I

105TH CONGRESS

1ST SESSION H. R. 561

To amend the Internal Revenue Code of 1986 to require that group health

plans and insurers offer access to coverage for children and to assist

families in the purchase of such coverage, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 4, 1997

Mr. STARK introduced the following bill; which was referred to the Committee

on Ways and Means, and in addition to the Committees on Education

and the Workforce, and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions

as fall within the jurisdiction of the committee concerned

A BILL

To amend the Internal Revenue Code of 1986 to require

that group health plans and insurers offer access to

coverage for children and to assist families in the purchase of such 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; FINDINGS; TABLE OF CONTENTS.

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

5 ‘‘Children Health Insurance Act of 1997’’.

6 (b) FINDINGS.—Congress finds that—
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1 (1) it is in the national interest to ensure that

2 every American child has access to affordable health

3 care;

4 (2) no family should be forced to choose be5 tween health care for its children and other essential

6 needs;

7 (3) 10,500,000 children in the United States

8 under the age of 19 have no health insurance cov9 erage, and 90 percent of these children have parents

10 who work, and too many of these children go with11 out needed health care;

12 (4) families have an obligation to contribute to

13 the cost of health insurance coverage for their chil14 dren, consistent with their ability to pay; and

15 (5) the Federal Government has an obligation

16 to help families provide health insurance coverage

17 for children.

18 (c) TABLE OF CONTENTS.—The table of contents of

19 this Act is as follows:

Sec. 1. Short title; findings; table of contents.

Sec. 2. Health insurance availability for children.

Sec. 3. Refundable credit for purchase of health insurance coverage for children.

Sec. 4. Employer may not discriminate against subsidy eligible individuals.

Sec. 5. Medicaid assistance with cost-sharing for qualifying children with family

income below 150 percent of the poverty line.

Sec. 6. Grants to States for health insurance outreach and information programs.
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1 SEC. 2. HEALTH INSURANCE AVAILABILITY FOR CHILDREN.

2 (a) IN GENERAL.—The Internal Revenue Code of

3 1986 (as amended by the Health Insurance Portability

4 and Accountability Act of 1996) is amended by adding at

5 the end the following:

6 ‘‘Subtitle L—Health Insurance

7 Availability for Children

8 ‘‘CHAPTER 101—HEALTH INSURANCE

9 AVAILABILITY FOR CHILDREN

‘‘Sec. 9901. Excise tax on failure to meet requirement of access

to coverage.

‘‘Sec. 9902. Requirement of access to coverage.

‘‘Sec. 9903. Definitions.

10 ‘‘SEC. 9901. EXCISE TAX ON FAILURE TO MEET REQUIRE11 MENT OF ACCESS TO COVERAGE.

12 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed

13 a tax on the failure of—

14 ‘‘(1) a group health plan to meet the coverage

15 requirements of section 9902(a); and

16 ‘‘(2) an insurer that offers health insurance

17 coverage in the individual market to meet the re18 quirements of section 9902(b).

19 ‘‘(b) AMOUNT OF TAX.—

20 ‘‘(1) GROUP HEALTH PLAN.—

21 ‘‘(A) IN GENERAL.—The amount of tax

22 imposed by subsection (a)(1) on any failure

23 with respect to a participant or beneficiary of a
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1 group health plan shall be 25 percent of each

2 premium received by the group health plan for

3 the plan year in which such failure occurs.

4 ‘‘(B) SELF-INSURED PLANS.—In the case

5 that the group health plan is self-insured, the

6 cost to the plan of the coverage of participants

7 and beneficiaries shall be treated as the pre8 mium received for the purposes of subpara9 graph (A).

10 ‘‘(2) INSURER OFFERING INDIVIDUAL HEALTH

11 INSURANCE COVERAGE.—The amount of tax im12 posed by subsection (a)(2) on any failure of an in13 surer with respect to an individual described in para14 graph (1) or (2) of section 9902(b) shall be 25 per15 cent of the total amount of the premiums paid to the

16 insurer for such coverage for the plan year in which

17 such failure occurs.

18 ‘‘(c) LIMITATIONS ON AMOUNT OF TAX.—

19 ‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT

20 DISCOVERED EXERCISING REASONABLE DILI21 GENCE.—No tax shall be imposed by subsection (a)

22 on any failure during any period for which it is es23 tablished to the satisfaction of the Secretary that

24 none of the persons referred to in subsection (e)
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1 knew, or exercising reasonable diligence would have

2 known, that such failure existed.

3 ‘‘(2) TAX NOT TO APPLY TO FAILURES COR4 RECTED WITHIN 30 DAYS.—No tax shall be imposed

5 by subsection (a) on any failure if—

6 ‘‘(A) such failure was due to reasonable

7 cause and not to willful neglect, and

8 ‘‘(B) such failure is corrected during the

9 30-day period beginning on the 1st date any of

10 the persons referred to in subsection (e) knew,

11 or exercising reasonable diligence would have

12 known, that such failure existed.

13 ‘‘(3) WAIVER.—In the case of a failure which is

14 due to reasonable cause and not to willful neglect,

15 the Secretary may waive part or all of the tax im16 posed by subsection (a) to the extent that the pay17 ment of such tax would be excessive relative to the

18 failure involved.

19 ‘‘(d) TAX NOT TO APPLY TO CERTAIN PLANS.—This

20 section shall not apply to—

21 ‘‘(1) any governmental plan (within the mean22 ing of section 414(d)), or

23 ‘‘(2) any church plan (within the meaning of

24 section 414(e)).
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1 ‘‘(e) LIABILITY FOR TAX.—The following shall be re2 sponsible for the tax imposed by subsection (a):

3 ‘‘(1) In the case of the tax imposed by sub4 section (a)(1) on a group health plan, the plan.

5 ‘‘(2) In the case of the tax imposed by sub6 section (a)(2) on an insurer offering health insur7 ance coverage, the insurer.

8 ‘‘SEC. 9902. REQUIREMENT OF ACCESS TO COVERAGE.

9 ‘‘(a) GROUP HEALTH PLANS.—

10 ‘‘(1) IN GENERAL.—Each group health plan

11 that provides coverage to any participant (or bene12 ficiary) must make available qualifying coverage for

13 each qualifying young dependent of an individual

14 who is a participant or beneficiary under the plan.

15 ‘‘(2) TIMING OF OFFER.—The offer under para16 graph (1) shall be made at the time a person first

17 becomes a qualifying young dependent and at least

18 annually thereafter.

19 ‘‘(b) HEALTH INSURANCE COVERAGE.—Each insurer

20 that offers health insurance coverage in the individual

21 market must offer qualifying coverage for each individual

22 who is under 21 years of age, residing in the United

23 States, and a citizen or national of the United States (or

24 alien permanently residing in the United States under

25 color of law).
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1 ‘‘(c) QUALIFYING COVERAGE.—For purposes of this

2 section—

3 ‘‘(1) IN GENERAL.—The term ‘qualifying cov4 erage’ means coverage of health care benefits that

5 the Secretary of Health and Human Services deter6 mines approximates the following benefits, without

7 any limitation based on a pre-existing condition with

8 respect to such benefits and without any waiting pe9 riod for coverage with respect to such benefits at a

10 premium or other charge that is reasonably priced

11 (within the meaning of paragraph (3)):

12 ‘‘(A) MEDICARE BENEFITS.—Benefits pro13 vided under parts A and B of title XVIII of the

14 Social Security Act, or benefits determined to

15 be actuarially equivalent to (or greater than)

16 such benefits; except that, subject to subpara17 graph (D), in no case shall the coinsurance at18 tributable to benefits under part B of such title

19 exceed (with respect to provision of an item or

20 service) the lesser of $10 or 10 percent of the

21 recognized payment amount with respect to

22 such item or service (determined without regard

23 to cost-sharing).

24 ‘‘(B) WELL CHILD CARE BENEFITS.—
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1 ‘‘(i) IN GENERAL.—Payment for the

2 following items and services, without the

3 application of deductibles, coinsurance, and

4 copayments:

5 ‘‘(I) Newborn and well-baby care,

6 including normal newborn care and

7 pediatrician services for high-risk de8 liveries.

9 ‘‘(II) Well-child care, including

10 routine office visits, routine immuni11 zations (including the vaccine itself),

12 routine laboratory tests, and preven13 tive dental care.

14 ‘‘(III) Early and periodic screen15 ing, diagnostic, and treatment services

16 (as defined in section 1905(r) of the

17 Social Security Act) for individuals

18 under the age of 21.

19 ‘‘(ii) PERIODICITY SCHEDULE.—The

20 Secretary, in consultation with the Amer21 ican Academy of Pediatrics, shall establish

22 a schedule of periodicity for services de23 scribed in clauses (I) and (II) of clause (i)
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1 which reflects the general, appropriate fre2 quency with which such services should be

3 provided to healthy children.

4 ‘‘(C) PRESCRIPTION DRUG BENEFIT.—A

5 benefit for prescription drugs and biologicals

6 necessary to meet catastrophic costs for such

7 drugs and biologicals, as determined by the Sec8 retary.

9 ‘‘(D) NO COST-SHARING FOR PREVENTIVE

10 SERVICES.—There shall be no deductibles, coin11 surance, or other cost sharing imposed with re12 spect to benefits for preventive services, as de13 fined by the Secretary.

14 ‘‘(2) MANAGED CARE PERMITTED.—Nothing in

15 this section shall be construed as limiting the provid16 ers through whom the benefits described in para17 graph (1) may be provided so long as there is rea18 sonable access to such benefits.

19 ‘‘(3) REASONABLY PRICED.—For purposes of

20 this subsection, coverage is considered to be ‘reason21 ably priced’ only if the premium or other charge for

22 the coverage does not exceed 150 percent of the av23 erage price for similar coverage offered in the same
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1 State (as determined based upon information pro2 vided by the Secretary of Health and Human Serv3 ices).

4 ‘‘(d) QUALIFYING YOUNG DEPENDENT.—For pur5 poses of this section, the term ‘qualifying young depend6 ent’ means an individual who is under 21 years of age,

7 residing in the United States, is a citizen or national of

8 the United States (or alien permanently residing in the

9 United States under color of law), and a dependent (as

10 defined in section 152).

11 ‘‘SEC. 9903. DEFINITIONS.

12 ‘‘In this chapter—

13 ‘‘(1) GROUP HEALTH PLAN.—The term ‘group

14 health plan’ has the meaning given such term in sec15 tion 5000(b)(1), but does not include such a plan

16 that has medical benefits that only consist of cov17 erage described in paragraph (2)(B).

18 ‘‘(2) HEALTH INSURANCE COVERAGE.—

19 ‘‘(A) IN GENERAL.—Except as provided in

20 subparagraph (B), the term ‘health insurance

21 coverage’ means benefits consisting of medical

22 care (provided directly, through insurance or re23 imbursement, or otherwise) under any hospital

24 or medical service policy or certificate, hospital

25 or medical service plan contract, or health
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1 maintenance organization group contract of2 fered by an insurer or a health maintenance or3 ganization.

4 ‘‘(B) EXCEPTION.—Such term does not in5 clude coverage under any separate policy, cer6 tificate, or contract only for one or more of any

7 of the following:

8 ‘‘(i) Coverage for accident, credit-only,

9 vision, disability income, long-term care,

10 nursing home care, community-based care

11 dental, on-site medical clinics, or employee

12 assistance programs, or any combination

13 thereof.

14 ‘‘(ii) Medicare supplemental health in15 surance (within the meaning of section

16 1882(g)(1) of the Social Security Act (42

17 U.S.C. 1395ss(g)(1))) and similar supple18 mental coverage provided under a group

19 health plan.

20 ‘‘(iii) Coverage issued as a supplement

21 to liability insurance.

22 ‘‘(iv) Liability insurance, including

23 general liability insurance and automobile

24 liability insurance.
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1 ‘‘(v) Workers’ compensation or similar

2 insurance.

3 ‘‘(vi) Automobile medical-payment in4 surance.

5 ‘‘(vii) Coverage for a specified disease

6 or illness.

7 ‘‘(viii) Hospital or fixed indemnity in8 surance.

9 ‘‘(ix) Short-term limited duration in10 surance.

11 ‘‘(x) Such other coverage, comparable

12 to that described in previous clauses, as

13 may be specified in regulations prescribed

14 under this title.

15 ‘‘(3) HEALTH MAINTENANCE ORGANIZATION.—

16 The term ‘health maintenance organization’

17 means—

18 ‘‘(A) a Federally qualified health mainte19 nance organization (as defined in section

20 1301(a) of the Public Health Service Act (42

21 U.S.C. 300e(a))),

22 ‘‘(B) an organization recognized under

23 State law as a health maintenance organization,

24 or
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1 ‘‘(C) a similar organization regulated

2 under State law for solvency in the same man3 ner and to the same extent as such a health

4 maintenance organization,

5 if it is subject to State law which regulates insur6 ance (within the meaning of section 514(b)(2) of the

7 Employee Retirement Income Security Act of 1974).

8 ‘‘(4) INSURER.—The term ‘insurer’ means an

9 insurance company, insurance service, or insurance

10 organization (including a health maintenance organi11 zation) which is licensed to engage in the business

12 of insurance in a State and which is subject to State

13 law which regulates insurance (within the meaning

14 of section 514(b)(2)(A) of the Employee Retirement

15 Income Security Act of 1974).

16 ‘‘(5) INDIVIDUAL MARKET.—The term ‘individ17 ual market’ means the market for health insurance

18 coverage offered to individuals and not to employers

19 or in connection with a group health plan and does

20 not include the market for such coverage issued only

21 by an insurer that makes such coverage available

22 only on the basis of affiliation with an association.

23 ‘‘(6) INCORPORATION OF CERTAIN DEFINI24 TIONS.—The terms ‘beneficiary’ and ‘participant’

25 have the meanings given such terms in section 3 of
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1 the Employee Retirement Income Security Act of

2 1974.’’.

3 (b) CLERICAL AMENDMENT.—The table of contents

4 for the Internal Revenue Code of 1986 is amended by add5 ing after the item relating to subtitle K the following new

6 item:

‘‘Subtitle L. Health Insurance Availability for Children.’’

7 (c) EFFECTIVE DATE.—The requirement of section

8 9902 of the Internal Revenue Code of 1986 (as added by

9 subsection (a) of this section) shall take effect on January

10 1, 1998, and shall apply to coverage offered on or after

11 such date regardless of whether the plan year began before

12 such date.

13 SEC. 3. REFUNDABLE CREDIT FOR PURCHASE OF HEALTH

14 INSURANCE COVERAGE FOR CHILDREN.

15 (a) GENERAL RULE.—Subpart C of part IV of sub16 chapter A of chapter 1 of the Internal Revenue Code of

17 1986 is amended by redesignating section 35 as section

18 36 and by inserting after section 34 the following new sec19 tion:

20 ‘‘SEC. 35. PURCHASE OF HEALTH INSURANCE COVERAGE

21 FOR CHILDREN.

22 ‘‘(a) GENERAL RULE.—In the case of an individual,

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

24 by this subtitle for the taxable year an amount equal to

25 95 percent of the amount paid by the taxpayer during the
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1 taxable year for insurance which constitutes medical care

2 (as defined in section 213) for a qualifying child of the

3 taxpayer.

4 ‘‘(b) LIMITATIONS BASED ON ADJUSTED GROSS IN5 COME AND EMPLOYER CONTRIBUTIONS.—

6 ‘‘(1) LIMITATION BASED ON AGI.—

7 ‘‘(A) IN GENERAL.—No credit shall be al8 lowed under subsection (a) for any taxable year

9 for which the taxpayer’s adjusted gross income

10 exceeds the applicable dollar amount by

11 $10,000 or more.

12 ‘‘(B) PHASEOUT.—If the taxpayer’s ad13 justed gross income for the taxable year exceeds

14 the applicable dollar amount by less than

15 $10,000, the credit which would (but for this

16 paragraph) be allowed under subsection (a)

17 shall be reduced (but not below zero) by an

18 amount which bears the same ratio to such

19 credit as such excess bears to $10,000. Any re20 duction under the preceding sentence which is

21 not a multiple of $10 shall be rounded to the

22 next lowest $10.

23 ‘‘(C) APPLICABLE DOLLAR AMOUNT.—The

24 term ‘applicable dollar amount’ means the sum

25 of—
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1 ‘‘(i) $15,000, plus

2 ‘‘(ii) $5,000 for each qualifying child

3 of the taxpayer who is covered by the in4 surance referred to in subsection (a).

5 ‘‘(2) REDUCTION BASED ON EMPLOYER CON6 TRIBUTION.—The amount of any credit allowed

7 under subsection (a) for any taxable year shall be re8 duced by the amount (if any) of an employer con9 tribution that is made (or offered to be made) on be10 half of the individual toward the premium for the in11 surance for periods during such year.

12 ‘‘(c) QUALIFYING CHILD.—

13 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

14 for the purposes of this section, the term ‘qualifying

15 child’ has the meaning given such term by section

16 32(c)(3).

17 ‘‘(2) EXCEPTIONS.—Such term does not in18 clude—

19 ‘‘(A) an individual who has applied and

20 been determined eligible for medical assistance

21 under title XIX of the Social Security Act, until

22 such time as the individual is no longer eligible

23 for such assistance; and

24 ‘‘(B) an individual who is residing in a

25 State (as defined for purposes of such title)
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1 that the Secretary of Health and Human Serv2 ices determines has reduced eligibility require3 ments for children under a State plan under

4 such title below that in effect as of January 1,

5 1997, until such time as such Secretary deter6 mines the State no longer has reduced such re7 quirements.

8 ‘‘(d) SPECIAL RULES.—

9 ‘‘(1) ONLY QUALIFYING CHILDREN MAY BE

10 COVERED BY INSURANCE.—No amount shall be

11 treated as paid for insurance under subsection (a) if

12 any individual other than a qualifying child of the

13 taxpayer is covered under such insurance. The prin14 ciples of section 213(d)(6) shall apply for purposes

15 of the preceding sentence.

16 ‘‘(2) ONLY REASONABLY PRICED COVERAGE

17 QUALIFIES.—No amount shall be treated as paid for

18 insurance under subsection (a) if the premium or

19 other charge for the insurance is not reasonably

20 priced (within the meaning of section 9902(c)(3)).

21 ‘‘(3) CERTAIN PLANS TREATED AS INSUR22 ANCE.—For purposes of this section, the term ‘in23 surance’ includes coverage under a State high risk

24 pool plan or under a governmental plan (within the

25 meaning of section 414(d)).
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1 ‘‘(4) CERTAIN RULES TO APPLY.—Rules similar

2 to the rules of subsections (d), (e), and (h) of section

3 32, and section 213(d)(6), shall apply for purposes

4 of this section.

5 ‘‘(5) SECTION NOT TO APPLY TO LONG-TERM

6 CARE INSURANCE.—This section shall not apply to

7 insurance which constitutes medical care by reason

8 of section 213(d)(1)(C).

9 ‘‘(6) DISQUALIFICATION OF CERTAIN INSUR10 ANCE.—If the Secretary of Health and Human Serv11 ices determines, based on information provided by a

12 State or otherwise, that an issuer of insurance under

13 this section has engaged in a pattern of abuse or

14 misrepresentation of such insurance, this section

15 shall not apply to insurance issued by such issuer

16 until such Secretary is satisfied that such pattern

17 has been remedied and will not recur.

18 ‘‘(e) COORDINATION WITH OTHER PROVISIONS.—

19 ‘‘(1) DEDUCTION FOR MEDICAL EXPENSES.—

20 The amount taken into account in computing the

21 credit under subsection (a) shall not be taken into

22 account in computing the amount allowable to the

23 taxpayer as a deduction under section 213(a).

24 ‘‘(2) DEDUCTION FOR HEALTH INSURANCE

25 COSTS OF SELF-EMPLOYED INDIVIDUALS.—No
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1 amount taken into account under section 162(l) may

2 be taken into account under this section.’’

3 (b) ADVANCE PAYMENT OF CREDIT.—

4 (1) IN GENERAL.—Chapter 25 of such Code

5 (relating to general provisions relating to employ6 ment taxes) is amended by inserting after section

7 3507 the following new section:

8 ‘‘SEC. 3507A. ADVANCE PAYMENT OF CHILDREN’S HEALTH

9 INSURANCE CREDIT.

10 ‘‘(a) GENERAL RULE.—Except as otherwise provided

11 in this section, every employer making payment of wages

12 to an employee with respect to whom a children’s health

13 insurance credit eligibility certificate is in effect shall, at

14 the time of paying such wages, make an additional pay15 ment equal to the children’s health insurance credit ad16 vance amount of such employee.

17 ‘‘(b) CHILDREN’S HEALTH INSURANCE CREDIT ELI18 GIBILITY CERTIFICATE.—For purposes of this title, a chil19 dren’s health insurance credit eligibility certificate is a

20 statement furnished by an employee to the employer

21 which—

22 ‘‘(1) certifies that the employee will be eligible

23 to receive the credit provided by section 35 for the

24 taxable year,
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1 ‘‘(2) certifies that the employee does not have

2 a children’s health insurance credit eligibility certifi3 cate in effect for the calendar year with respect to

4 the payment of wages by another employer,

5 ‘‘(3) states whether or not the employee’s

6 spouse has such a certificate in effect, and

7 ‘‘(4) estimates the amount of children’s health

8 insurance credit of the employee for the calendar

9 year.

10 For purposes of this section, a certificate shall be treated

11 as being in effect with respect to a spouse if such a certifi12 cate will be in effect on the first status determination date

13 following the date on which the employee furnishes the

14 statement in question.

15 ‘‘(c) CHILDREN’S HEALTH INSURANCE CREDIT AD16 VANCE AMOUNT.—

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

18 the term ‘children’s health insurance credit advance

19 amount’ means, with respect to any payroll period,

20 the amount determined—

21 ‘‘(A) on the basis of the employee’s wages

22 from the employer for such period,

23 ‘‘(B) on the basis of the employee’s esti24 mated amount of children’s health insurance
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1 credit included in the children’s health insur2 ance credit eligibility certificate, and

3 ‘‘(C) in accordance with tables prescribed

4 by the Secretary.

5 ‘‘(2) ADVANCE AMOUNT TABLES.—The tables

6 referred to in paragraph (1)(C)—

7 ‘‘(A) shall be similar in form to the tables

8 prescribed under section 3402 and, to the maxi9 mum extent feasible, shall be coordinated with

10 such tables and the tables prescribed under sec11 tion 3507(c), and

12 ‘‘(B) shall be structured to carry out the

13 principles of subparagraphs (B) and (C) of sec14 tion 3507(c)(2).

15 ‘‘(d) CHILDREN’S HEALTH INSURANCE CREDIT.—

16 For purposes of this section, the term ‘children’s health

17 insurance credit’ means the credit allowable by section 35.

18 ‘‘(e) OTHER RULES.—For purposes of this section,

19 rules similar to the rules of subsections (d) and (e) of sec20 tion 3507 shall apply.

21 ‘‘(f) REGULATIONS.—The Secretary shall prescribe

22 such regulations as may be necessary to carry out the pur23 poses of this section.’’.
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1 (2) CLERICAL AMENDMENT.—The table of sec2 tions for chapter 25 of such Code is amended by in3 serting after the item relating to section 3507 the

4 following new item:

‘‘Sec. 3507A. Advance payment of children’s health insurance

credit.’’.

5 (c) REPORTING.—

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

7 subchapter A of chapter 61 of such Code is amended

8 by adding at the end the following new section:

9 ‘‘SEC. 6050S. RETURNS RELATING TO PREMIUMS RECEIVED

10 FOR HEALTH INSURANCE COVERAGE FOR

11 CHILDREN.

12 ‘‘(a) REQUIREMENT OF REPORTING.—Any person

13 who, in connection with a trade or business, receives from

14 any individual any premium for coverage to which section

15 35 applies shall make a return, according to the forms

16 or regulations prescribed by the Secretary, setting forth—

17 ‘‘(1) the aggregate amount of such premiums

18 received from such individual during any calendar

19 year,

20 ‘‘(2) the name, address, and TIN of such indi21 vidual, and

22 ‘‘(3) such other information as the Secretary

23 may prescribe.
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1 ‘‘(b) STATEMENTS TO BE FURNISHED TO INDIVID2 UALS WITH RESPECT TO WHOM INFORMATION IS RE3 QUIRED.—Every person required to make a return under

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

5 is required to be set forth in such return a written state6 ment showing—

7 ‘‘(1) the name, address, and phone number of

8 the information contact of the person required to

9 make such return, and

10 ‘‘(2) the aggregate amount of premiums de11 scribed in subsection (a) received by such person

12 from such individual.

13 The written statement required under the preceding sen14 tence shall be furnished to the individual on or before Jan15 uary 31 of the year following the calendar year for which

16 the return under subsection (a) was required to be made.’’

17 (2) PENALTIES.—

18 (A) Subparagraph (B) of section

19 6724(d)(1) of such Code is amended by redesig20 nating clauses (x) through (xv) as clauses (xi)

21 through (xvi), respectively, and by inserting

22 after clause (ix) the following new clause:

23 ‘‘(x) section 6050S (relating to report24 ing of premiums received for health insur25 ance coverage for children),’’.
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1 (B) Paragraph (2) of section 6724(d) of

2 such Code is amended by redesignating sub3 paragraph (R) and the succeeding subpara4 graphs as subparagraphs (S) and following, re5 spectively, and by inserting after subparagraph

6 (Q) the following new subparagraph:

7 ‘‘(R) section 6050S(b) (relating to report8 ing of premiums received for health insurance

9 coverage for children),’’.

10 (3) CLERICAL AMENDMENT.—The table of sec11 tions for subpart B of part III of subchapter A of

12 chapter 61 of such Code is amended by adding at

13 the end the following new item:

‘‘Sec. 6050S. Returns relating to premiums received for health insurance coverage for children.’’

14 (d) TECHNICAL AND CONFORMING AMENDMENTS.—

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

16 31, United States Code, is amended by inserting be17 fore the period ‘‘or from section 35 of such Code’’.

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

19 IV of subchapter A of chapter 1 of such Code is

20 amended by striking the item relating to section 35

21 and inserting the following new items:

‘‘Sec. 35. Purchase of health insurance coverage for children.

‘‘Sec. 36. Overpayments of tax.’’

22 (e) EFFECTIVE DATE.—
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1 (1) IN GENERAL.—Except as otherwise pro2 vided in this subsection, the amendments made by

3 this section shall apply to taxable years beginning

4 after December 31, 1997.

5 (2) ADVANCE PAYMENTS.—The amendment

6 made by subsection (b) shall apply to remuneration

7 paid after December 31, 1997.

8 (3) REPORTING.—The amendment made by

9 subsection (c) shall apply to payments received after

10 December 31, 1997.

11 SEC. 4. EMPLOYER MAY NOT DISCRIMINATE AGAINST SUB12 SIDY ELIGIBLE INDIVIDUALS.

13 (a) GENERAL RULE.—Any employer which elects to

14 make employer contributions on behalf of an individual

15 who is an employee of such employer, or who is a depend16 ent of such employee, for health insurance coverage shall

17 not condition, or vary, such contributions with respect to

18 any such individual by reason of such individual’s status

19 as an individual eligible for a tax credit under section 35

20 of the Internal Revenue Code of 1986 (as added by section

21 3 of this Act).

22 (b) ELIMINATION OF CONTRIBUTIONS.—An employer

23 shall not be treated as failing to meet the requirements

24 of subsection (a) if the employer ceases to make employer
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1 contributions for health insurance coverage for all its em2 ployees.

3 SEC. 5. MEDICAID COST-SHARING ASSISTANCE FOR QUALI4 FYING CHILDREN WITH FAMILY INCOME

5 BELOW 150 PERCENT OF THE POVERTY LINE.

6 (a) IN GENERAL.—Section 1902 of the Social Secu7 rity Act (42 U.S.C. 1396a) is amended—

8 (1) in subsection (a)(10)(E)—

9 (A) by striking ‘‘and’’ at the end of clause

10 (ii), and

11 (B) by inserting at the end the following

12 new clause:

13 ‘‘(iv) for making medical assistance avail14 able for cost-sharing assistance described in

15 subsection (aa)(2) for qualifying children de16 scribed in subsection (aa)(1); and’’; and

17 (2) by adding at the end the following new sub18 section:

19 ‘‘(aa)(1) For purposes of subsection (a)(10)(E)(iv),

20 individuals described in this paragraph are qualifying chil21 dren (as defined in section 35(c) of the Internal Revenue

22 Code of 1986) whose family income has been determined

23 under paragraph (3) to be less than 150 percent of the

24 official poverty line (as defined by the Office of Manage25 ment and Budget, and revised annually in accordance with
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1 section 673(2) of the Omnibus Budget Reconciliation Act

2 of 1981) applicable to a family of the size involved.

3 ‘‘(2) For purposes of subsection (a)(10)(E)(iv), the

4 cost-sharing assistance described in this paragraph con5 sists of a reduction in the amount of copayment applied

6 with respect to an item or service for insurance under sec7 tion 35 of the Internal Revenue Code of 1986 to an

8 amount equal to 20 percent of the copayment amount oth9 erwise applicable under the insurance, rounded to the

10 nearest dollar.

11 ‘‘(3)(A) The Secretary shall promulgate regulations

12 specifying requirements for State plans under this title

13 with respect to determining eligibility of qualifying chil14 dren for cost-sharing assistance under this subsection.

15 ‘‘(B) The regulations promulgated by the Secretary

16 under subparagraph (A) shall include the following re17 quirements:

18 ‘‘(i) A State plan shall provide that an individ19 ual may file an application for assistance with an

20 agency designated by the State at any time, in per21 son or by mail.

22 ‘‘(ii) A State plan shall provide for the use of

23 an application form developed by the Secretary.

24 Such form shall—
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1 ‘‘(I) be simple in form and understandable

2 to the average individual;

3 ‘‘(II) in the case of a State with a signifi4 cant number of residents with limited English5 speaking proficiency, be in languages other than

6 English, as appropriate for the State;

7 ‘‘(III) require the provision of information

8 necessary to make a determination as to wheth9 er an individual is eligible for assistance, includ10 ing a declaration of estimated income by the in11 dividual; and

12 ‘‘(IV) require attachment of such docu13 mentation as deemed necessary by the Sec14 retary in order to ensure eligibility for assist15 ance.

16 ‘‘(iii) A State plan shall make applications ac17 cessible at locations where individuals are most likely

18 to obtain the applications.

19 ‘‘(iv) A State plan shall require individuals to

20 submit revised applications to reflect changes in esti21 mated family incomes, including changes in employ22 ment status of family members, during the year.

23 The State shall revise the amount of any cost-shar24 ing assistance based on such a revised application.
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1 ‘‘(C) A determination by a State that an individual

2 is eligible for cost-sharing assistance shall be effective for

3 the calendar year for which such determination is made

4 unless a revised application submitted under subpara5 graph (B)(iv) indicates that an individual is no longer eli6 gible for assistance.

7 ‘‘(D) Determinations made pursuant to this para8 graph may be coordinated with determinations of eligi9 bility for state-administered health programs to the extent

10 that such coordination brings about administrative effi11 ciencies.

12 ‘‘(4) If a State determines that a qualifying child is

13 eligible for cost-sharing assistance under this section the

14 State shall notify the health plan in which such individual

15 is enrolled in a timely manner.’’.

16 (b) 100 PERCENT FEDERAL FINANCING.—Section

17 1905(b) of such Act (42 U.S.C. 1396d(b)) is amended by

18 adding at the end the following: ‘‘Notwithstanding the

19 first sentence of this section, the Federal medical assist20 ance percentage shall be 100 percent with respect to

21 amounts expended as medical assistance for cost-sharing

22 assistance described in the last sentence of section

23 1905(a).’’.

24 (c) COVERAGE OF COST-SHARING ASSISTANCE AS

25 MEDICAL ASSISTANCE.—Section 1905(a) of such Act (42
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1 U.S.C. 1396d(a)) is amended by adding at the end the

2 following: ‘‘Such term also includes payment of the cost3 sharing assistance under section 1902(a)(10)(E)(iv).’’.

4 (d) EFFECTIVE DATE.—(1) Except as provided in

5 paragraph (2), the amendments made by this section shall

6 apply to calendar quarters beginning on or after January

7 1, 1998, without regard to whether or not final regulations

8 to carry out such amendments have been promulgated by

9 such date.

10 (2) In the case of a State plan for medical assistance

11 under title XIX of the Social Security Act which the Sec12 retary of Health and Human Services determines requires

13 State legislation (other than legislation appropriating

14 funds) in order for the plan to meet the additional require15 ments imposed by the amendments made by subsection

16 (a), the State plan shall not be regarded as failing to com17 ply with the requirements of such title solely on the basis

18 of its failure to meet these additional requirements before

19 the first day of the first calendar quarter beginning after

20 the close of the first regular session of the State legisla21 ture that begins after the date of the enactment of this

22 Act. For purposes of the previous sentence, in the case

23 of a State that has a 2-year legislative session, each year

24 of such session shall be deemed to be a separate regular

25 session of the State legislature.
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1 SEC. 6. GRANTS TO STATES FOR HEALTH INSURANCE OUT2 REACH AND INFORMATION PROGRAMS.

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

4 Human Services (in this section referred to as the ‘‘Sec5 retary’’) shall provide financial assistance to States in

6 order to operate outreach and information programs that

7 meet the requirements specified in subsection (b).

8 (b) REQUIREMENTS FOR OUTREACH AND INFORMA9 TION PROGRAMS.—Each outreach and information pro10 gram shall—

11 (1) target individuals eligible for access to

12 health coverage under section 9902 of the Internal

13 Revenue Code of 1986, tax credits under section 35

14 of such Code, or cost-sharing assistance under sec15 tion 1902(aa) of the Social Security Act;

16 (2) provide comparative information on the poli17 cies offered by issuers in the State under sections 35

18 and 9902 of such Code;

19 (3) assist individuals in purchasing policies

20 under section 9902 of such Code; and

21 (4) forward to the Secretary any findings by

22 the State of a pattern of abuse or misrepresentation

23 by the issuer of insurance for which a tax credit is

24 available under section 35 of such Code.
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1 The Secretary shall consider findings forwarded under

2 paragraph (4) in determining whether a insurance contin3 ues to qualify for purposes of obtaining a tax credit under

4 section 35 of such Code.

5 (c) AMOUNT OF ASSISTANCE.—The Secretary shall

6 determine the amount of financial assistance provided to

7 a State under this section. In determining such amount,

8 the Secretary shall take into account the number of quali9 fying children (as defined in section 35(c) of such Code)

10 in the State.

11 (d) APPLICATION REQUIRED.—No State is eligible

12 for assistance under this section unless the State submits

13 to the Secretary an application that is in such form, is

14 made in such manner, and contains such agreements, as15 surances, and information as the Secretary determines to

16 be necessary to carry out this section.

17 (e) AUTHORIZATION OF APPROPRIATIONS.—There

18 are authorized to be appropriated for each fiscal year (be19 ginning with fiscal year 1998) such sums as may be nec20 essary to carry out this section.

Æ