II 

111TH CONGRESS 

1ST SESSION S. 142 

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

every uninsured child in America has health insurance coverage, and 

for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 6, 2009 

Mr. KERRY introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend titles XIX and XXI of the Social Security Act 

to ensure that every uninsured child in America has 

health insurance coverage, and for other purposes. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Kids Come First Act of 2009’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 


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TITLE I—EXPANDED COVERAGE OF CHILDREN UNDER MEDICAID 

AND SCHIP 

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

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

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

TITLE II—STATE OPTIONS FOR INCREMENTAL CHILD COVERAGE 

EXPANSIONS 

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

have other health coverage. 

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

SCHIP. 

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

SCHIP. 

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

TITLE III—TAX INCENTIVES FOR HEALTH INSURANCE 

COVERAGE OF CHILDREN 

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

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

insurance. 

TITLE IV—SMALL BUSINESS CHILDREN’S HEALTH EDUCATION 

TASK FORCE 

Sec. 401. Definitions. 

Sec. 402. Establishment of task force. 

TITLE V—MISCELLANEOUS 

Sec. 501. Requirement for group market health insurers to offer dependent coverage option for workers with children. 

TITLE VI—REVENUE PROVISION 

Sec. 601. Partial repeal of rate reduction in the highest income tax bracket. 

1 SEC. 2. FINDINGS. 

2 Congress makes the following findings: 

3 (1) NEED FOR UNIVERSAL COVERAGE.— 

4 (A) There are nearly 9,000,000 children 

5 under the age of 19 that are uninsured. One 

6 out of every 9 children are uninsured while 1 in 

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1 ican children are uninsured. Three-fifths, ap2 proximately 5,400,000, of these children are eli3 gible but not enrolled in the Medicaid program 

4 or the State Children’s Health Insurance Pro5 gram (SCHIP). 

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

7 likely as children in higher income families to 

8 be uninsured. It is estimated that over 60 per9 cent of uninsured children have at least 1 par10 ent working full time over the course of the 

11 year. 

12 (C) It is estimated that legal immigrant 

13 children are three times as likely to be uninsured as native born children. Nearly 1 14 ⁄2 of low15 income immigrant children are uninsured. 

16 (D) Children in the South are twice as 

17 likely to be uninsured than children in the Mid18 west. In the Northeast, 8.5 percent of children 

19 are uninsured, while in the Midwest 7.2, per20 cent are uninsured. The South’s rate of unin21 sured children is 14.8 percent while the West 

22 has an uninsured rate of 11.5 percent. 

23 (E) Children’s health care needs are ne24 glected in the United States. Over 20 percent of 

25 children in the United States are not fully up 


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1 to date on their basic immunizations. Half of 

2 all children with asthma who do not have health 

3 insurance do not receive preventative care. One 

4 out of every 4 children do not receive annual 

5 dental exams. Minority children are less likely 

6 to receive proven treatments such as prescrip7 tion medications to treat chronic disease. 

8 (F) According to a study conducted by the 

9 Urban Institute in February 2007, among those 

10 eligible for SCHIP, children whose families are 

11 self-employed or who work for small business 

12 concerns are far less likely to be enrolled in 

13 that program, specifically that 1 out of every 4 

14 eligible children with parents who work for a 

15 small business concern or are self-employed are 

16 not enrolled, compared with 1 out of 10 eligible 

17 children whose parents work for a large firm 

18 who are not enrolled. 

19 (2) ROLE OF THE MEDICAID AND STATE CHIL20 DREN’S HEALTH INSURANCE PROGRAMS.— 

21 (A) The Medicaid program and SCHIP 

22 serve as a crucial health safety net for 

23 30,600,000 children. During the recent eco24 nomic downturn and the highest number of un25 insured individuals ever recorded in the United 


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1 States, the Medicaid program and SCHIP off2 set losses in employer-sponsored coverage. 

3 (B) 23,500,000 children are enrolled today 

4 in the Medicaid program, accounting for approximately 1 5 ⁄2 of all enrollees and only 19 per6 cent of total program costs. 

7 (C) The Medicaid program and SCHIP do 

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

9 coverage have reduced the percentage of low-income uninsured children by 1 10 ⁄3 in the last dec11 ade. In addition, a study found that publicly in12 sured children are more likely to obtain medical 

13 care, preventive care, and dental care than simi14 lar low-income privately insured children. 

15 (D) Publicly funded programs such as the 

16 Medicaid program and SCHIP actually improve 

17 children’s health. Children who are currently in18 sured by public programs are in better health 

19 than they were a year ago. Expansion of cov20 erage for children and pregnant women under 

21 the Medicaid program and SCHIP reduces 

22 rates of avoidable hospitalizations, and has been 

23 proven to reduce childhood deaths, infant mor24 tality rates, and the incidence of low birth 

25 weight. 


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1 (E) Studies have found that children en2 rolled in public insurance programs experience 

3 a significant improvement in measures of school 

4 performance. 

5 (F) Despite the success of expansions in 

6 general under the Medicaid program and 

7 SCHIP, due to current budget constraints, 

8 many states have stopped doing aggressive out9 reach and have raised premiums and cost-shar10 ing requirements on families under these pro11 grams. 

12 (G) Difficult renewal policies and reenroll13 ment barriers make seamless coverage in 

14 SCHIP unattainable. In addition to children 

15 who do not remain in the system due to re16 enrollment barriers, studies indicate that as 

17 many as 67 percent of children who were eligi18 ble but not enrolled for SCHIP had applied for 

19 coverage but were denied due to procedural 

20 issues. 

21 (H) While the Medicaid program and 

22 SCHIP expansions to date have done much to 

23 offset what otherwise would have been a signifi24 cant loss of coverage among children because of 

25 declining employer coverage, the shortcomings 


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1 of previous expansions, such as the failure to 

2 enroll all eligible children and caps on enroll3 ment in SCHIP because of under-funding, also 

4 are clear. 

5 TITLE I—EXPANDED COVERAGE 

6 OF CHILDREN UNDER MED7 ICAID AND SCHIP 

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

9 FOR MEDICAL ASSISTANCE FOR CHILDREN 

10 IN POVERTY IN EXCHANGE FOR EXPANDED 

11 COVERAGE OF CHILDREN IN WORKING POOR 

12 FAMILIES UNDER MEDICAID OR SCHIP. 

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

14 Act (42 U.S.C. 1396 et seq.) is amended by adding at 

15 the end the following: 

16 ‘‘STATE OPTION FOR INCREASED FMAP FOR MEDICAL AS17 SISTANCE FOR CHILDREN IN POVERTY IN EXCHANGE

18 FOR EXPANDED COVERAGE OF CHILDREN IN WORK19 ING POOR FAMILIES UNDER THIS TITLE OR TITLE

20 XXI 

21 ‘‘SEC. 1942. (a) 100 PERCENT FMAP.— 

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

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

24 through an amendment to each of its State plans 

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1 ther such plan), agrees to satisfy the conditions de2 scribed in subsections (b), (c), and (d), the Federal 

3 medical assistance percentage shall be 100 percent 

4 with respect to the total amount expended by the 

5 State for providing medical assistance under this 

6 title for each fiscal year quarter beginning on or 

7 after the date described in subsection (e) for chil8 dren whose family income does not exceed 100 per9 cent of the poverty line. 

10 ‘‘(2) LIMITATION ON SCOPE OF APPLICATION

11 OF INCREASE.—The increase in the Federal medical 

12 assistance percentage for a State under this section 

13 shall apply only with respect to the total amount ex14 pended for providing medical assistance under this 

15 title for a fiscal year quarter for children described 

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

17 to— 

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

19 title, including disproportionate share hospital 

20 payments described in section 1923; 

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

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

23 or title XXI that are based on the enhanced 

24 FMAP described in section 2105(b). 


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1 ‘‘(b) ELIGIBILITY EXPANSIONS.—The condition de2 scribed in this subsection is that the State agrees to do 

3 the following: 

4 ‘‘(1) COVERAGE UNDER MEDICAID OR SCHIP

5 FOR CHILDREN IN FAMILIES WHOSE INCOME DOES

6 NOT EXCEED 300 PERCENT OF THE POVERTY

7 LINE.— 

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

9 provide medical assistance under this title or 

10 child health assistance under title XXI to chil11 dren whose family income exceeds the medicaid 

12 applicable income level (as defined in section 

13 2110(b)(4) but by substituting ‘January 1, 

14 2009’ for ‘March 31, 1997’), but does not ex15 ceed 300 percent of the poverty line. 

16 ‘‘(B) STATE OPTION TO EXPAND COV17 ERAGE THROUGH SUBSIDIZED PURCHASE OF

18 FAMILY COVERAGE.—A State may elect to carry 

19 out subparagraph (A) through the provision of 

20 assistance for the purchase of dependent cov21 erage under a group health plan or health in22 surance coverage if— 

23 ‘‘(i) the dependent coverage is con24 sistent with the benefit standards under 


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1 this title or title XXI, as approved by the 

2 Secretary; and 

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

4 coverage under this title or title XXI. 

5 ‘‘(C) DEEMED SATISFACTION FOR CERTAIN

6 STATES.—A State that, as of January 1, 2009, 

7 provides medical assistance under this title or 

8 child health assistance under title XXI to chil9 dren whose family income is 300 percent of the 

10 poverty line shall be deemed to satisfy this 

11 paragraph. 

12 ‘‘(2) COVERAGE FOR CHILDREN UNDER AGE

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

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

15 not attained 21 years of age. 

16 ‘‘(3) OPPORTUNITY FOR HIGHER INCOME CHIL17 DREN TO PURCHASE SCHIP COVERAGE.—The State 

18 agrees to permit any child whose family income ex19 ceeds 300 percent of the poverty line to purchase 

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

21 full cost of providing such coverage, as determined 

22 by the State. 

23 ‘‘(4) COVERAGE FOR LEGAL IMMIGRANT CHIL24 DREN.—The State agrees to— 


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1 ‘‘(A) provide medical assistance under this 

2 title and child health assistance under title XXI 

3 for alien children who are lawfully residing in 

4 the United States (including battered aliens de5 scribed in section 431(c) of the Personal Re6 sponsibility and Work Opportunity Reconcili7 ation Act of 1996) and who are otherwise eligi8 ble for such assistance in accordance with sec9 tion 1903(v)(4) and 2107(e)(1)(F); and 

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

11 deter applications by such aliens, including 

12 through the application of the removal of the 

13 barriers described in subsection (c). 

14 ‘‘(c) REMOVAL OF ENROLLMENT AND ACCESS BAR15 RIERS.—The condition described in this subsection is that 

16 the State agrees to do the following: 

17 ‘‘(1) PRESUMPTIVE ELIGIBILITY FOR CHIL18 DREN.—The State agrees to— 

19 ‘‘(A) provide presumptive eligibility for 

20 children under this title and title XXI in ac21 cordance with section 1920A; and 

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

23 provided to an uncovered child (as defined in 

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

25 for medical assistance under this title as child 


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1 health assistance for purposes of paying a pro2 vider of such items or services, so long as such 

3 items or services would be considered child 

4 health assistance for a targeted low-income 

5 child under title XXI. 

6 ‘‘(2) ADOPTION OF 12-MONTH CONTINUOUS EN7 ROLLMENT.—The State agrees to provide that eligi8 bility for assistance under this title and title XXI 

9 shall not be regularly redetermined more often than 

10 once every year for children. 

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

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

13 a child applying for medical assistance under this 

14 title or child health assistance under title XXI to de15 clare and certify by signature under penalty of per16 jury family income for purposes of collecting finan17 cial eligibility information. 

18 ‘‘(4) ADOPTION OF ACCEPTANCE OF ELIGI19 BILITY DETERMINATIONS FOR OTHER ASSISTANCE

20 PROGRAMS.—The State agrees to accept determina21 tions (made within a reasonable period, as found by 

22 the State, before its use for this purpose) of an indi23 vidual’s family or household income made by a Fed24 eral or State agency (or a public or private entity 

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1 cy), including the agencies administering the supple2 mental nutrition assistance program established 

3 under the Food and Nutrition Act of 2008 (7 U.S.C. 

4 2011 et seq.), the Richard B. Russell National 

5 School Lunch Act, and the Child Nutrition Act of 

6 1966, notwithstanding any differences in budget 

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

8 only if— 

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

10 responsibilities affected or potentially affected 

11 by such determinations; and 

12 ‘‘(B) any information furnished by such 

13 agency pursuant to this subparagraph is used 

14 solely for purposes of determining eligibility for 

15 medical assistance under this title or for child 

16 health assistance under title XXI. 

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

18 not (or demonstrates that it does not) apply any as19 sets or resources test for eligibility under this title 

20 or title XXI with respect to children. 

21 ‘‘(6) ELIGIBILITY DETERMINATIONS AND REDE22 TERMINATIONS.— 

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

24 purposes of initial eligibility determinations and 

25 redeterminations of children under this title and 


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

2 and to permit applications and renewals by 

3 mail, telephone, and the Internet. 

4 ‘‘(B) NONDUPLICATION OF INFORMA5 TION.— 

6 ‘‘(i) IN GENERAL.—For purposes of 

7 redeterminations of eligibility for currently 

8 or previously enrolled children under this 

9 title and title XXI, the State agrees to use 

10 all information in its possession (including 

11 information available to the State under 

12 other Federal or State programs) to deter13 mine eligibility or redetermine continued 

14 eligibility before seeking similar informa15 tion from parents. 

16 ‘‘(ii) RULE OF CONSTRUCTION.— 

17 Nothing in clause (i) shall be construed as 

18 limiting any obligation of a State to pro19 vide notice and a fair hearing before deny20 ing, terminating, or reducing a child’s cov21 erage based on such information in the 

22 possession of the State. 

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

24 SCHIP.—The State agrees to not impose any numer25 ical limitation, waiting list, waiting period, or similar 


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1 limitation on the eligibility of children for child 

2 health assistance under title XXI or to establish or 

3 enforce other barriers to the enrollment of eligible 

4 children based on the date of their application for 

5 coverage. 

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

7 The State agrees to— 

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

9 health care providers under this title that are 

10 no less than the average of payment rates for 

11 similar services for such providers provided 

12 under the benchmark benefit packages de13 scribed in section 2103(b); 

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

15 are sufficient to ensure that children enrolled 

16 under this title or title XXI have adequate ac17 cess to comprehensive care, in accordance with 

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

19 and 

20 ‘‘(C) include provisions in its contracts 

21 with providers under this title guaranteeing 

22 compliance with these requirements. 

23 ‘‘(d) MAINTENANCE OF MEDICAID ELIGIBILITY LEV24 ELS FOR CHILDREN.— 


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

2 this subsection is that the State agrees to maintain 

3 eligibility income, resources, and methodologies ap4 plied under this title (including under a waiver of 

5 such title or under section 1115) with respect to 

6 children that are no more restrictive than the eligi7 bility income, resources, and methodologies applied 

8 with respect to children under this title (including 

9 under such a waiver) as of January 1, 2009. 

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

11 this section shall be construed as implying that a 

12 State does not have to comply with the minimum in13 come levels required for children under section 

14 1902(l)(2). 

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

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

17 a plan amendment that satisfies the requirements of sub18 sections (b), (c), and (d) is approved by the Secretary. 

19 ‘‘(f) DEFINITION OF POVERTY LINE.—In this sec20 tion, the term ‘poverty line’ has the meaning given that 

21 term in section 2110(c)(5).’’. 

22 (b) CONFORMING AMENDMENTS.— 

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

24 Social Security Act (42 U.S.C. 1396d(b)) is amend25 ed by inserting before the period the following: ‘‘, 


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1 and with respect to amounts expended for medical 

2 assistance for children on or after the date described 

3 in subsection (e) of section 1942, in the case of a 

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

5 approved plan amendment under this title and title 

6 XXI’’. 

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

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

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

10 after ‘‘section 1611(b)(1),’’; and 

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

12 the following: 

13 ‘‘(D) who would not receive such medical assist14 ance but for State electing the option under section 

15 1942 and satisfying the conditions described in sub16 sections (b), (c), and (d) of such section,’’. 

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

18 STATES THAT EXPAND ELIGIBILITY FOR 

19 CHILDREN. 

20 (a) IN GENERAL.—Section 2105 of the Social Secu21 rity Act (42 U.S.C. 1397dd) is amended by adding at the 

22 end the following: 

23 ‘‘(h) GUARANTEED FUNDING FOR CHILD HEALTH

24 ASSISTANCE FOR COVERAGE EXPANSION STATES.— 


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

2 that has, in accordance with section 1942, an ap3 proved plan amendment under this title and title 

4 XIX, any payment cap that would otherwise apply to 

5 the State under this title as a result of having ex6 pended all allotments available for expenditure by 

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

8 with respect to amounts expended by the State on 

9 or after the date described in section 1942(e). 

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

11 out of any money in the Treasury not otherwise ap12 propriated, such sums as may be necessary for the 

13 purpose of paying a State described in paragraph 

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

15 described in section 1942(e), an amount equal to the 

16 enhanced FMAP of expenditures described in para17 graph (1) and incurred during such quarter.’’. 

18 (b) CONFORMING AMENDMENTS.—Section 2104 of 

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

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

21 2105(h)’’ after ‘‘subsection (d)’’; 

22 (2) in subsection (b)(1), by striking ‘‘and sub23 section (d)’’ and inserting ‘‘, subsection (d), and sec24 tion 2105(h)’’; and 


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1 (3) in subsection (c)(1), by inserting ‘‘and sec2 tion 2105(h)’’ after ‘‘subsection (d)’’. 

3 TITLE II—STATE OPTIONS FOR 

4 INCREMENTAL CHILD COV5 ERAGE EXPANSIONS 

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

7 SCHIP COVERAGE TO CHILDREN WHO HAVE 

8 OTHER HEALTH COVERAGE. 

9 (a) IN GENERAL.—Section 2110(b) of the Social Se10 curity Act (42 U.S.C. 1397jj(b)) is amended— 

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

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

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

14 paragraph: 

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

16 COVERAGE.— 

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

18 the requirement of paragraph (1)(C) that a tar19 geted low-income child may not be covered 

20 under a group health plan or under health in21 surance coverage in order to provide— 

22 ‘‘(i) items or services that are not cov23 ered, or are only partially covered, under 

24 such plan or coverage; or 

25 ‘‘(ii) cost-sharing protection. 


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1 ‘‘(B) ELIGIBILITY.—In waiving such re2 quirement, a State may limit the application of 

3 the waiver to children whose family income does 

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

5 as the level so specified does not exceed the 

6 maximum income level otherwise established for 

7 other children under the State child health 

8 plan. 

9 ‘‘(C) CONTINUED APPLICATION OF DUTY

10 TO PREVENT SUBSTITUTION OF EXISTING COV11 ERAGE.—Nothing in this paragraph shall be 

12 construed as modifying the application of sec13 tion 2102(b)(3)(C) to a State.’’. 

14 (b) APPLICATION OF ENHANCED MATCH UNDER

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

16 is amended— 

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

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

19 or (u)(4)’’; and 

20 (2) in subsection (u), by redesignating para21 graph (4) as paragraph (5) and by inserting after 

22 paragraph (3) the following: 

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

24 described in this paragraph are expenditures for items and 

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


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

3 1397gg(e)(1)) is amended— 

4 (1) by redesignating subparagraphs (B) 

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

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

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

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

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

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

16 U.S.C. 1397jj(b)(2)) is amended— 

17 (1) by redesignating subparagraphs (A) and 

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

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

21 following: 

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

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

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


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

2 not apply to any low-income child who would 

3 otherwise be eligible for child health assistance 

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

5 SEC. 203. OPTIONAL COVERAGE OF LEGAL IMMIGRANT 

6 CHILDREN UNDER MEDICAID AND SCHIP. 

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

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

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

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

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

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

13 under this title) to provide medical assistance under this 

14 title for aliens— 

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

16 States (including battered aliens described in section 

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

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

21 defined under such plan), including optional targeted 

22 low-income children described in section 

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

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

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

3 of provision of assistance to such category and the cost 

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

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

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

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

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

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

12 section 201(c), is amended redesignating subparagraph 

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

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

18 such section to that category of children under 

19 title XIX.’’. 

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

22 AND SCHIP. 

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

25 the end the following: 


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

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

4 for medical assistance under this title shall remain eligible 

5 for medical assistance until such time as the State has 

6 information demonstrating that the individual is no longer 

7 so eligible.’’. 

8 (b) APPLICATION UNDER TITLE XXI.—Section 

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

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

11 amended— 

12 (1) by redesignating subparagraphs (C) through 

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

14 and 

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

16 following: 

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

19 TITLE III—TAX INCENTIVES FOR 

20 HEALTH INSURANCE COV21 ERAGE OF CHILDREN 

22 SEC. 301. REFUNDABLE CREDIT FOR HEALTH INSURANCE 

23 COVERAGE OF CHILDREN. 

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


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1 1986 (relating to refundable credits) is amended by insert2 ing after section 36 the following new section: 

3 ‘‘SEC. 36A. HEALTH INSURANCE COVERAGE OF CHILDREN. 

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

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

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

7 paid during the taxable year, not compensated for by in8 surance or otherwise, for qualified health insurance for 

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

10 of the adjusted gross income of such taxpayer for such 

11 taxable year. 

12 ‘‘(b) DEPENDENT CHILD.—For purposes of this sec13 tion, the term ‘dependent child’ means any child (as de14 fined in section 152(f)(1)) who has not attained the age 

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

16 taxable year of the taxpayer begins and with respect to 

17 whom a deduction under section 151 is allowable to the 

18 taxpayer. 

19 ‘‘(c) QUALIFIED HEALTH INSURANCE.—For pur20 poses of this section— 

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

22 insurance’ means insurance, either employer-pro23 vided or made available under title XIX or XXI of 

24 the Social Security Act, which constitutes medical 


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

2 to— 

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

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

5 as relates to qualified long-term care insurance 

6 contracts. 

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

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

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

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

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

15 223 to the taxpayer for a payment for the taxable 

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

18 applied by treating such payment as a payment for 

19 qualified health insurance for such individual. 

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

22 that portion of the payments otherwise allowable as 

23 a deduction under section 220 or 223 for the taxable 

24 year which is equal to the amount of credit allowed 

25 for such taxable year by reason of this subsection. 


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1 ‘‘(e) SPECIAL RULES.— 

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

3 The Secretary shall provide rules for the allocation 

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

6 under such insurance. 

7 ‘‘(2) COORDINATION WITH DEDUCTION FOR

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

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

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

14 ‘‘(3) COORDINATION WITH MEDICAL EXPENSE

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

17 paragraph) be taken into account by the taxpayer 

18 under section 213 or 223 for the taxable year shall 

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

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

22 credit shall be allowed under this section to any indi23 vidual with respect to whom a deduction under sec24 tion 151 is allowable to another taxpayer for a taxVerDate Nov 24 2008 22:26 Jan 07, 2009 Jkt 079200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S142.IS S142

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1 able year beginning in the calendar year in which 

2 such individual’s taxable year begins. 

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

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

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

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

9 section shall not apply to a taxpayer for any taxable 

10 year if such taxpayer elects to have this section not 

11 apply for such taxable year.’’. 

12 (b) INFORMATION REPORTING.— 

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

14 subchapter A of chapter 61 of the Internal Revenue 

15 Code of 1986 (relating to information concerning 

16 transactions with other persons) is amended by add17 ing at the end the following new section: 

18 ‘‘SEC. 6050X. RETURNS RELATING TO PAYMENTS FOR 

19 QUALIFIED HEALTH INSURANCE. 

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

21 person who, in connection with a trade or business con22 ducted by such person, receives payments during any cal23 endar year from any individual for coverage of a depend24 ent child (as defined in section 36A(b)) of such individual 

25 under creditable health insurance, shall make the return 


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

2 may by regulations prescribe) with respect to each indi3 vidual from whom such payments were received. 

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

5 is described in this subsection if such return— 

6 ‘‘(1) is in such form as the Secretary may pre7 scribe, and 

8 ‘‘(2) contains— 

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

10 individual from whom payments described in 

11 subsection (a) were received, 

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

13 dependent child (as so defined) who was pro14 vided by such person with coverage under cred15 itable health insurance by reason of such pay16 ments and the period of such coverage, and 

17 ‘‘(C) such other information as the Sec18 retary may reasonably prescribe. 

19 ‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur20 poses of this section, the term ‘creditable health insurance’ 

21 means qualified health insurance (as defined in section 

22 36A(c)). 

23 ‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID24 UALS WITH RESPECT TO WHOM INFORMATION IS RE25 QUIRED.—Every person required to make a return under 


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

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

3 such return a written statement showing— 

4 ‘‘(1) the name and address of the person re5 quired to make such return and the phone number 

6 of the information contact for such person, 

7 ‘‘(2) the aggregate amount of payments de8 scribed in subsection (a) received by the person re9 quired to make such return from the individual to 

10 whom the statement is required to be furnished, and 

11 ‘‘(3) the information required under subsection 

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

13 The written statement required under the preceding sen14 tence shall be furnished on or before January 31 of the 

15 year following the calendar year for which the return 

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

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

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

19 provided in regulations prescribed by the Secretary, in the 

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

21 another person, only the person first receiving such 

22 amount shall be required to make the return under sub23 section (a).’’. 

24 (2) ASSESSABLE PENALTIES.— 


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1 (A) Subparagraph (B) of section 

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

4 of clause (xxi), by striking ‘‘and’’ at the end of 

5 clause (xxii) and inserting ‘‘or’’, and by insert6 ing at the end the following new clause: 

7 ‘‘(xxiii) section 6050X (relating to re8 turns relating to payments for qualified 

9 health insurance), and’’. 

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

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

12 end of subparagraph (CC), by striking the pe13 riod at the end of subparagraph (DD) and in14 serting ‘‘, or’’, and by adding at the end the fol15 lowing new subparagraph: 

16 ‘‘(EE) section 6050X(d) (relating to re17 turns relating to payments for qualified health 

18 insurance).’’. 

19 (3) CLERICAL AMENDMENT.—The table of sec20 tions for subpart B of part III of subchapter A of 

21 chapter 61 of such Code is amended by inserting 

22 after the item relating to section 6050W the fol23 lowing new item: 

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

24 (c) CONFORMING AMENDMENTS.— 


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

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

4 Code’’. 

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

6 IV of subchapter A of chapter 1 of the Internal Rev7 enue Code of 1986 is amended by inserting after the 

8 item relating to section 36 the following new items: 

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

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

10 this section shall apply to taxable years beginning after 

11 December 31, 2008. 

12 SEC. 302. FORFEITURE OF PERSONAL EXEMPTION FOR ANY 

13 CHILD NOT COVERED BY HEALTH INSUR14 ANCE. 

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

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

17 amended by adding at the end the following new para18 graph: 

19 ‘‘(5) REDUCTION OF EXEMPTION AMOUNT FOR

20 ANY CHILD NOT COVERED BY HEALTH INSUR21 ANCE.— 

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

23 provided in this paragraph, the exemption 

24 amount otherwise determined under this sub25 section for any dependent child (as defined in 


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

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

6 ‘‘(B) FULL REDUCTION IF NO PROOF OF

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

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

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

13 shall be deemed to be 100 percent. 

14 ‘‘(C) NONAPPLICATION OF PARAGRAPH TO

15 TAXPAYERS IN LOWEST TAX BRACKET.—This 

16 paragraph shall not apply to any taxpayer 

17 whose taxable income for the taxable year does 

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

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

21 this section shall apply to taxable years beginning after 

22 December 31, 2008. 


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1 TITLE IV—SMALL BUSINESS 

2 CHILDREN’S HEALTH EDU3 CATION TASK FORCE 

4 SEC. 401. DEFINITIONS. 

5 In this title: 

6 (1) The terms ‘‘Administration’’ and ‘‘Adminis7 trator’’ means the Small Business Administration 

8 and the Administrator thereof, respectively. 

9 (2) The term ‘‘certified development company’’ 

10 means a development company participating in the 

11 program under title V of the Small Business Invest12 ment Act of 1958 (15 U.S.C. 695 et seq.). 

13 (3) The term ‘‘Medicaid program’’ means the 

14 program established under title XIX of the Social 

15 Security Act (42 U.S.C. 1396 et seq.). 

16 (4) The term ‘‘Service Corps of Retired Execu17 tives’’ means the Service Corps of Retired Execu18 tives authorized by section 8(b)(1) of the Small 

19 Business Act (15 U.S.C. 637(b)(1)). 

20 (5) The term ‘‘small business concern’’ has the 

21 meaning given that term in section 3 of the Small 

22 Business Act (15 U.S.C. 632). 

23 (6) The term ‘‘small business development cen24 ter’’ means a small business development center deVerDate Nov 24 2008 22:26 Jan 07, 2009 Jkt 079200 PO 00000 Frm 00034 Fmt 6652 Sfmt 6201 E:\BILLS\S142.IS S142

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1 scribed in section 21 of the Small Business Act (15 

2 U.S.C. 648). 

3 (7) The term ‘‘State’’ has the meaning given 

4 that term for purposes of title XXI of the Social Se5 curity Act (42 U.S.C. 1397aa et seq.). 

6 (8) The term ‘‘State Children’s Health Insur7 ance Program’’ means the State Children’s Health 

8 Insurance Program established under title XXI of 

9 the Social Security Act (42 U.S.C. 1397aa et seq.). 

10 (9) The term ‘‘task force’’ means the task force 

11 established under section 402(a). 

12 (10) The term ‘‘women’s business center’’ 

13 means a women’s business center described in sec14 tion 29 of the Small Business Act (15 U.S.C. 656). 

15 SEC. 402. ESTABLISHMENT OF TASK FORCE. 

16 (a) ESTABLISHMENT.—There is established a task 

17 force to conduct a nationwide campaign of education and 

18 outreach for small business concerns regarding the avail19 ability of coverage for children through private insurance 

20 options, the Medicaid program, and the State Children’s 

21 Health Insurance Program. 

22 (b) MEMBERSHIP.—The task force shall consist of 

23 the Administrator, the Secretary of Health and Human 

24 Services, the Secretary of Labor, and the Secretary of the 

25 Treasury. 


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1 (c) RESPONSIBILITIES.—The campaign conducted 

2 under this section shall include— 

3 (1) efforts to educate the owners of small busi4 ness concerns about the value of health coverage for 

5 children; 

6 (2) information regarding options available to 

7 the owners and employees of small business concerns 

8 to make insurance more affordable, including Fed9 eral and State tax deductions and credits for health 

10 care-related expenses and health insurance expenses 

11 and Federal tax exclusion for health insurance op12 tions available under employer-sponsored cafeteria 

13 plans under section 125 of the Internal Revenue 

14 Code of 1986; 

15 (3) efforts to educate the owners of small busi16 ness concerns about assistance available through 

17 public programs; and 

18 (4) efforts to educate the owners and employees 

19 of small business concerns regarding the availability 

20 of the hotline operated as part of the Insure Kids 

21 Now program of the Department of Health and 

22 Human Services. 

23 (d) IMPLEMENTATION.—In carrying out this section, 

24 the task force may— 


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1 (1) use any business partner of the Administra2 tion, including— 

3 (A) a small business development center; 

4 (B) a certified development company; 

5 (C) a women’s business center; and 

6 (D) the Service Corps of Retired Execu7 tives; 

8 (2) enter into— 

9 (A) a memorandum of understanding with 

10 a chamber of commerce; and 

11 (B) a partnership with any appropriate 

12 small business concern or health advocacy 

13 group; and 

14 (3) designate outreach programs at regional of15 fices of the Department of Health and Human Serv16 ices to work with district offices of the Administra17 tion. 

18 (e) WEBSITE.—The Administrator shall ensure that 

19 links to information on the eligibility and enrollment re20 quirements for the Medicaid program and State Children’s 

21 Health Insurance Program of each State are prominently 

22 displayed on the website of the Administration. 

23 (f) REPORT.— 

24 (1) IN GENERAL.—Not later than 2 years after 

25 the date of enactment of this Act, and every 2 years 


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1 thereafter, the Administrator shall submit to the 

2 Committee on Small Business and Entrepreneurship 

3 of the Senate and the Committee on Small Business 

4 of the House of Representatives a report on the sta5 tus of the nationwide campaign conducted under 

6 subsection (a). 

7 (2) CONTENTS.—Each report submitted under 

8 paragraph (1) shall include a status update on all 

9 efforts made to educate owners and employees of 

10 small business concerns on options for providing 

11 health insurance for children through public and pri12 vate alternatives. 

13 TITLE V—MISCELLANEOUS 

14 SEC. 501. REQUIREMENT FOR GROUP MARKET HEALTH IN15 SURERS TO OFFER DEPENDENT COVERAGE 

16 OPTION FOR WORKERS WITH CHILDREN. 

17 (a) ERISA.— 

18 (1) IN GENERAL.—Subpart B of part 7 of sub19 title B of title I of the Employee Retirement Income 

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

21 amended by adding at the end the following: 

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

23 DEPENDENT COVERAGE FOR CHILDREN. 

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

25 health plan, and a health insurance issuer providing health 


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1 insurance coverage in connection with a group health plan, 

2 shall offer an individual who is enrolled in such coverage 

3 the option to purchase dependent coverage for a child of 

4 the individual. 

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

6 employer shall not be required to contribute to the cost 

7 of purchasing dependent coverage for a child by an indi8 vidual who is an employee of such employer. 

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

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

11 years of age.’’. 

12 (2) CLERICAL AMENDMENT.—The table of con13 tents in section 1 of the Employee Retirement In14 come Security Act of 1974 (29 U.S.C. 1001) is 

15 amended by inserting after the item relating to sec16 tion 713 the following: 

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

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

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

19 (42 U.S.C. 300gg–4 et seq.) is amended by adding at the 

20 end the following: 


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1 ‘‘SEC. 2708. REQUIREMENT TO OFFER OPTION TO PUR2 CHASE DEPENDENT COVERAGE FOR CHIL3 DREN. 

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

5 health plan, and a health insurance issuer providing health 

6 insurance coverage in connection with a group health plan, 

7 shall offer an individual who is enrolled in such coverage 

8 the option to purchase dependent coverage for a child of 

9 the individual. 

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

11 employer shall not be required to contribute to the cost 

12 of purchasing dependent coverage for a child by an indi13 vidual who is an employee of such employer. 

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

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

16 years of age.’’. 

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

18 this section shall apply with respect to plan years begin19 ning on or after January 1, 2009. 

20 TITLE VI—REVENUE PROVISION 

21 SEC. 601. PARTIAL REPEAL OF RATE REDUCTION IN THE 

22 HIGHEST INCOME TAX BRACKET. 

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

24 is amended by adding at the end the following flush sen25 tence: 

26


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1 ‘‘In the case of taxable years beginning 

2 during calendar year 2009 and thereafter, 

3 the final item in the fourth column in the 

4 preceding table shall be applied by sub5 stituting for ‘‘35.0%’’ a rate equal to the 

6 lesser of 39.6% or the rate the Secretary 

7 determines is necessary to provide suffi8 cient revenues to offset the Federal outlays 

9 required to implement the provisions of, 

10 and amendments made by, the Kids Come 

11 First Act of 2009.’’. 

Æ 


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