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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 561 Introduced in House (IH)]

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.

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

SECTION 1. SHORT TITLE; FINDINGS; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Children Health 
Insurance Act of 1997''.
    (b) Findings.--Congress finds that--
            (1) it is in the national interest to ensure that every 
        American child has access to affordable health care;
            (2) no family should be forced to choose between health 
        care for its children and other essential needs;
            (3) 10,500,000 children in the United States under the age 
        of 19 have no health insurance coverage, and 90 percent of 
        these children have parents who work, and too many of these 
        children go without needed health care;
            (4) families have an obligation to contribute to the cost 
        of health insurance coverage for their children, consistent 
        with their ability to pay; and
            (5) the Federal Government has an obligation to help 
        families provide health insurance coverage for children.
    (c) Table of Contents.--The table of contents of 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.

SEC. 2. HEALTH INSURANCE AVAILABILITY FOR CHILDREN.

    (a) In General.--The Internal Revenue Code of 1986 (as amended by 
the Health Insurance Portability and Accountability Act of 1996) is 
amended by adding at the end the following:

        ``Subtitle L--Health Insurance Availability for Children

       ``CHAPTER 101--HEALTH INSURANCE 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.

``SEC. 9901. EXCISE TAX ON FAILURE TO MEET REQUIREMENT OF ACCESS TO 
              COVERAGE.

    ``(a) Imposition of Tax.--There is hereby imposed a tax on the 
failure of--
            ``(1) a group health plan to meet the coverage requirements 
        of section 9902(a); and
            ``(2) an insurer that offers health insurance coverage in 
        the individual market to meet the requirements of section 
        9902(b).
    ``(b) Amount of Tax.--
            ``(1) Group health plan.--
                    ``(A) In general.--The amount of tax imposed by 
                subsection (a)(1) on any failure with respect to a 
                participant or beneficiary of a  group health plan 
shall be 25 percent of each premium received by the group health plan 
for the plan year in which such failure occurs.
                    ``(B) Self-insured plans.--In the case that the 
                group health plan is self-insured, the cost to the plan 
                of the coverage of participants and beneficiaries shall 
                be treated as the premium received for the purposes of 
                subparagraph (A).
            ``(2) Insurer offering individual health insurance 
        coverage.--The amount of tax imposed by subsection (a)(2) on 
        any failure of an insurer with respect to an individual 
        described in paragraph (1) or (2) of section 9902(b) shall be 
        25 percent of the total amount of the premiums paid to the 
        insurer for such coverage for the plan year in which such 
        failure occurs.
    ``(c) Limitations on Amount of Tax.--
            ``(1) Tax not to apply where failure not discovered 
        exercising reasonable diligence.--No tax shall be imposed by 
        subsection (a) on any failure during any period for which it is 
        established to the satisfaction of the Secretary that none of 
        the persons referred to in subsection (e) knew, or exercising 
        reasonable diligence would have known, that such failure 
        existed.
            ``(2) Tax not to apply to failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected during the 30-day 
                period beginning on the 1st date any of the persons 
                referred to in subsection (e) knew, or exercising 
                reasonable diligence would have known, that such 
                failure existed.
            ``(3) Waiver.--In the case of a failure which is due to 
        reasonable cause and not to willful neglect, the Secretary may 
        waive part or all of the tax imposed by subsection (a) to the 
        extent that the payment of such tax would be excessive relative 
        to the failure involved.
    ``(d) Tax Not To Apply to Certain Plans.--This section shall not 
apply to--
            ``(1) any governmental plan (within the meaning of section 
        414(d)), or
            ``(2) any church plan (within the meaning of section 
        414(e)).
    ``(e) Liability for Tax.--The following shall be responsible for 
the tax imposed by subsection (a):
            ``(1) In the case of the tax imposed by subsection (a)(1) 
        on a group health plan, the plan.
            ``(2) In the case of the tax imposed by subsection (a)(2) 
        on an insurer offering health insurance coverage, the insurer.

``SEC. 9902. REQUIREMENT OF ACCESS TO COVERAGE.

    ``(a) Group Health Plans.--
            ``(1) In general.--Each group health plan that provides 
        coverage to any participant (or beneficiary) must make 
        available qualifying coverage for each qualifying young 
        dependent of an individual who is a participant or beneficiary 
        under the plan.
            ``(2) Timing of offer.--The offer under paragraph (1) shall 
        be made at the time a person first becomes a qualifying young 
        dependent and at least annually thereafter.
    ``(b) Health Insurance Coverage.--Each insurer that offers health 
insurance coverage in the individual market must offer qualifying 
coverage for each individual who is under 21 years of age, residing in 
the United States, and a citizen or national of the United States (or 
alien permanently residing in the United States under color of law).
    ``(c) Qualifying Coverage.--For purposes of this section--
            ``(1) In general.--The term `qualifying coverage' means 
        coverage of health care benefits that the Secretary of Health 
        and Human Services determines approximates the following 
        benefits, without any limitation based on a pre-existing 
        condition with respect to such benefits and without any waiting 
        period for coverage with respect to such benefits at a premium 
        or other charge that is reasonably priced (within the meaning 
        of paragraph (3)):
                    ``(A) Medicare benefits.--Benefits provided under 
                parts A and B of title XVIII of the Social Security 
                Act, or benefits determined to be actuarially 
                equivalent to (or greater than) such benefits; except 
                that, subject to subparagraph (D), in no case shall the 
                coinsurance attributable to benefits under part B of 
                such title exceed (with respect to provision of an item 
                or service) the lesser of $10 or 10 percent of the 
                recognized payment amount with respect to such item or 
                service (determined without regard to cost-sharing).
                    ``(B) Well child care benefits.--
                            ``(i) In general.--Payment for the 
                        following items and services, without the 
                        application of deductibles, coinsurance, and 
                        copayments:
                                    ``(I) Newborn and well-baby care, 
                                including normal newborn care and 
                                pediatrician services for high-risk 
                                deliveries.
                                    ``(II) Well-child care, including 
                                routine office visits, routine 
                                immunizations (including the vaccine 
                                itself), routine laboratory tests, and 
                                preventive dental care.
                                    ``(III) Early and periodic 
                                screening, diagnostic, and treatment 
                                services (as defined in section 1905(r) 
                                of the Social Security Act) for 
                                individuals under the age of 21.
                            ``(ii) Periodicity schedule.--The 
                        Secretary, in consultation with the American 
                        Academy of Pediatrics, shall establish a 
                        schedule of periodicity for services described 
                        in clauses (I) and (II) of clause (i) which 
                        reflects the general, appropriate frequency 
                        with which such services should be provided to 
                        healthy children.
                    ``(C) Prescription drug benefit.--A benefit for 
                prescription drugs and biologicals necessary to meet 
                catastrophic costs for such drugs and biologicals, as 
                determined by the Secretary.
                    ``(D) No cost-sharing for preventive services.--
                There shall be no deductibles, coinsurance, or other 
                cost sharing imposed with respect to benefits for 
                preventive services, as defined by the Secretary.
            ``(2) Managed care permitted.--Nothing in this section 
        shall be construed as limiting the providers through whom the 
        benefits described in paragraph (1) may be provided so long as 
        there is reasonable access to such benefits.
            ``(3) Reasonably priced.--For purposes of this subsection, 
        coverage is considered to be `reasonably priced' only if the 
        premium or other charge for the coverage does not exceed 150 
        percent of the average price for similar coverage offered in 
        the same State (as determined based upon information provided 
        by the Secretary of Health and Human Services).
    ``(d) Qualifying Young Dependent.--For purposes of this section, 
the term `qualifying young dependent' means an individual who is under 
21 years of age, residing in the United States, is a citizen or 
national of the United States (or alien permanently residing in the 
United States under color of law), and a dependent (as defined in 
section 152).

``SEC. 9903. DEFINITIONS.

    ``In this chapter--
            ``(1) Group health plan.--The term `group health plan' has 
        the meaning given such term in section 5000(b)(1), but does not 
        include such a plan that has medical benefits that only consist 
        of coverage described in paragraph (2)(B).
            ``(2) Health insurance coverage.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `health insurance coverage' 
                means benefits consisting of medical care (provided 
                directly, through insurance or reimbursement, or 
                otherwise) under any hospital or medical service policy 
                or certificate, hospital or medical service plan 
                contract, or health maintenance organization group 
                contract offered by an insurer or a health maintenance 
                organization.
                    ``(B) Exception.--Such term does not include 
                coverage under any separate policy, certificate, or 
                contract only for one or more of any of the following:
                            ``(i) Coverage for accident, credit-only, 
                        vision, disability income, long-term care, 
                        nursing home care, community-based care dental, 
                        on-site medical clinics, or employee assistance 
                        programs, or any combination thereof.
                            ``(ii) Medicare supplemental health 
                        insurance (within the meaning of section 
                        1882(g)(1) of the Social Security Act (42 
                        U.S.C. 1395ss(g)(1))) and similar supplemental 
                        coverage provided under a group health plan.
                            ``(iii) Coverage issued as a supplement to 
                        liability insurance.
                            ``(iv) Liability insurance, including 
                        general liability insurance and automobile 
                        liability insurance.
                            ``(v) Workers' compensation or similar 
                        insurance.
                            ``(vi) Automobile medical-payment 
                        insurance.
                            ``(vii) Coverage for a specified disease or 
                        illness.
                            ``(viii) Hospital or fixed indemnity 
                        insurance.
                            ``(ix) Short-term limited duration 
                        insurance.
                            ``(x) Such other coverage, comparable to 
                        that described in previous clauses, as may be 
                        specified in regulations prescribed under this 
                        title.
            ``(3) Health maintenance organization.--The term `health 
        maintenance organization' means--
                    ``(A) a Federally qualified health maintenance 
                organization (as defined in section 1301(a) of the 
                Public Health Service Act (42 U.S.C. 300e(a))),
                    ``(B) an organization recognized under State law as 
                a health maintenance organization, or
                    ``(C) a similar organization regulated under State 
                law for solvency in the same manner and to the same 
                extent as such a health maintenance organization,
        if it is subject to State law which regulates insurance (within 
        the meaning of section 514(b)(2) of the Employee Retirement 
        Income Security Act of 1974).
            ``(4) Insurer.--The term `insurer' means an insurance 
        company, insurance service, or insurance organization 
        (including a health maintenance organization) which is licensed 
        to engage in the business of insurance in a State and which is 
        subject to State law which regulates insurance (within the 
        meaning of section 514(b)(2)(A) of the Employee Retirement 
        Income Security Act of 1974).
            ``(5) Individual market.--The term `individual market' 
        means the market for health insurance coverage offered to 
        individuals and not to employers or in connection with a group 
        health plan and does not include the market for such coverage 
        issued only by an insurer that makes such coverage available 
        only on the basis of affiliation with an association.
            ``(6) Incorporation of certain definitions.--The terms 
        `beneficiary' and `participant' have the meanings given such 
        terms in section 3 of the Employee Retirement Income Security 
        Act of 1974.''.
    (b) Clerical Amendment.--The table of contents for the Internal 
Revenue Code of 1986 is amended by adding after the item relating to 
subtitle K the following new item:

                              ``Subtitle L. Health Insurance 
                                        Availability for Children.''
    (c) Effective Date.--The requirement of section 9902 of the 
Internal Revenue Code of 1986 (as added by subsection (a) of this 
section) shall take effect on January 1, 1998, and shall apply to 
coverage offered on or after such date regardless of whether the plan 
year began before such date.

SEC. 3. REFUNDABLE CREDIT FOR PURCHASE OF HEALTH INSURANCE COVERAGE FOR 
              CHILDREN.

    (a) General Rule.--Subpart C of part IV of subchapter A of chapter 
1 of the Internal Revenue Code of 1986 is amended by redesignating 
section 35 as section 36 and by inserting after section 34 the 
following new section:

``SEC. 35. PURCHASE OF HEALTH INSURANCE COVERAGE FOR CHILDREN.

    ``(a) General Rule.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle for the 
taxable year an amount equal to 95 percent of the amount paid by the 
taxpayer during the taxable year for insurance which constitutes 
medical care (as defined in section 213) for a qualifying child of the 
taxpayer.
    ``(b) Limitations Based on Adjusted Gross Income and Employer 
Contributions.--
            ``(1) Limitation based on agi.--
                    ``(A) In general.--No credit shall be allowed under 
                subsection (a) for any taxable year for which the 
                taxpayer's adjusted gross income exceeds the applicable 
                dollar amount by $10,000 or more.
                    ``(B) Phaseout.--If the taxpayer's adjusted gross 
                income for the taxable year exceeds the applicable 
                dollar amount by less than $10,000, the credit which 
                would (but for this paragraph) be allowed under 
                subsection (a) shall be reduced (but not below zero) by 
                an amount which bears the same ratio to such credit as 
                such excess bears to $10,000. Any reduction under the 
                preceding sentence which is not a multiple of $10 shall 
                be rounded to the next lowest $10.
                    ``(C) Applicable dollar amount.--The term 
                `applicable dollar amount' means the sum of--
                            ``(i) $15,000, plus
                            ``(ii) $5,000 for each qualifying child of 
                        the taxpayer who is covered by the insurance 
                        referred to in subsection (a).
            ``(2) Reduction based on employer contribution.--The amount 
        of any credit allowed under subsection (a) for any taxable year 
        shall be reduced by the amount (if any) of an employer 
        contribution that is made (or offered to be made) on behalf of 
        the individual toward the premium for the insurance for periods 
        during such year.
    ``(c) Qualifying Child.--
            ``(1) In general.--Subject to paragraph (2), for the 
        purposes of this section, the term `qualifying child' has the 
        meaning given such term by section 32(c)(3).
            ``(2) Exceptions.--Such term does not include--
                    ``(A) an individual who has applied and been 
                determined eligible for medical assistance under title 
                XIX of the Social Security Act, until such time as the 
                individual is no longer eligible for such assistance; 
                and
                    ``(B) an individual who is residing in a State (as 
                defined for purposes of such title) that the Secretary 
                of Health and Human Services determines has reduced 
                eligibility requirements for children under a State 
                plan under such title below that in effect as of 
                January 1, 1997, until such time as such Secretary 
                determines the State no longer has reduced such 
                requirements.
    ``(d) Special Rules.--
            ``(1) Only qualifying children may be covered by 
        insurance.--No amount shall be treated as paid for insurance 
        under subsection (a) if any individual other than a qualifying 
        child of the taxpayer is covered under such insurance. The 
        principles of section 213(d)(6) shall apply for purposes of the 
        preceding sentence.
            ``(2) Only reasonably priced coverage qualifies.--No amount 
        shall be treated as paid for insurance under subsection (a) if 
        the premium or other charge for the insurance is not reasonably 
        priced (within the meaning of section 9902(c)(3)).
            ``(3) Certain plans treated as insurance.--For purposes of 
        this section, the term `insurance' includes coverage under a 
        State high risk pool plan or under a governmental plan (within 
        the meaning of section 414(d)).
            ``(4) Certain rules to apply.--Rules similar to the rules 
        of subsections (d), (e), and (h) of section 32, and section 
        213(d)(6), shall apply for purposes of this section.
            ``(5) Section not to apply to long-term care insurance.--
        This section shall not apply to insurance which constitutes 
        medical care by reason of section 213(d)(1)(C).
            ``(6) Disqualification of certain insurance.--If the 
        Secretary of Health and Human Services determines, based on 
        information provided by a State or otherwise, that an issuer of 
        insurance under this section has engaged in a pattern of abuse 
        or misrepresentation of such insurance, this section shall not 
        apply to insurance issued by such issuer until such Secretary 
        is satisfied that such pattern has been remedied and will not 
        recur.
    ``(e) Coordination With Other Provisions.--
            ``(1) Deduction for medical expenses.--The amount taken 
        into account in computing the credit under subsection (a) shall 
        not be taken into account in computing the amount allowable to 
        the taxpayer as a deduction under section 213(a).
            ``(2) Deduction for health insurance costs of self-employed 
        individuals.--No amount taken into account under section 162(l) 
        may be taken into account under this section.''
    (b) Advance Payment of Credit.--
            (1) In general.--Chapter 25 of such Code (relating to 
        general provisions relating to employment taxes) is amended by 
        inserting after section 3507 the following new section:

``SEC. 3507A. ADVANCE PAYMENT OF CHILDREN'S HEALTH INSURANCE CREDIT.

    ``(a) General Rule.--Except as otherwise provided in this section, 
every employer making payment of wages to an employee with respect to 
whom a children's health insurance credit eligibility certificate is in 
effect shall, at the time of paying such wages, make an additional 
payment equal to the children's health insurance credit advance amount 
of such employee.
    ``(b) Children's Health Insurance Credit Eligibility Certificate.--
For purposes of this title, a children's health insurance credit 
eligibility certificate is a statement furnished by an employee to the 
employer which--
            ``(1) certifies that the employee will be eligible to 
        receive the credit provided by section 35 for the taxable year,
            ``(2) certifies that the employee does not have a 
        children's health insurance credit eligibility certificate in 
        effect for the calendar year with respect to the payment of 
        wages by another employer,
            ``(3) states whether or not the employee's spouse has such 
        a certificate in effect, and
            ``(4) estimates the amount of children's health insurance 
        credit of the employee for the calendar year.
For purposes of this section, a certificate shall be treated as being 
in effect with respect to a spouse if such a certificate will be in 
effect on the first status determination date following the date on 
which the employee furnishes the statement in question.
    ``(c) Children's Health Insurance Credit Advance Amount.--
            ``(1) In general.--For purposes of this title, the term 
        `children's health insurance credit advance amount' means, with 
        respect to any payroll period, the amount determined--
                    ``(A) on the basis of the employee's wages from the 
                employer for such period,
                    ``(B) on the basis of the employee's estimated 
                amount of children's health insurance credit included 
                in the children's health insurance credit eligibility 
                certificate, and
                    ``(C) in accordance with tables prescribed by the 
                Secretary.
            ``(2) Advance amount tables.--The tables referred to in 
        paragraph (1)(C)--
                    ``(A) shall be similar in form to the tables 
                prescribed under section 3402 and, to the maximum 
                extent feasible, shall be coordinated with such tables 
                and the tables prescribed under section 3507(c), and
                    ``(B) shall be structured to carry out the 
                principles of subparagraphs (B) and (C) of section 
                3507(c)(2).
    ``(d) Children's Health Insurance Credit.--For purposes of this 
section, the term `children's health insurance credit' means the credit 
allowable by section 35.
    ``(e) Other Rules.--For purposes of this section, rules similar to 
the rules of subsections (d) and (e) of section 3507 shall apply.
    ``(f) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section.''.
            (2) Clerical Amendment.--The table of sections for chapter 
        25 of such Code is amended by inserting after the item relating 
        to section 3507 the following new item:

                              ``Sec. 3507A. Advance payment of 
                                        children's health insurance 
                                        credit.''.
    (c) Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of such Code is amended by adding at the end the 
        following new section:

``SEC. 6050S. RETURNS RELATING TO PREMIUMS RECEIVED FOR HEALTH 
              INSURANCE COVERAGE FOR CHILDREN.

    ``(a) Requirement of Reporting.--Any person who, in connection with 
a trade or business, receives from any individual any premium for 
coverage to which section 35 applies shall make a return, according to 
the forms or regulations prescribed by the Secretary, setting forth--
            ``(1) the aggregate amount of such premiums received from 
        such individual during any calendar year,
            ``(2) the name, address, and TIN of such individual, and
            ``(3) such other information as the Secretary may 
        prescribe.
    ``(b) Statements To Be Furnished to Individuals With Respect to 
Whom Information Is Required.--Every person required to make a return 
under  subsection (a) shall furnish to each individual whose name is 
required to be set forth in such return a written statement showing--
            ``(1) the name, address, and phone number of the 
        information contact of the person required to make such return, 
        and
            ``(2) the aggregate amount of premiums described in 
        subsection (a) received by such person from such individual.
The written statement required under the preceding sentence shall be 
furnished to the individual on or before January 31 of the year 
following the calendar year for which the return under subsection (a) 
was required to be made.''
            (2) Penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1) of such 
                Code is amended by redesignating clauses (x) through 
                (xv) as clauses (xi) through (xvi), respectively, and 
                by inserting after clause (ix) the following new 
                clause:
                            ``(x) section 6050S (relating to reporting 
                        of premiums received for health insurance 
                        coverage for children),''.
                    (B) Paragraph (2) of section 6724(d) of such Code 
                is amended by redesignating subparagraph (R) and the 
                succeeding subparagraphs as subparagraphs (S) and 
                following, respectively, and by inserting after 
                subparagraph (Q) the following new subparagraph:
                    ``(R) section 6050S(b) (relating to reporting of 
                premiums received for health insurance coverage for 
                children),''.
            (3) Clerical amendment.--The table of sections for subpart 
        B of part III of subchapter A of chapter 61 of such Code is 
        amended by adding at the end the following new item:

                              ``Sec. 6050S. Returns relating to 
                                        premiums received for health 
                                        insurance coverage for 
                                        children.''
    (d) Technical and Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``or 
        from section 35 of such Code''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of such Code is amended by striking 
        the item relating to section 35 and inserting the following new 
        items:

                              ``Sec. 35. Purchase of health insurance 
                                        coverage for children.
                              ``Sec. 36. Overpayments of tax.''
    (e) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years beginning after December 31, 1997.
            (2) Advance payments.--The amendment made by subsection (b) 
        shall apply to remuneration paid after December 31, 1997.
            (3) Reporting.--The amendment made by subsection (c) shall 
        apply to payments received after December 31, 1997.

SEC. 4. EMPLOYER MAY NOT DISCRIMINATE AGAINST SUBSIDY ELIGIBLE 
              INDIVIDUALS.

    (a) General Rule.--Any employer which elects to make employer 
contributions on behalf of an individual who is an employee of such 
employer, or who is a dependent of such employee, for health insurance 
coverage shall not condition, or vary, such contributions with respect 
to any such individual by reason of such individual's status as an 
individual eligible for a tax credit under section 35 of the Internal 
Revenue Code of 1986 (as added by section 3 of this Act).
    (b) Elimination of Contributions.--An employer shall not be treated 
as failing to meet the requirements of subsection (a) if the employer 
ceases to make employer contributions for health insurance coverage for 
all its employees.

SEC. 5. MEDICAID COST-SHARING ASSISTANCE FOR QUALIFYING CHILDREN WITH 
              FAMILY INCOME BELOW 150 PERCENT OF THE POVERTY LINE.

    (a) In General.--Section 1902 of the Social Security Act (42 U.S.C. 
1396a) is amended--
            (1) in subsection (a)(10)(E)--
                    (A) by striking ``and'' at the end of clause (ii), 
                and
                    (B) by inserting at the end the following new 
                clause:
                    ``(iv) for making medical assistance available for 
                cost-sharing assistance described in subsection (aa)(2) 
                for qualifying children described in subsection 
                (aa)(1); and''; and
            (2) by adding at the end the following new subsection:
    ``(aa)(1) For purposes of subsection (a)(10)(E)(iv), individuals 
described in this paragraph are qualifying children (as defined in 
section 35(c) of the Internal Revenue Code of 1986) whose family income 
has been determined under paragraph (3) to be less than 150 percent of 
the official poverty line (as defined by the Office of Management and 
Budget, and revised annually in accordance with section 673(2) of the 
Omnibus Budget Reconciliation Act of 1981) applicable to a family of 
the size involved.
    ``(2) For purposes of subsection (a)(10)(E)(iv), the cost-sharing 
assistance described in this paragraph consists of a reduction in the 
amount of copayment applied with respect to an item or service for 
insurance under section 35 of the Internal Revenue Code of 1986 to an 
amount equal to 20 percent of the copayment amount otherwise applicable 
under the insurance, rounded to the nearest dollar.
    ``(3)(A) The Secretary shall promulgate regulations specifying 
requirements for State plans under this title with respect to 
determining eligibility of qualifying children for cost-sharing 
assistance under this subsection.
    ``(B) The regulations promulgated by the Secretary under 
subparagraph (A) shall include the following requirements:
            ``(i) A State plan shall provide that an individual may 
        file an application for assistance with an agency designated by 
        the State at any time, in person or by mail.
            ``(ii) A State plan shall provide for the use of an 
        application form developed by the Secretary. Such form shall--
                    ``(I) be simple in form and understandable to the 
                average individual;
                    ``(II) in the case of a State with a significant 
                number of residents with limited English-speaking 
                proficiency, be in languages other than English, as 
                appropriate for the State;
                    ``(III) require the provision of information 
                necessary to make a determination as to whether an 
                individual is eligible for assistance, including a 
                declaration of estimated income by the individual; and
                    ``(IV) require attachment of such documentation as 
                deemed necessary by the Secretary in order to ensure 
                eligibility for assistance.
            ``(iii) A State plan shall make applications accessible at 
        locations where individuals are most likely to obtain the 
        applications.
            ``(iv) A State plan shall require individuals to submit 
        revised applications to reflect changes in estimated family 
        incomes, including changes in employment status of family 
        members, during the year. The State shall revise the amount of 
        any cost-sharing assistance based on such a revised 
        application.
    ``(C) A determination by a State that an individual is eligible for 
cost-sharing assistance shall be effective for the calendar year for 
which such determination is made  unless a revised application 
submitted under subparagraph (B)(iv) indicates that an individual is no 
longer eligible for assistance.
    ``(D) Determinations made pursuant to this paragraph may be 
coordinated with determinations of eligibility for state-administered 
health programs to the extent that such coordination brings about 
administrative efficiencies.
    ``(4) If a State determines that a qualifying child is eligible for 
cost-sharing assistance under this section the State shall notify the 
health plan in which such individual is enrolled in a timely manner.''.
    (b) 100 Percent Federal Financing.--Section 1905(b) of such Act (42 
U.S.C. 1396d(b)) is amended by adding at the end the following: 
``Notwithstanding the first sentence of this section, the Federal 
medical assistance percentage shall be 100 percent with respect to 
amounts expended as medical assistance for cost-sharing assistance 
described in the last sentence of section 1905(a).''.
    (c) Coverage of Cost-Sharing Assistance as Medical Assistance.--
Section 1905(a) of such Act (42 U.S.C. 1396d(a)) is amended by adding 
at the end the following: ``Such term also includes payment of the 
cost-sharing assistance under section 1902(a)(10)(E)(iv).''.
    (d) Effective Date.--(1) Except as provided in paragraph (2), the 
amendments made by this section shall apply to calendar quarters 
beginning on or after January 1, 1998, without regard to whether or not 
final regulations to carry out such amendments have been promulgated by 
such date.
    (2) In the case of a State plan for medical assistance under title 
XIX of the Social Security Act which the Secretary of Health and Human 
Services determines requires State legislation (other than legislation 
appropriating funds) in order for the plan to meet the additional 
requirements imposed by the amendments made by subsection (a), the 
State plan shall not be regarded as failing to comply with the 
requirements of such title solely on the basis of its failure to meet 
these additional requirements before the first day of the first 
calendar quarter beginning after the close of the first regular session 
of the State legislature that begins after the date of the enactment of 
this Act. For purposes of the previous sentence, in the case of a State 
that has a 2-year legislative session, each year of such session shall 
be deemed to be a separate regular session of the State legislature.

SEC. 6. GRANTS TO STATES FOR HEALTH INSURANCE OUTREACH AND INFORMATION 
              PROGRAMS.

    (a) In General.--The Secretary of Health and Human Services (in 
this section referred to as the ``Secretary'') shall provide financial 
assistance to States in order to operate outreach and information 
programs that meet the requirements specified in subsection (b).
    (b) Requirements for Outreach and Information Programs.--Each 
outreach and information program shall--
            (1) target individuals eligible for access to health 
        coverage under section 9902 of the Internal Revenue Code of 
        1986, tax credits under section 35 of such Code, or cost-
        sharing assistance under section 1902(aa) of the Social 
        Security Act;
            (2) provide comparative information on the policies offered 
        by issuers in the State under sections 35 and 9902 of such 
        Code;
            (3) assist individuals in purchasing policies under section 
        9902 of such Code; and
            (4) forward to the Secretary any findings by the State of a 
        pattern of abuse or misrepresentation by the issuer of 
        insurance for which a tax credit is available under section 35 
        of such Code.
The Secretary shall consider findings forwarded under paragraph (4) in 
determining whether a insurance continues to qualify for purposes of 
obtaining a tax credit under section 35 of such Code.
    (c) Amount of Assistance.--The Secretary shall determine the amount 
of financial assistance provided to a State under this section. In 
determining such amount, the Secretary shall take into account the 
number of qualifying children (as defined in section 35(c) of such 
Code) in the State.
    (d) Application Required.--No State is eligible for assistance 
under this section unless the State submits to the Secretary an 
application that is in such form, is made in such manner, and contains 
such agreements, assurances, and information as the Secretary 
determines to be necessary to carry out this section.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated for each fiscal year (beginning with fiscal year 1998) 
such sums as may be necessary to carry out this section.
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