that 

12 the child be deprived of parental support or care by reason 

13 of the death, continued absence from the home, incapacity, 

14 or unemployment of a parent,’’ after ‘‘section 407(a),’’. 

15 (b) CONFORMING AMENDMENT.—Section 1905(a) of 

16 the Social Security Act (42 U.S.C. 1396d(a)) is amended, 

17 in the matter before paragraph (1), in clause (ii), by strik18 ing ‘‘if such child is (or would, if needy, be) a dependent 

19 child under part A of title IV’’. 

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

21 this section apply to eligibility determinations made on or 

22 after October 1, 2006, whether or not regulations imple23 menting such amendments have been issued. 
85 

•S 1225 IS 

1 Subtitle D—State Option to Extend 

2 Medicaid Coverage to Certain 

3 Low-Income Individuals 

4 SEC. 231. STATE OPTION TO EXTEND MEDICAID COVERAGE 

5 TO CERTAIN LOW-INCOME INDIVIDUALS. 

6 (a) STATE OPTION.—Section 1902(a)(10)(A)(ii) of 

7 the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)), 

8 as amended by section 212(a)(1)(A), is amended— 

9 (1) by striking ‘‘or’’ at the end of subclause 

10 (XVIII); 

11 (2) by adding ‘‘or’’ at the end of subclause 

12 (XIX); and 

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

14 ‘‘(XX) who are individuals who 

15 are not otherwise eligible for medical 

16 assistance under this subparagraph, 

17 or under a waiver approved under sec18 tion 1115, or otherwise, as of the date 

19 of enactment of this subclause and 

20 whose family income does not exceed 

21 125 percent of the income official pov22 erty line (as defined by the Office of 

23 Management and Budget and revised 

24 annually in accordance with section 

25 673(2) of the Omnibus Budget Rec-
86 

•S 1225 IS 

1 onciliation Act of 1981) applicable to 

2 a family of the size involved;’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) MEDICAL ASSISTANCE ELIGIBILITY CAT5 EGORIES.—Section 1905(a) of such Act (42 U.S.C. 

6 1396d(a)), as amended by section 212(e)(1), is 

7 amended in the matter preceding paragraph (1)— 

8 (i) by striking ‘‘or’’ at the end of 

9 clause (xiii); 

10 (ii) by adding ‘‘or’’ at the end of 

11 clause (xiv); and 

12 (iii) by inserting after clause (xiv) the 

13 following: 

14 ‘‘(xv) who are individuals described in section 

15 1902(a)(10)(A)(ii)(XX),’’. 

16 (2) EXEMPTION FROM UPPER INCOME LIMITA17 TION.—Section 1903(f)(4) of such Act (42 U.S.C. 

18 1396b(f)(4)), as amended by section 212(e)(2)(B), is 

19 amended by inserting ‘‘1902(a)(10)(A)(ii)(XX),’’ 

20 after ‘‘1902(a)(10)(A)(ii)(XIX),’’. 

21 (c) EFFECTIVE DATES.—The amendments made by 

22 this subsection take effect on October 1, 2006. 
87 

•S 1225 IS 

1 Subtitle E—Improving Welfare-to2 Work Transition Under Medicaid 

3 SEC. 241. IMPROVING WELFARE-TO-WORK TRANSITION 

4 UNDER MEDICAID. 

5 (a) MAKING PROVISION PERMANENT.— 

6 (1) IN GENERAL.—Subsection (f) of section 

7 1925 of the Social Security Act (42 U.S.C. 1396r– 

8 6) is repealed. 

9 (2) CONFORMING AMENDMENT.—Section 

10 1902(e)(1) of the Social Security Act (42 U.S.C. 

11 1396a(e)(1)) is repealed. 

12 (b) STATE OPTION OF INITIAL 12-MONTH ELIGI13 BILITY.—Section 1925 of the Social Security Act (42 

14 U.S.C. 1396r–6) is amended— 

15 (1) in subsection (a), by adding at the end the 

16 following: 

17 ‘‘(5) OPTION OF 12-MONTH INITIAL ELIGIBILITY

18 PERIOD.—A State may elect to treat any reference 

19 in this subsection to a 6-month period (or 6 months) 

20 as a reference to a 12-month period (or 12 months). 

21 In the case of such an election, subsection (b) shall 

22 not apply.’’; and 

23 (2) in subsection (b)(1), by inserting ‘‘and sub24 section (a)(5)’’ after ‘‘paragraph (3)’’. 

25 (c) SIMPLIFICATION.— 
88 

•S 1225 IS 

1 (1) REMOVAL OF ADMINISTRATIVE REPORTING

2 REQUIREMENTS FOR ADDITIONAL 6-MONTH EXTEN3 SION.—Section 1925(b)(2) of the Social Security Act 

4 (42 U.S.C. 1396r–6(b)(2)) is amended— 

5 (A) by striking subparagraph (B); 

6 (B) in subparagraph (A)(i)— 

7 (i) in the heading, by striking ‘‘AND

8 REQUIREMENTS’’; 

9 (ii) by striking ‘‘(I)’’ and all that fol10 lows through ‘‘(II)’’ and inserting ‘‘(i)’’; 

11 (iii) by striking ‘‘, and (III)’’ and in12 serting ‘‘and (ii)’’; and 

13 (iv) by redesignating such subpara14 graph as subparagraph (A) (with appro15 priate indentation); and 

16 (C) in subparagraph (A)(ii)— 

17 (i) in the heading, by striking ‘‘RE18 PORTING REQUIREMENTS AND’’; 

19 (ii) by striking ‘‘notify the family of 

20 the reporting requirement under subpara21 graph (B)(ii) and’’ and inserting ‘‘provide 

22 the family with notification of’’; and 

23 (iii) by redesignating such subpara24 graph as subparagraph (B) (with appro25 priate indentation). 
89 

•S 1225 IS 

1 (2) REMOVAL OF REQUIREMENT FOR PREVIOUS

2 RECEIPT OF MEDICAL ASSISTANCE.—Section 

3 1925(a)(1) of the Social Security Act (42 U.S.C. 

4 1396r–6(a)(1)) is amended— 

5 (A) by inserting ‘‘but subject to subpara6 graph (B)’’ after ‘‘any other provision of this 

7 title’’; 

8 (B) by redesignating the matter after ‘‘RE9 QUIREMENT.—’’ as a subparagraph (A) with 

10 the heading ‘‘IN GENERAL.—’’ and with the 

11 same indentation as subparagraph (B) (as 

12 added by subparagraph (C)); and 

13 (C) by adding at the end the following: 

14 ‘‘(B) STATE OPTION TO WAIVE REQUIRE15 MENT FOR 3 MONTHS PREVIOUS RECEIPT OF

16 MEDICAL ASSISTANCE.—A State may, at its op17 tion, elect also to apply subparagraph (A) in 

18 the case of a family that had applied for and 

19 was eligible for such aid for fewer than 3 

20 months during the 6 immediately preceding 

21 months described in such subparagraph.’’. 

22 (3) PERMITTING INCREASE OR WAIVER OF 185

23 PERCENT OF POVERTY EARNING LIMIT.—Section 

24 1925(b)(3)(A)(iii)(III) of the Social Security Act (42 

25 U.S.C. 1396r–6(b)(3)(A)(iii)(III)) is amended— 
90 

•S 1225 IS 

1 (A) by inserting ‘‘(at its option)’’ after 

2 ‘‘the State’’; and 

3 (B) by inserting ‘‘(or such higher percent 

4 as the State may specify)’’ after ‘‘185 percent’’. 

5 (4) EXEMPTION FOR STATES COVERING NEEDY

6 FAMILIES UP TO 185 PERCENT OF POVERTY.—Sec7 tion 1925 of the Social Security Act (42 U.S.C. 

8 1396r–6), as amended by subsection (a), is amend9 ed— 

10 (A) in each of subsections (a)(1) and 

11 (b)(1), by inserting ‘‘but subject to subsection 

12 (f),’’ after ‘‘Notwithstanding any other provi13 sion of this title,’’; and 

14 (B) by adding at the end the following: 

15 ‘‘(f) EXEMPTION FOR STATE COVERING NEEDY

16 FAMILIES UP TO 185 PERCENT OF POVERTY.— 

17 ‘‘(1) IN GENERAL.—At State option, the provi18 sions of this section shall not apply to a State that 

19 uses the authority under section 

20 1902(a)(10)(A)(ii)(XIX), section 1931(b)(2)(C), or 

21 otherwise to make medical assistance available under 

22 the State plan under this title to eligibleindividuals 

23 described in section 1902(k)(1), or all individuals de24 scribed in section 1931(b)(1), and who are in fami25 lies with gross incomes (determined without regard 
91 

•S 1225 IS 

1 to work-related child care expenses of such individ2 uals) at or below 185 percent of the income official 

3 poverty line (as defined by the Office of Manage4 ment and Budget, and revised annually in accord5 ance with section 673(2) of the Omnibus Budget 

6 Reconciliation Act of 1981) applicable to a family of 

7 the size involved. 

8 ‘‘(2) APPLICATION TO OTHER PROVISIONS OF

9 THIS TITLE.—The State plan of a State described in 

10 paragraph (1) shall be deemed to meet the require11 ments of section 1902(a)(10)(A)(i)(I).’’. 

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

13 this section take effect on October 1, 2006, whether or 

14 not regulations implementing such amendments have been 

15 issued. 

16 Subtitle F—Grants to Promote In17 novative Outreach and Enroll18 ment Under Medicaid and 

19 SCHIP 

20 SEC. 251. GRANTS TO PROMOTE INNOVATIVE OUTREACH 

21 AND ENROLLMENT UNDER MEDICAID AND 

22 SCHIP. 

23 (a) GRANTS FOR EXPANDED OUTREACH ACTIVI24 TIES.—Title XXI of the Social Security Act (42 U.S.C. 
92 

•S 1225 IS 

1 1397aa et seq.), as amended by section 212(a)(2), is 

2 amended by adding at the end the following: 

3 ‘‘SEC. 2112. EXPANDED OUTREACH ACTIVITIES. 

4 ‘‘(a) IN GENERAL.—The Secretary shall award 

5 grants to eligible entities to— 

6 ‘‘(1) conduct innovative outreach and enroll7 ment efforts that are designed to increase the enroll8 ment and participation of eligible children under this 

9 title and title XIX; and 

10 ‘‘(2) promote understanding of the importance 

11 of health insurance coverage for prenatal care and 

12 children. 

13 ‘‘(b) PRIORITY FOR AWARD OF GRANTS.—In making 

14 grants under subsection (a), the Secretary shall give pri15 ority to— 

16 ‘‘(1) eligible entities that propose to target geo17 graphic areas with high rates of— 

18 ‘‘(A) eligible but unenrolled children, in19 cluding such children who reside in rural areas; 

20 or 

21 ‘‘(B) racial and ethnic minorities and 

22 health disparity populations, including those 

23 proposals that address cultural and linguistic 

24 barriers to enrollment; and 
93 

•S 1225 IS 

1 ‘‘(2) eligible entities that plan to engage in out2 reach efforts with respect to individuals described in 

3 paragraph (1) and that are— 

4 ‘‘(A) Federal health safety net organiza5 tions; or 

6 ‘‘(B) faith-based organizations or con7 sortia. 

8 ‘‘(c) APPLICATION.—An eligible entity that desires to 

9 receive a grant under this section shall submit an applica10 tion to the Secretary in such form and manner, and con11 taining such information, as the Secretary may decide. 

12 Such application shall include— 

13 ‘‘(1) quality and outcomes performance meas14 ures to evaluate the effectiveness of activities funded 

15 by a grant awarded under this section to ensure that 

16 the activities are meeting their goals; and 

17 ‘‘(2) an assurance that the entity shall— 

18 ‘‘(A) conduct an assessment of the effec19 tiveness of such activities against such perform20 ance measures; and 

21 ‘‘(B) collect and report enrollment data 

22 and other information determined as a result of 

23 conducting such assessments to the Secretary, 

24 in such form and manner as the Secretary shall 

25 require. 
94 

•S 1225 IS 

1 ‘‘(d) DISSEMINATION OF ENROLLMENT DATA AND

2 INFORMATION DETERMINED FROM EFFECTIVENESS AS3 SESSMENTS; ANNUAL REPORT.—The Secretary shall— 

4 ‘‘(1) disseminate to eligible entities and make 

5 publicly available the enrollment data and informa6 tion reported in accordance with subsection 

7 (c)(2)(B); and 

8 ‘‘(2) submit an annual report to Congress on 

9 the outreach activities funded by grants awarded 

10 under this section. 

11 ‘‘(e) DEFINITIONS.—In this section: 

12 ‘‘(1) ELIGIBLE ENTITY.—The term ‘eligible en13 tity’ means any of the following: 

14 ‘‘(A) A State. 

15 ‘‘(B) A Federal health safety net organiza16 tion. 

17 ‘‘(C) A national, local, or community-based 

18 public or nonprofit private organization. 

19 ‘‘(D) A faith-based organization or con20 sortia, to the extent that a grant awarded to 

21 such an entity is consistent with the require22 ments of section 1955 of the Public Health 

23 Service Act (42 U.S.C. 300x–65) relating to a 

24 grant award to non-governmental entities. 

25 ‘‘(E) An elementary or secondary school. 
95 

•S 1225 IS 

1 ‘‘(2) FEDERAL HEALTH SAFETY NET ORGANI2 ZATION.—The term ‘Federal health safety net orga3 nization’ means— 

4 ‘‘(A) an Indian tribe, tribal organization, 

5 or an urban Indian organization receiving funds 

6 under title V of the Indian Health Care Im7 provement Act (25 U.S.C. 1651 et seq.); 

8 ‘‘(B) a federally-qualified health center (as 

9 defined in section 1905(l)(2)(B)); 

10 ‘‘(C) a hospital defined as a dispropor11 tionate share hospital for purposes of section 

12 1923; 

13 ‘‘(D) a covered entity described in section 

14 340B(a)(4) of the Public Health Service Act 

15 (42 U.S.C. 256b(a)(4)); and 

16 ‘‘(E) any other entity or a consortium that 

17 serves children under a federally-funded pro18 gram, including the special supplemental nutri19 tion program for women, infants, and children 

20 (WIC) established under section 17 of the Child 

21 Nutrition Act of 1966 (42 U.S.C. 1786), the 

22 head start and early head start programs under 

23 the Head Start Act (42 U.S.C. 9801 et seq.), 

24 the school lunch program established under the 
96 

•S 1225 IS 

1 Richard B. Russell National School Lunch Act, 

2 and an elementary or secondary school. 

3 ‘‘(3) INDIANS; INDIAN TRIBE; TRIBAL ORGANI4 ZATION; URBAN INDIAN ORGANIZATION; SERVICE

5 UNIT.—The terms ‘Indian’, ‘Indian tribe’, ‘tribal or6 ganization’, ‘urban Indian organization’, and ‘Serv7 ice Unit’ have the meanings given such terms in sec8 tion 4 of the Indian Health Care Improvement Act 

9 (25 U.S.C. 1603). 

10 ‘‘(f) APPROPRIATION.—There is appropriated, out of 

11 any money in the Treasury not otherwise appropriated, 

12 $50,000,000 for each of fiscal years 2006 and 2007 for 

13 the purpose of awarding grants under this section. 

14 Amounts appropriated and paid under the authority of 

15 this section shall be in addition to amounts appropriated 

16 under section 2104 and paid to States in accordance with 

17 section 2105.’’. 

18 (b) EXTENDING USE OF OUTSTATIONED WORKERS

19 TO ACCEPT TITLE XXI APPLICATIONS.—Section 

20 1902(a)(55) of the Social Security Act (42 U.S.C. 

21 1396a(a)(55)) is amended by inserting ‘‘, and applications 

22 for child health assistance under title XXI’’ after 

23 ‘‘(a)(10)(A)(ii)(IX)’’. 
97 

•S 1225 IS 

1 SEC. 252. STATE OPTION TO PROVIDE FOR SIMPLIFIED DE2 TERMINATIONS OF A CHILD’S FINANCIAL ELI3 GIBILITY FOR MEDICAL ASSISTANCE UNDER 

4 MEDICAID OR CHILD HEALTH ASSISTANCE 

5 UNDER SCHIP. 

6 (a) MEDICAID.—Section 1902(e) of the Social Secu7 rity Act (42 U.S.C. 1396a(e)) is amended by adding at 

8 the end the following: 

9 ‘‘(13)(A) At the option of the State, the plan 

10 may provide that financial eligibility requirements 

11 for medical assistance are met for an individual who 

12 is under an age specified by the State (except as 

13 provided in subparagraph (C), not to exceed 21 

14 years of age) by using a determination made within 

15 a reasonable period (as determined by the State) be16 fore its use for this purpose, of the individual’s fam17 ily or household income, or if applicable for purposes 

18 of determining eligibility under this title or title 

19 XXI, assets or resources, by a Federal or State 

20 agency, or a public or private entity making such de21 termination on behalf of such agency, specified by 

22 the plan, including (but not limited to) an agency 

23 administering the State program funded under part 

24 A of title IV, the Food Stamp Act of 1977, the 

25 Richard B. Russell National School Lunch Act, or 

26 the Child Nutrition Act of 1966, notwithstanding 
98 

•S 1225 IS 

1 any differences in budget unit, disregard, deeming, 

2 or other methodology, but only if— 

3 ‘‘(i) the agency has fiscal liabilities or re4 sponsibilities affected or potentially affected by 

5 such determination; and 

6 ‘‘(ii) any information furnished by the 

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 ‘‘(B) Nothing in subparagraph (A) shall be con12 strued— 

13 ‘‘(i) to authorize the denial of medical as14 sistance under this title or of child health as15 sistance under title XXI to an individual who, 

16 without the application of this paragraph, would 

17 qualify for such assistance; 

18 ‘‘(ii) to relieve a State of the obligation 

19 under subsection (a)(8) to furnish medical as20 sistance with reasonable promptness after the 

21 submission of an initial application that is eval22 uated or for which evaluation is requested pur23 suant to this paragraph; or 

24 ‘‘(iii) to relieve a State of the obligation to 

25 determine eligibility for medical assistance 
99 

•S 1225 IS 

1 under this title or for child health assistance 

2 under title XXI on a basis other than family or 

3 household income (or, if applicable, assets or re4 sources) if an individual is determined ineligible 

5 for such assistance on the basis of information 

6 furnished pursuant to this paragraph. 

7 ‘‘(C) At the option of a State, the financial eli8 gibility process described in subparagraph (A) may 

9 apply to an individual who is older than age 21 if 

10 the individual’s eligibility for medical assistance 

11 under this title is based on pregnancy or if the indi12 vidual is a parent, guardian, or other caretaker rel13 ative of an individual found eligible under subpara14 graph (A).’’. 

15 (b) SCHIP.—Section 2107(e)(1) of the Social Secu16 rity Act (42 U.S.C. 1397gg(e)(1)) is amended by adding 

17 at the end the following: 

18 ‘‘(E) Section 1902(e)(13) (relating to the 

19 State option to base an individual’s eligibility 

20 for assistance on financial determinations made 

21 by a program providing nutrition or other pub22 lic assistance (except that the State option 

23 under subparagraph (C) of such section shall 

24 apply under this title only if an individual is 

25 pregnant)).’’. 
100 

•S 1225 IS 

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

2 this section take effect on October 1, 2005. 

3 Subtitle G—Demonstration Pro4 grams to Improve Medicaid and 

5 SCHIP Outreach to Homeless 

6 Individuals and Families 

7 SEC. 261. DEMONSTRATION PROGRAMS TO IMPROVE MED8 ICAID AND SCHIP OUTREACH TO HOMELESS 

9 INDIVIDUALS AND FAMILIES. 

10 (a) AUTHORITY.—The Secretary of Health and 

11 Human Services may award demonstration grants to not 

12 more than 7 States (or other qualified entities) to conduct 

13 innovative programs that are designed to improve out14 reach to homeless individuals and families under the pro15 grams described in subsection (b) with respect to enroll16 ment of such individuals and families under such pro17 grams and the provision of services (and coordinating the 

18 provision of such services) under such programs. 

19 (b) PROGRAMS FOR HOMELESS DESCRIBED.—The 

20 programs described in this subsection are as follows: 

21 (1) MEDICAID.—The program under title XIX 

22 of the Social Security Act (42 U.S.C. 1396 et seq.). 

23 (2) CHIP.—The program under title XXI of 

24 the Social Security Act (42 U.S.C. 1397aa et seq.). 
101 

•S 1225 IS 

1 (3) TANF.—The program under part of A of 

2 title IV of the Social Security Act (42 U.S.C. 601 

3 et seq.). 

4 (4) SAMHSA BLOCK GRANTS.—The program 

5 of grants under part B of title XIX of the Public 

6 Health Service Act (42 U.S.C. 300x–1 et seq.). 

7 (5) FOOD STAMP PROGRAM.—The program 

8 under the Food Stamp Act of 1977 (7 U.S.C. 2011 

9 et seq.). 

10 (6) WORKFORCE INVESTMENT ACT.—The pro11 gram under the Workforce Investment Act of 1999 

12 (29 U.S.C. 2801 et seq.). 

13 (7) WELFARE-TO-WORK.—The welfare-to-work 

14 program under section 403(a)(5) of the Social Secu15 rity Act (42 U.S.C. 603(a)(5)). 

16 (8) OTHER PROGRAMS.—Other public and pri17 vate benefit programs that serve low-income individ18 uals. 

19 (c) APPROPRIATIONS.—For the purposes of carrying 

20 out this section, there is appropriated for fiscal year 2006, 

21 out of any funds in the Treasury not otherwise appro22 priated, $10,000,000, to remain available until expended. 
102 

•S 1225 IS 

1 TITLE III—STRENGTHENING THE 

2 HEALTH CARE SAFETY NET 

3 SEC. 301. INCREASE IN FUNDING FOR THE CONSOLIDATED 

4 HEALTH CENTERS PROGRAM. 

5 It is the sense of the Senate that the amounts appro6 priated for consolidated health centers under section 330 

7 of the Public Health Service Act (42 U.S.C. 254b) should 

8 be doubled over the 5-fiscal year period beginning with fis9 cal year 2006. 

10 TITLE IV—EXPANSION OF AC11 CESS TO HEALTH CARE IN 

12 RURAL AND UNDERSERVED 

13 AREAS 

14 SEC. 401. EXPANSION OF FUNDING. 

15 It is the sense of the Senate that the amounts appro16 priated for National Health Service Corps under subpart 

17 II of part D of title III of the Public Health Service Act 

18 (42 U.S.C. 254d et seq.) should be doubled over the 5- 

19 fiscal year period beginning with fiscal year 2006 to assist 

20 in provide support for physicians, dentists, and other 

21 health care clinicians who serve in rural and inner city 

22 areas. 
103 

•S 1225 IS 

1 SEC. 402. LOAN REPAYMENT AND SCHOLARSHIP PRO2 GRAMS. 

3 Section 338C of the Public Health Service Act (42 

4 U.S.C. 254m) is amended by adding at the end the fol5 lowing: 

6 ‘‘(e) Notwithstanding any other provision of this title, 

7 periods of obligated service may be served and fulfilled on 

8 a part time basis if— 

9 ‘‘(1) such part time service is agreed to by both 

10 the placement site or sites and the recipient of the 

11 scholarship or loan repayment; and 

12 ‘‘(2) the recipient’s total obligation is fulfilled.’’. 

13 TITLE V—EXPANDED ACCESS TO 

14 AFFORDABLE LONG-TERM CARE 

15 SEC. 501. TREATMENT OF PREMIUMS ON QUALIFIED LONG16 TERM CARE INSURANCE CONTRACTS. 

17 (a) IN GENERAL.—Part VII of subchapter B of chap18 ter 1 of the Internal Revenue Code of 1986 (relating to 

19 additional itemized deductions) is amended by redesig20 nating section 224 as section 225 and by inserting after 

21 section 223 the following new section: 

22 ‘‘SEC. 224. PREMIUMS ON QUALIFIED LONG-TERM CARE IN23 SURANCE CONTRACTS. 

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

25 there shall be allowed as a deduction an amount equal to 

26 the applicable percentage of the amount of eligible long- 
104 

•S 1225 IS 

1 term care premiums (as defined in section 213(d)(10)) 

2 paid during the taxable year for coverage for the taxpayer, 

3 his spouse, and dependents under a qualified long-term 

4 care insurance contract (as defined in section 7702B(b)). 

5 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

6 subsection (a)— 

7 ‘‘(1) IN GENERAL.—Except as otherwise pro8 vided in this subsection, the applicable percentage 

9 shall be determined in accordance with the following 

10 table based on the number of years of continuous 

11 coverage (as of the close of the taxable year) of the 

12 individual under any qualified long-term care insur13 ance contracts (as defined in section 7702B(b)): 

‘‘If the number of years of The applicable long-term 

continuous coverage is— care percentage is—

Less than 1 .................................................................. 60

At least 1 but less than 2 ............................................. 70

At least 2 but less than 3 ............................................. 80

At least 3 but less than 4 ............................................. 90

At least 4 ...................................................................... 100. 

14 ‘‘(2) SPECIAL RULES FOR INDIVIDUALS WHO

15 HAVE ATTAINED AGE 55.—In the case of an indi16 vidual who has attained age 55 as of the close of the 

17 taxable year, the following table shall be substituted 

18 for the table in paragraph (1). 

‘‘If the number of years of The applicable long-term 

continuous coverage is— care percentage is—

Less than 1 .................................................................. 70

At least 1 but less than 2 ............................................. 85

At least 2 ...................................................................... 100. 
105 

•S 1225 IS 

1 ‘‘(3) ONLY COVERAGE AFTER 2002 TAKEN INTO

2 ACCOUNT.—Only coverage for periods after Decem3 ber 31, 2004, shall be taken into account under this 

4 subsection. 

5 ‘‘(4) CONTINUOUS COVERAGE.—An individual 

6 shall not fail to be treated as having continuous cov7 erage if the aggregate breaks in coverage during any 

8 1-year period are less than 60 days. 

9 ‘‘(c) COORDINATION WITH OTHER DEDUCTIONS.— 

10 Any amount paid by a taxpayer for any qualified long11 term care insurance contract to which subsection (a) ap12 plies shall not be taken into account in computing the 

13 amount allowable to the taxpayer as a deduction under 

14 section 162(l) or 213(a).’’. 

15 (b) LONG-TERM CARE INSURANCE PERMITTED TO

16 BE OFFERED UNDER CAFETERIA PLANS AND FLEXIBLE

17 SPENDING ARRANGEMENTS.— 

18 (1) CAFETERIA PLANS.—Section 125(f) of the 

19 Internal Revenue Code of 1986 (defining qualified 

20 benefits) is amended by inserting before the period 

21 at the end ‘‘; except that such term shall include the 

22 payment of premiums for any qualified long-term 

23 care insurance contract (as defined in section 

24 7702B) to the extent the amount of such payment 

25 does not exceed the eligible long-term care premiums 
106 

•S 1225 IS 

1 (as defined in section 213(d)(10)) for such con2 tract’’. 

3 (2) FLEXIBLE SPENDING ARRANGEMENTS.— 

4 Section 106 of such Code (relating to contributions 

5 by an employer to accident and health plans) is 

6 amended by striking subsection (c). 

7 (c) CONFORMING AMENDMENTS.— 

8 (1) Section 62(a) of the Internal Revenue Code 

9 of 1986 is amended by inserting after paragraph 

10 (20) the following new item: 

11 ‘‘(21) PREMIUMS ON QUALIFIED LONG-TERM

12 CARE INSURANCE CONTRACTS.—The deduction al13 lowed by section 224.’’. 

14 (2) The table of sections for part VII of sub15 chapter B of chapter 1 of such Code is amended by 

16 striking the last item and inserting the following 

17 new items: 

‘‘Sec. 224. Premiums on qualified long-term care insurance contracts. 

‘‘Sec. 225. Cross reference.’’. 

18 (d) EFFECTIVE DATES.— 

19 (1) IN GENERAL.—Except as provided in para20 graph (2), the amendments made by this section 

21 shall apply to taxable years beginning after Decem22 ber 31, 2004. 

23 (2) CAFETERIA PLANS AND FLEXIBLE SPEND24 ING ARRANGEMENTS.—The amendments made by 
107 

•S 1225 IS 

1 subsection (b) shall apply to taxable years beginning 

2 after December 31, 2004. 

3 SEC. 502. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE 

4 NEEDS. 

5 (a) IN GENERAL.—Subpart A of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code of 

7 1986 (relating to nonrefundable personal credits) is 

8 amended by inserting after section 25B the following new 

9 section: 

10 ‘‘SEC. 25C. CREDIT FOR TAXPAYERS WITH LONG-TERM 

11 CARE NEEDS. 

12 ‘‘(a) ALLOWANCE OF CREDIT.— 

13 ‘‘(1) IN GENERAL.—There shall be allowed as a 

14 credit against the tax imposed by this chapter for 

15 the taxable year an amount equal to the applicable 

16 credit amount multiplied by the number of applica17 ble individuals with respect to whom the taxpayer is 

18 an eligible caregiver for the taxable year. 

19 ‘‘(2) APPLICABLE CREDIT AMOUNT.—For pur20 poses of paragraph (1), the applicable credit amount 

21 shall be determined in accordance with the following 

22 table: 

‘‘For taxable years beginning The applicable 

in calendar year— credit amount is—

2005 ..................................................................................... $1,000

2006 ..................................................................................... 1,500

2007 ..................................................................................... 2,000

2008 ..................................................................................... 2,500

2009 or thereafter ................................................................ 3,000. 
108 

•S 1225 IS 

1 ‘‘(b) LIMITATION BASED ON ADJUSTED GROSS IN2 COME.— 

3 ‘‘(1) IN GENERAL.—The amount of the credit 

4 allowable under subsection (a) shall be reduced (but 

5 not below zero) by $100 for each $1,000 (or fraction 

6 thereof) by which the taxpayer’s modified adjusted 

7 gross income exceeds the threshold amount. For 

8 purposes of the preceding sentence, the term ‘modi9 fied adjusted gross income’ means adjusted gross in10 come increased by any amount excluded from gross 

11 income under section 911, 931, or 933. 

12 ‘‘(2) THRESHOLD AMOUNT.—For purposes of 

13 paragraph (1), the term ‘threshold amount’ means— 

14 ‘‘(A) $150,000 in the case of a joint re15 turn, and 

16 ‘‘(B) $75,000 in any other case. 

17 ‘‘(3) INDEXING.—In the case of any taxable 

18 year beginning in a calendar year after 2005, each 

19 dollar amount contained in paragraph (2) shall be 

20 increased by an amount equal to the product of— 

21 ‘‘(A) such dollar amount, and 

22 ‘‘(B) the medical care cost adjustment de23 termined under section 213(d)(10)(B)(ii) for 

24 the calendar year in which the taxable year be-
109 

•S 1225 IS 

1 gins, determined by substituting ‘August 2005’ 

2 for ‘August 1996’ in subclause (II) thereof. 

3 If any increase determined under the preceding sen4 tence is not a multiple of $50, such increase shall 

5 be rounded to the next lowest multiple of $50. 

6 ‘‘(c) DEFINITIONS.—For purposes of this section— 

7 ‘‘(1) APPLICABLE INDIVIDUAL.— 

8 ‘‘(A) IN GENERAL.—The term ‘applicable 

9 individual’ means, with respect to any taxable 

10 year, any individual who has been certified, be11 fore the due date for filing the return of tax for 

12 the taxable year (without extensions), by a phy13 sician (as defined in section 1861(r)(1) of the 

14 Social Security Act) as being an individual with 

15 long-term care needs described in subparagraph 

16 (B) for a period— 

17 ‘‘(i) which is at least 180 consecutive 

18 days, and 

19 ‘‘(ii) a portion of which occurs within 

20 the taxable year. 

21 Such term shall not include any individual oth22 erwise meeting the requirements of the preceding sentence unless within the 391 23 ⁄2 month 

24 period ending on such due date (or such other 

25 period as the Secretary prescribes) a physician 
110 

•S 1225 IS 

1 (as so defined) has certified that such indi2 vidual meets such requirements. 

3 ‘‘(B) INDIVIDUALS WITH LONG-TERM CARE

4 NEEDS.—An individual is described in this sub5 paragraph if the individual meets any of the fol6 lowing requirements: 

7 ‘‘(i) The individual is at least 6 years 

8 of age and— 

9 ‘‘(I) is unable to perform (with10 out substantial assistance from an11 other individual) at least 3 activities 

12 of daily living (as defined in section 

13 7702B(c)(2)(B)) due to a loss of 

14 functional capacity, or 

15 ‘‘(II) requires substantial super16 vision to protect such individual from 

17 threats to health and safety due to se18 vere cognitive impairment and is un19 able to perform, without reminding or 

20 cuing assistance, at least 1 activity of 

21 daily living (as so defined) or to the 

22 extent provided in regulations pre23 scribed by the Secretary (in consulta24 tion with the Secretary of Health and 
111 

•S 1225 IS 

1 Human Services), is unable to engage 

2 in age appropriate activities. 

3 ‘‘(ii) The individual is at least 2 but 

4 not 6 years of age and is unable due to a 

5 loss of functional capacity to perform 

6 (without substantial assistance from an7 other individual) at least 2 of the following 

8 activities: eating, transferring, or mobility. 

9 ‘‘(iii) The individual is under 2 years 

10 of age and requires specific durable med11 ical equipment by reason of a severe health 

12 condition or requires a skilled practitioner 

13 trained to address the individual’s condi14 tion to be available if the individual’s par15 ents or guardians are absent. 

16 ‘‘(2) ELIGIBLE CAREGIVER.— 

17 ‘‘(A) IN GENERAL.—A taxpayer shall be 

18 treated as an eligible caregiver for any taxable 

19 year with respect to the following individuals: 

20 ‘‘(i) The taxpayer. 

21 ‘‘(ii) The taxpayer’s spouse. 

22 ‘‘(iii) An individual with respect to 

23 whom the taxpayer is allowed a deduction 

24 under section 151 for the taxable year. 
112 

•S 1225 IS 

1 ‘‘(iv) An individual who would be de2 scribed in clause (iii) for the taxable year 

3 if section 151(c)(1)(A) were applied by 

4 substituting for the exemption amount an 

5 amount equal to the sum of the exemption 

6 amount, the standard deduction under sec7 tion 63(c)(2)(C), and any additional stand8 ard deduction under section 63(c)(3) which 

9 would be applicable to the individual if 

10 clause (iii) applied. 

11 ‘‘(v) An individual who would be de12 scribed in clause (iii) for the taxable year 

13 if— 

14 ‘‘(I) the requirements of clause 

15 (iv) are met with respect to the indi16 vidual, and 

17 ‘‘(II) the requirements of sub18 paragraph (B) are met with respect to 

19 the individual in lieu of the support 

20 test of section 152(a). 

21 ‘‘(B) RESIDENCY TEST.—The require22 ments of this subparagraph are met if an indi23 vidual has as his principal place of abode the 

24 home of the taxpayer and— 
113 

•S 1225 IS 

1 ‘‘(i) in the case of an individual who 

2 is an ancestor or descendant of the tax3 payer or the taxpayer’s spouse, is a mem4 ber of the taxpayer’s household for over 

5 half the taxable year, or 

6 ‘‘(ii) in the case of any other indi7 vidual, is a member of the taxpayer’s 

8 household for the entire taxable year. 

9 ‘‘(C) SPECIAL RULES WHERE MORE THAN

10 1 ELIGIBLE CAREGIVER.— 

11 ‘‘(i) IN GENERAL.—If more than 1 in12 dividual is an eligible caregiver with re13 spect to the same applicable individual for 

14 taxable years ending with or within the 

15 same calendar year, a taxpayer shall be 

16 treated as the eligible caregiver if each 

17 such individual (other than the taxpayer) 

18 files a written declaration (in such form 

19 and manner as the Secretary may pre20 scribe) that such individual will not claim 

21 such applicable individual for the credit 

22 under this section. 

23 ‘‘(ii) NO AGREEMENT.—If each indi24 vidual required under clause (i) to file a 

25 written declaration under clause (i) does 
114 

•S 1225 IS 

1 not do so, the individual with the highest 

2 modified adjusted gross income (as defined 

3 in section 32(c)(5)) shall be treated as the 

4 eligible caregiver. 

5 ‘‘(iii) MARRIED INDIVIDUALS FILING

6 SEPARATELY.—In the case of married indi7 viduals filing separately, the determination 

8 under this subparagraph as to whether the 

9 husband or wife is the eligible caregiver 

10 shall be made under the rules of clause (ii) 

11 (whether or not one of them has filed a 

12 written declaration under clause (i)). 

13 ‘‘(d) IDENTIFICATION REQUIREMENT.—No credit 

14 shall be allowed under this section to a taxpayer with re15 spect to any applicable individual unless the taxpayer in16 cludes the name and taxpayer identification number of 

17 such individual, and the identification number of the phy18 sician certifying such individual, on the return of tax for 

19 the taxable year. 

20 ‘‘(e) TAXABLE YEAR MUST BE FULL TAXABLE

21 YEAR.—Except in the case of a taxable year closed by rea22 son of the death of the taxpayer, no credit shall be allow23 able under this section in the case of a taxable year cov24 ering a period of less than 12 months.’’. 

25 (b) CONFORMING AMENDMENTS.— 
115 

•S 1225 IS 

1 (1) Section 6213(g)(2) of the Internal Revenue 

2 Code of 1986 is amended by striking ‘‘and’’ at the 

3 end of subparagraph (L), by striking the period at 

4 the end of subparagraph (M) and inserting ‘‘, and’’, 

5 and by inserting after subparagraph (M) the fol6 lowing new subparagraph: 

7 ‘‘(N) an omission of a correct TIN or phy8 sician identification required under section 

9 25C(d) (relating to credit for taxpayers with 

10 long-term care needs) to be included on a re11 turn.’’. 

12 (2) The table of sections for subpart A of part 

13 IV of subchapter A of chapter 1 of such Code is 

14 amended by inserting after the item relating to sec15 tion 25B the following new item: 

‘‘Sec. 25C. Credit for taxpayers with long-term care needs.’’. 

16 (c) EFFECTIVE DATES.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 December 31, 2004. 

19 SEC. 503. ADDITIONAL CONSUMER PROTECTIONS FOR 

20 LONG-TERM CARE INSURANCE. 

21 (a) ADDITIONAL PROTECTIONS APPLICABLE TO

22 LONG-TERM CARE INSURANCE.—Subparagraphs (A) and 

23 (B) of section 7702B(g)(2) of the Internal Revenue Code 

24 of 1986 (relating to requirements of model regulation and 

25 Act) are amended to read as follows: 
116 

•S 1225 IS 

1 ‘‘(A) IN GENERAL.—The requirements of 

2 this paragraph are met with respect to any con3 tract if such contract meets— 

4 ‘‘(i) MODEL REGULATION.—The fol5 lowing requirements of the model regula6 tion: 

7 ‘‘(I) Section 6A (relating to guar8 anteed renewal or noncancellability), 

9 and the requirements of section 6B of 

10 the model Act relating to such section 

11 6A. 

12 ‘‘(II) Section 6B (relating to pro13 hibitions on limitations and exclu14 sions). 

15 ‘‘(III) Section 6C (relating to ex16 tension of benefits). 

17 ‘‘(IV) Section 6D (relating to 

18 continuation or conversion of cov19 erage). 

20 ‘‘(V) Section 6E (relating to dis21 continuance and replacement of poli22 cies). 

23 ‘‘(VI) Section 7 (relating to unin24 tentional lapse). 
117 

•S 1225 IS 

1 ‘‘(VII) Section 8 (relating to dis2 closure), other than section 8F there3 of. 

4 ‘‘(VIII) Section 11 (relating to 

5 prohibitions against post-claims un6 derwriting). 

7 ‘‘(IX) Section 12 (relating to 

8 minimum standards). 

9 ‘‘(X) Section 13 (relating to re10 quirement to offer inflation protec11 tion), except that any requirement for 

12 a signature on a rejection of inflation 

13 protection shall permit the signature 

14 to be on an application or on a sepa15 rate form. 

16 ‘‘(XI) Section 25 (relating to pro17 hibition against preexisting conditions 

18 and probationary periods in replace19 ment policies or certificates). 

20 ‘‘(XII) The provisions of section 

21 26 relating to contingent nonforfeiture 

22 benefits, if the policyholder declines 

23 the offer of a nonforfeiture provision 

24 described in paragraph (4). 
118 

•S 1225 IS 

1 ‘‘(ii) MODEL ACT.—The following re2 quirements of the model Act: 

3 ‘‘(I) Section 6C (relating to pre4 existing conditions). 

5 ‘‘(II) Section 6D (relating to 

6 prior hospitalization). 

7 ‘‘(III) The provisions of section 8 

8 relating to contingent nonforfeiture 

9 benefits, if the policyholder declines 

10 the offer of a nonforfeiture provision 

11 described in paragraph (4). 

12 ‘‘(B) DEFINITIONS.—For purposes of this 

13 paragraph— 

14 ‘‘(i) MODEL PROVISIONS.—The terms 

15 ‘model regulation’ and ‘model Act’ mean 

16 the long-term care insurance model regula17 tion, and the long-term care insurance 

18 model Act, respectively, promulgated by 

19 the National Association of Insurance 

20 Commissioners (as adopted as of Sep21 tember 2000). 

22 ‘‘(ii) COORDINATION.—Any provision 

23 of the model regulation or model Act listed 

24 under clause (i) or (ii) of subparagraph 

25 (A) shall be treated as including any other 
119 

•S 1225 IS 

1 provision of such regulation or Act nec2 essary to implement the provision. 

3 ‘‘(iii) DETERMINATION.—For pur4 poses of this section and section 4980C, 

5 the determination of whether any require6 ment of a model regulation or the model 

7 Act has been met shall be made by the 

8 Secretary.’’. 

9 (b) EXCISE TAX.—Paragraph (1) of section 

10 4980C(c) of the Internal Revenue Code of 1986 (relating 

11 to requirements of model provisions) is amended to read 

12 as follows: 

13 ‘‘(1) REQUIREMENTS OF MODEL PROVISIONS.— 

14 ‘‘(A) MODEL REGULATION.—The following 

15 requirements of the model regulation must be 

16 met: 

17 ‘‘(i) Section 9 (relating to required 

18 disclosure of rating practices to con19 sumer).’’ 

20 ‘‘(ii) Section 14 (relating to applica21 tion forms and replacement coverage). 

22 ‘‘(iii) Section 15 (relating to reporting 

23 requirements), except that the issuer shall 

24 also report at least annually the number of 

25 claims denied during the reporting period 
120 

•S 1225 IS 

1 for each class of business (expressed as a 

2 percentage of claims denied), other than 

3 claims denied for failure to meet the wait4 ing period or because of any applicable 

5 preexisting condition. 

6 ‘‘(iv) Section 22 (relating to filing re7 quirements for marketing). 

8 ‘‘(v) Section 23 (relating to standards 

9 for marketing), including inaccurate com10 pletion of medical histories, other than 

11 paragraphs (1), (6), and (9) of section 

12 23C, except that— 

13 ‘‘(I) in addition to such require14 ments, no person shall, in selling or 

15 offering to sell a qualified long-term 

16 care insurance contract, misrepresent 

17 a material fact; and 

18 ‘‘(II) no such requirements shall 

19 include a requirement to inquire or 

20 identify whether a prospective appli21 cant or enrollee for long-term care in22 surance has accident and sickness in23 surance. 

24 ‘‘(vi) Section 24 (relating to suit25 ability). 
121 

•S 1225 IS 

1 ‘‘(vii) Section 29 (relating to standard 

2 format outline of coverage). 

3 ‘‘(viii) Section 30 (relating to require4 ment to deliver shopper’s guide). 

5 The requirements referred to in clause (vi) shall 

6 not include those portions of the personal work7 sheet described in Appendix B relating to con8 sumer protection requirements not imposed by 

9 section 4980C or 7702B. 

10 ‘‘(B) MODEL ACT.—The following require11 ments of the model Act must be met: 

12 ‘‘(i) Section 6F (relating to right to 

13 return), except that such section shall also 

14 apply to denials of applications and any re15 fund shall be made within 30 days of the 

16 return or denial. 

17 ‘‘(ii) Section 6G (relating to outline of 

18 coverage). 

19 ‘‘(iii) Section 6H (relating to require20 ments for certificates under group plans). 

21 ‘‘(iv) Section 6I (relating to policy 

22 summary). 

23 ‘‘(v) Section 6J (relating to monthly 

24 reports on accelerated death benefits). 
122 

•S 1225 IS 

1 ‘‘(vi) Section 7 (relating to incontest2 ability period). 

3 ‘‘(C) DEFINITIONS.—For purposes of this 

4 paragraph, the terms ‘model regulation’ and 

5 ‘model Act’ have the meanings given such terms 

6 by section 7702B(g)(2)(B).’’. 

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

8 this section shall apply to policies issued more than 1 year 

9 after the date of the enactment of this Act. 

10 TITLE VI—PROMOTING 

11 HEALTHIER LIFESTYLES 

12 SEC. 601. COMMUNITY PARTNERSHIPS TO PROMOTE 

13 HEALTHY LIFESTYLES. 

14 (a) GRANTS.—The Secretary of Health and Human 

15 Services (referred to in this title as the ‘‘Secretary’’) shall 

16 award grants to States to enable such States to provide 

17 assistance to eligible community partnerships that will 

18 carry out activities to promote healthy lifestyles. 

19 (b) ELIGIBILITY.— 

20 (1) STATE.—To be eligible to receive a grant 

21 under subsection (a), a State shall prepare and sub22 mit to the Secretary an application at such time, in 

23 such manner and containing such information as the 

24 Secretary may require. 
123 

•S 1225 IS 

1 (2) COMMUNITY PARTNERSHIP.—To be eligible 

2 to receive assistance from a State under a grant 

3 under subsection (a), an entity shall— 

4 (A) be a partnership consisting of one or 

5 more public and private organizations (such as 

6 hospitals, health centers, other health care pro7 viders, employers, local educational agencies, 

8 community organizations, and public health or9 ganizations); and 

10 (B) prepare and submit to the State an 

11 application at such time, in such manner and 

12 containing such information as the State may 

13 require, including a description of the activities 

14 that the partnership will carry out with assist15 ance provided under this section. 

16 (c) ACTIVITIES.—A State shall use amounts received 

17 under a grant under this section to support activities con18 ducted by an eligible community partnership to promote 

19 health lifestyles, including— 

20 (1) activities to reduce the primary risk factors 

21 for diseases, such as smoking, obesity, and sedentary 

22 lifestyles; 

23 (2) implementing employee health promotion 

24 programs in the workplace using best practices to 
124 

•S 1225 IS 

1 improve health access, education, and prevention 

2 promotion and disease management; 

3 (3) activities to decrease hospital inpatient ad4 missions of individuals with chronic diseases; and 

5 (4) the development of programs relating to 

6 mental health and substance abuse. 

7 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

8 are authorized to be appropriated to carry out this section, 

9 such sums as may be necessary for each of fiscal years 

10 2006 through 2010. 

11 SEC. 602. WORKSITE WELLNESS GRANT PROGRAM. 

12 (a) GRANTS.—The Secretary shall award grants to 

13 States (through State health departments or other State 

14 agencies working in consultation with the State health 

15 agency) to enable such States to provide assistance to em16 ployers that employ not to exceed 100 employees to enable 

17 such employers to establish and operate worksite wellness 

18 programs for their employees. 

19 (b) APPLICATION.—To be eligible to receive a grant 

20 under subsection (a), a State shall prepare and submit to 

21 the Secretary an application at such time, in such manner, 

22 and containing such information as the Secretary may re23 quire, including— 
125 

•S 1225 IS 

1 (1) a description of the manner in which the 

2 State intends to use amounts received under the 

3 grant; and 

4 (2) assurances that the State will only use 

5 amounts provided under such grant to provide as6 sistance to employers that can demonstrate that they 

7 are in compliance with minimum program character8 istics (relative to scope and regularity of services of9 fered) that are developed by the Secretary in con10 sultation with experts in public health and represent11 atives of small employers. 

12 (c) ALLOCATION.—Grants shall be allocated among 

13 States based on the population of individuals employed by 

14 small employers in such States. 

15 (d) PROGRAM CHARACTERISTICS.—In developing 

16 minimum program characteristics under subsection (b)(2), 

17 the Secretary shall ensure that all activities established or 

18 enhanced under a grant under this section have clearly 

19 defined goals and objectives and demonstrate how receipt 

20 of such assistance will help to achieve established State 

21 or local health objectives based on the National Health 

22 Promotion and Disease Prevention Objectives. 

23 (e) USE OF FUNDS.—Amounts received under a 

24 grant awarded under subsection (a) shall be used by a 

25 State to provide grants to employers (as described in sub-
126 

•S 1225 IS 

1 section (a)), nonprofit organizations, or public authorities, 

2 or to operate State-based worksite wellness programs. 

3 (f) SPECIAL EMPHASIS.—In funding employer work4 site wellness projects under this section, a State shall give 

5 special emphasis to— 

6 (1) the development of joint wellness programs 

7 between employers; 

8 (2) the development of employee assistance pro9 grams dealing with substance abuse; 

10 (3) maximizing the use of, and coordination 

11 with, existing community resources such as non12 profit health organizations; and 

13 (4) encouraging the participation of dependents 

14 of employees and retirees in wellness programs. 

15 (g) AUTHORIZATION OF APPROPRIATIONS.—There 

16 are authorized to be appropriated to carry out this section, 

17 such sums as may be necessary for each of fiscal years 

18 2006 through 2010. 

19 SEC. 603. COMPREHENSIVE SCHOOL HEALTH EDUCATION. 

20 (a) IN GENERAL.—The Secretary shall use amounts 

21 appropriated in each fiscal year under subsection (d) to 

22 expand comprehensive school health education programs 

23 administered by the Centers for Disease Control and Pre24 vention under sections 301 and 311 of the Public Health 

25 Service Act (42 U.S.C. 241 and 243). 
127 

•S 1225 IS 

1 (b) SPECIFIED USE OF FUNDS.—In meeting the re2 quirement of subsection (a), the Secretary shall expand 

3 the number of children receiving planned, sequential kin4 dergarten through 12th grade comprehensive school edu5 cation as a component of comprehensive programs of 

6 school health, including— 

7 (1) physical education programs that provide 

8 lifelong physical activity; 

9 (2) healthy school food service selections; 

10 (3) programs that promote a healthy and safe 

11 school environment; 

12 (4) schoolsite health promotion for faculty and 

13 staff; 

14 (5) integrated school and community health 

15 promotion efforts; and 

16 (6) school nursing disease prevention and 

17 health promotion services. 

18 (c) COORDINATION OF EXISTING PROGRAMS.—The 

19 Secretary of Health and Human Services, the Secretary 

20 of Education, and the Secretary of Agriculture shall work 

21 cooperatively to coordinate existing school health edu22 cation programs within the jurisdiction of their respective 

23 Departments in a manner that maximizes the efficiency 

24 and effectiveness of Federal expenditures for such pro25 grams. 
128 

•S 1225 IS 

1 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated to carry out this section, 

3 such sums as may be necessary for each of fiscal years 

4 2006 through 2010. 

5 TITLE VII—MEDICARE FAIRNESS 

6 Subtitle A—Medicare Value and 

7 Quality Demonstration 

8 SEC. 701. FINDINGS. 

9 The Senate makes the following findings: 

10 (1) The United States Government should re11 ward physicians, hospitals, and other health care 

12 providers that provide high-quality, cost-effective 

13 health care to beneficiaries under the medicare pro14 gram. 

15 (2) The Journal of the American Medical Asso16 ciation has published quality indicators in an article 

17 entitled ‘‘Quality of Medical Care Delivered to Medi18 care Beneficiaries: A Profile at State and National 

19 Levels’’. 

20 (3) The cost of health care is— 

21 (A) reflected in the type and volume of 

22 physicians’ services and in physician ordering 

23 and prescribing behavior; and 

24 (B) reflected in the amount of the average 

25 payment to hospitals under the medicare pro-
129 

•S 1225 IS 

1 gram for each medicare beneficiary in each 

2 State. 

3 (4) Physician and hospital practice patterns 

4 contribute to the total cost and quality of care for 

5 each medicare beneficiary in each State. 

6 (5) The original medicare fee-for-service pro7 gram under parts A and B of title XVIII of the So8 cial Security Act does not include a mechanism to 

9 pay for interventions designed to improve quality of 

10 care. While the framework for payments to managed 

11 care organizations under the Medicare+Choice pro12 gram under part C of such title allows for the re13 allocation of capitation revenues to cover such things 

14 as disease state management and quality improve15 ment infrastructure, even the most optimistic projec16 tions for managed care enrollment leave the majority 

17 of medicare beneficiaries in the original medicare 

18 fee-for-service program. 

19 SEC. 702. DEMONSTRATION PROJECT TO ENCOURAGE THE 

20 PROVISION OF HIGH-QUALITY, COST-EFFEC21 TIVE INPATIENT HOSPITAL SERVICES. 

22 (a) PURPOSE.—The purpose of the demonstration 

23 project conducted under this section is to encourage the 

24 provision of high-quality, cost-effective health care to 

25 beneficiaries under the medicare program under title 
130 

•S 1225 IS 

1 XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) 

2 by providing incentive payments to hospitals located in 

3 States in which high-quality and cost-effective services are 

4 being provided in order to finance further quality improve5 ments. 

6 (b) DEMONSTRATION PROJECT.— 

7 (1) ESTABLISHMENT.—Not later than 6 

8 months after the date of enactment of this Act, the 

9 Secretary shall establish a demonstration project 

10 under which— 

11 (A) the Secretary provides bonus payments 

12 to providers of inpatient hospital services that 

13 deliver high-quality health care at low costs in 

14 accordance with the methodology established by 

15 the Agency for Healthcare Research and Qual16 ity under paragraph (2); and 

17 (B) the Secretary funds a plan at each site 

18 to increase the number of providers of inpatient 

19 hospital services that provide high-quality, low20 cost health care to beneficiaries under the medi21 care program under title XVIII of the Social 

22 Security Act. 

23 (2) VALUE AND QUALITY RANKING METHOD24 OLOGY.— 
131 

•S 1225 IS 

1 (A) IN GENERAL.—The Agency for 

2 Healthcare Research and Quality shall establish 

3 a value and quality ranking methodology under 

4 which the Secretary awards bonus payments to 

5 providers of inpatient hospital services located 

6 in those States that demonstrate that such pro7 viders in the State are providing high value be8 cause of the high-quality, cost-effective health 

9 care services being provided to medicare bene10 ficiaries. 

11 (B) BASIS.—The methodology established 

12 under subparagraph (A) shall be based on the 

13 rank and performance on medicare quality indi14 cators contained in the article entitled ‘‘Quality 

15 of Medical Care Delivered to Medicare Bene16 ficiaries: A Profile at State and National Lev17 els’’ published in the October 4, 2000, issue of 

18 the Journal of the American Medical Associa19 tion or such other quality indicators as the Sec20 retary determines to be appropriate. 

21 (3) SITES.—The Secretary shall select 2 States 

22 in which to conduct the demonstration project— 

23 (A) from among the top 25 States (as 

24 ranked using the methodology established under 

25 paragraph (2)) that are also among the group 
132 

•S 1225 IS 

1 of 25 States with the lowest per capita cost to 

2 the medicare program under title XVIII of the 

3 Social Security Act during the most recent 12- 

4 month period for which data are available; and 

5 (B) based upon information contained in 

6 applications submitted to the Secretary by such 

7 States at such time, in such form and manner, 

8 and containing such information as the Sec9 retary may require. 

10 (4) DURATION OF PROJECT.—The demonstra11 tion project shall be conducted over a 5-year period. 

12 (c) REPORTS.—The Secretary shall submit to the ap13 propriate committees of Congress interim reports on the 

14 demonstration project and a final report on the project 

15 within 6 months after the conclusion of the project to16 gether with recommendations for such legislative or ad17 ministrative action as the Secretary determines appro18 priate. 

19 (d) WAIVER.—The Secretary shall waive such provi20 sions of titles XI and XVIII of the Social Security Act 

21 (42 U.S.C. 1301 et seq. and 1395 et seq.) as may be nec22 essary to conduct the demonstration project under this 

23 section. 

24 (e) DEFINITIONS.—In this section: 
133 

•S 1225 IS 

1 (1) PROVIDER OF INPATIENT HOSPITAL SERV2 ICES.—The term ‘‘provider of inpatient hospital 

3 services’’ means any individual or entity that re4 ceives payment under the medicare program under 

5 title XVIII of the Social Security Act (42 U.S.C. 

6 1395 et seq.) for providing an inpatient hospital 

7 service (as defined in section 1861(b) of such Act 

8 (42 U.S.C. 1395x(b))). 

9 (2) SECRETARY.—The term ‘‘Secretary’’ means 

10 the Secretary of Health and Human Services. 

11 (f) FUNDING.—There are appropriated from the Fed12 eral Hospital Insurance Trust Fund under section 1817 

13 of the Social Security Act (42 U.S.C. 1395i) such sums 

14 as the Secretary determines are necessary to conduct the 

15 demonstration project under this section. 

16 SEC. 703. DEMONSTRATION PROJECT TO ENCOURAGE THE 

17 PROVISION OF HIGH-QUALITY, COST-EFFEC18 TIVE PHYSICIANS’ SERVICES. 

19 (a) PURPOSE.—The purpose of the demonstration 

20 project conducted under this section is to encourage the 

21 provision of high-quality, cost-effective health care to 

22 beneficiaries under the medicare program under title 

23 XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) 

24 by providing incentive payments to physicians located in 

25 States in which high-quality and cost-effective services are 
134 

•S 1225 IS 

1 being provided in order to finance further quality improve2 ments. 

3 (b) DEMONSTRATION PROJECT.— 

4 (1) ESTABLISHMENT.—Not later than 6 

5 months after the date of enactment of this Act, the 

6 Secretary shall establish a demonstration project 

7 under which— 

8 (A) the Secretary provides bonus payments 

9 to providers of physicians’ services that deliver 

10 high-quality, cost-effective health care in ac11 cordance with the methodology established by 

12 the Agency for Healthcare Research and Qual13 ity under paragraph (2); and 

14 (B) the Secretary funds a plan in each 

15 State to increase the number of providers of 

16 physicians’ services that provide high-quality, 

17 cost-effective health care to beneficiaries under 

18 the medicare program under title XVIII of the 

19 Social Security Act. 

20 (2) VALUE AND QUALITY RANKING METHOD21 OLOGY.— 

22 (A) IN GENERAL.—The Agency for 

23 Healthcare Research and Quality shall establish 

24 a value and quality ranking methodology under 

25 which the Secretary awards bonus payments to 
135 

•S 1225 IS 

1 providers of physicians’ services located in those 

2 States that demonstrate that such providers in 

3 the State are providing high value because of 

4 the high-quality, cost-effective health care serv5 ices being provided to medicare beneficiaries. 

6 (B) BASIS.—The methodology established 

7 under subparagraph (A) shall be based on the 

8 rank and performance on medicare quality indi9 cators contained in the article entitled ‘‘Quality 

10 of Medical Care Delivered to Medicare Bene11 ficiaries: A Profile at State and National Lev12 els’’ published in the October 4, 2000, issue of 

13 the Journal of the American Medical Associa14 tion or such other quality indicators as the Sec15 retary determines to be appropriate. 

16 (3) SITES.—The Secretary shall select 2 States 

17 in which to conduct the demonstration project— 

18 (A) from among the top 25 States (as 

19 ranked using the methodology established under 

20 paragraph (2)) that are also among the 25 

21 States with the lowest per capita cost to the 

22 medicare program under title XVIII of the So23 cial Security Act during the most recent 12- 

24 month period for which data are available; and 
136 

•S 1225 IS 

1 (B) based upon information contained in 

2 applications submitted to the Secretary by such 

3 States at such time, in such form and manner, 

4 and containing such information as the Sec5 retary may require. 

6 (4) DURATION OF PROJECT.—The demonstra7 tion project shall be conducted over a 5-year period. 

8 (c) REPORTS.—The Secretary shall submit to the ap9 propriate committees of Congress interim reports on the 

10 demonstration project and a final report on the project 

11 within 6 months after the conclusion of the project to12 gether with recommendations for such legislative or ad13 ministrative action as the Secretary determines appro14 priate. 

15 (d) WAIVER.—The Secretary shall waive such provi16 sions of titles XI and XVIII of the Social Security Act 

17 (42 U.S.C. 1301 et seq. and 1395 et seq.) as may be nec18 essary to conduct the demonstration project under this 

19 section. 

20 (e) DEFINITIONS.—In this section: 

21 (1) PROVIDER OF PHYSICIANS’ SERVICES.—The 

22 term ‘‘provider of physicians’ services’’ means any 

23 individual or entity that receives payment under the 

24 medicare program under title XVIII of the Social 

25 Security Act (42 U.S.C. 1395 et seq.) for providing 
137 

•S 1225 IS 

1 physicians’ services (as defined in section 1861(q) of 

2 such Act (42 U.S.C. 1395x(q))). 

3 (2) SECRETARY.—The term ‘‘Secretary’’ means 

4 the Secretary of Health and Human Services. 

5 (f) FUNDING.—There are appropriated from the Fed6 eral Supplementary Medical Insurance Trust Fund under 

7 section 1841 of the Social Security Act (42 U.S.C. 1395t) 

8 such sums as the Secretary determines are necessary to 

9 conduct the demonstration project under this section. 

10 Subtitle B—Graduate Medical 

11 Education Demonstration 

12 SEC. 711. CLINICAL ROTATION DEMONSTRATION PROJECT. 

13 (a) ESTABLISHMENT.—Not later than 6 months after 

14 the date of enactment of this Act, the Secretary shall es15 tablish a demonstration project that provides for dem16 onstration grants designed to provide financial or other 

17 incentives to hospitals to attract educators and clinical 

18 practitioners so that hospitals that serve beneficiaries 

19 under the medicare program under title XVIII of the So20 cial Security Act (42 U.S.C. 1395 et seq.) who are resi21 dents of underserved areas may host clinical rotations. 

22 (b) DURATION OF PROJECT.—The demonstration 

23 project shall be conducted over a 5-year period. 

24 (c) FUNDING.— 
138 

•S 1225 IS 

1 (1) IN GENERAL.—Subject to paragraph (2), 

2 the Secretary shall pay the costs of the demonstra3 tion project conducted under this section from the 

4 Federal Hospital Insurance Trust Fund under sec5 tion 1817 of the Social Security Act (42 U.S.C. 

6 1395i). 

7 (2) CAP ON FUNDING.—The Secretary may not 

8 expend more than $20,000,000 to conduct the dem9 onstration project under this section. 

10 (3) BUDGET NEUTRALITY FOR DEMONSTRA11 TION PROJECT.—Notwithstanding any other provi12 sion of law, the Secretary shall provide for an appro13 priate reduction in the aggregate amount of addi14 tional payments made under subsection (d)(5)(B) of 

15 section 1886 of the Social Security Act (42 U.S.C. 

16 1395ww) for the indirect costs of medical education 

17 and for direct graduate medical education costs 

18 under subsection (h) of such section to reflect any 

19 increase in amounts expended from the Federal Hos20 pital Insurance Trust Fund as a result of the dem21 onstration project conducted under this section. 

22 (d) REPORTS.—The Secretary shall submit to the ap23 propriate committees of Congress interim reports on the 

24 demonstration project and a final report on such project 

25 within 6 months after the conclusion of the project to-
139 

•S 1225 IS 

1 gether with recommendations for such legislative or ad2 ministrative action as the Secretary determines appro3 priate. 

4 (e) WAIVER.—The Secretary shall waive such provi5 sions of titles XI and XVIII of the Social Security Act 

6 (42 U.S.C. 1301 et seq. and 1395 et seq.) as may be nec7 essary to conduct the demonstration project under this 

8 section. 

9 (f) DEFINITIONS.—In this section: 

10 (1) HOSPITAL.—The term ‘‘hospital’’ means 

11 any subsection (d) hospital (as defined in section 

12 1886(d)(1)(B) of the Social Security Act (42 U.S.C. 

13 1395ww(d)(1)(B)) that had indirect or direct costs 

14 of medical education during the most recent cost re15 porting period preceding the date of enactment of 

16 this Act. 

17 (2) SECRETARY.—The term ‘‘Secretary’’ means 

18 the Secretary of Health and Human Services. 

19 (3) UNDERSERVED AREA.—The term ‘‘under20 served area’’ means such medically underserved 

21 urban areas and medically underserved rural areas 

22 as the Secretary may specify. 

Æ