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 deter-
mined 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 pur-
chase of such coverage, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives 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 be-
tween 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 cov-
erage, and 90 percent of these children have parents
who work, and too many of these children go with-
out needed health care;
(4) families have an obligation to contribute to
the cost of health insurance coverage for their chil-
dren, 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 pro-
grams.
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 REQUIRE-
MENT 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 re-
quirements 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 pre-
mium received for the purposes of subpara-
graph (A).
‘‘(2) INSURER OFFERING INDIVIDUAL HEALTH
INSURANCE
COVERAGE.—The amount of tax im-
posed by subsection (a)(2) on any failure of an in-
surer with respect to an individual described in para-
graph (1) or (2) of section 9902(b) shall be 25 per-
cent 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
DILI-
GENCE.—No tax shall be imposed by subsection (a)
on any failure during any period for which it is es-
tablished 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 COR-
RECTED 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 im-
posed by subsection (a) to the extent that the pay-
ment 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 mean-
ing of section 414(d)), or
‘‘(2) any church plan (within the meaning of
section 414(e)).
‘‘(e) LIABILITY FOR TAX.—The following shall be re-
sponsible for the tax imposed by subsection (a):
‘‘(1) In the case of the tax imposed by sub-
section (a)(1) on a group health plan, the plan.
‘‘(2) In the case of the tax imposed by sub-
section (a)(2) on an insurer offering health insur-
ance 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 bene-
ficiary) 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 para-
graph (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 cov-
erage’ means coverage of health care benefits that
the Secretary of Health and Human Services deter-
mines approximates the following benefits, without
any limitation based on a pre-existing condition with
respect to such benefits and without any waiting pe-
riod 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 pro-
vided 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 subpara-
graph (D), in no case shall the coinsurance at-
tributable 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 de-
liveries.
‘‘(II) Well-child care, including
routine office visits, routine immuni-
zations (including the vaccine itself),
routine laboratory tests, and preven-
tive dental care.
‘‘(III) Early and periodic screen-
ing, 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 Amer-
ican Academy of Pediatrics, shall establish
a schedule of periodicity for services de-
scribed in clauses (I) and (II) of clause (i)
which reflects the general, appropriate fre-
quency 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 Sec-
retary.
‘‘(D) NO COST-SHARING FOR PREVENTIVE
SERVICES.—There shall be no deductibles, coin-
surance, or other cost sharing imposed with re-
spect to benefits for preventive services, as de-
fined by the Secretary.
‘‘(2) MANAGED CARE PERMITTED.—Nothing in
this section shall be construed as limiting the provid-
ers through whom the benefits described in para-
graph (1) may be provided so long as there is rea-
sonable access to such benefits.
‘‘(3) REASONABLY
PRICED.—For purposes of
this subsection, coverage is considered to be ‘reason-
ably priced’ only if the premium or other charge for
the coverage does not exceed 150 percent of the av-
erage price for similar coverage offered in the same
State (as determined based upon information pro-
vided by the Secretary of Health and Human Serv-
ices).
‘‘(d) QUALIFYING YOUNG DEPENDENT.—For pur-
poses of this section, the term ‘qualifying young depend-
ent’ 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 sec-
tion 5000(b)(1), but does not include such a plan
that has medical benefits that only consist of cov-
erage 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 re-
imbursement, or otherwise) under any hospital
or medical service policy or certificate, hospital
or medical service plan contract, or health
maintenance organization group contract of-
fered by an insurer or a health maintenance or-
ganization.
‘‘(B) EXCEPTION.—Such term does not in-
clude coverage under any separate policy, cer-
tificate, 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 in-
surance (within the meaning of section
1882(g)(1) of the Social Security Act (42
U.S.C. 1395ss(g)(1))) and similar supple-
mental 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 in-
surance.
‘‘(vii) Coverage for a specified disease
or illness.
‘‘(viii) Hospital or fixed indemnity in-
surance.
‘‘(ix) Short-term limited duration in-
surance.
‘‘(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 mainte-
nance 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 man-
ner and to the same extent as such a health
maintenance organization,
if it is subject to State law which regulates insur-
ance (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 organi-
zation) 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 ‘individ-
ual 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
DEFINI-
TIONS.—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 add-
ing 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 sub-
chapter 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 sec-
tion:
‘‘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 IN-
COME AND EMPLOYER CONTRIBUTIONS.—
‘‘(1) LIMITATION BASED ON AGI.—
‘‘(A) IN GENERAL.—No credit shall be al-
lowed 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 ad-
justed 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 re-
duction 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 in-
surance referred to in subsection (a).
‘‘(2) REDUCTION BASED ON EMPLOYER CON-
TRIBUTION.—The amount of any credit allowed
under subsection (a) for any taxable year shall be re-
duced by the amount (if any) of an employer con-
tribution that is made (or offered to be made) on be-
half of the individual toward the premium for the in-
surance 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 in-
clude—
‘‘(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 Serv-
ices determines has reduced eligibility require-
ments for children under a State plan under
such title below that in effect as of January 1,
1997, until such time as such Secretary deter-
mines the State no longer has reduced such re-
quirements.
‘‘(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 prin-
ciples 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
INSUR-
ANCE.—For purposes of this section, the term ‘in-
surance’ 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
INSUR-
ANCE.—If the Secretary of Health and Human Serv-
ices 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 employ-
ment 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 pay-
ment equal to the children’s health insurance credit ad-
vance amount of such employee.
‘‘(b) CHILDREN’S HEALTH INSURANCE CREDIT ELI-
GIBILITY CERTIFICATE.—For purposes of this title, a chil-
dren’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 certifi-
cate 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 certifi-
cate 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 AD-
VANCE 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 esti-
mated amount of children’s health insurance
credit included in the children’s health insur-
ance 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 maxi-
mum extent feasible, shall be coordinated with
such tables and the tables prescribed under sec-
tion 3507(c), and
‘‘(B) shall be structured to carry out the
principles of subparagraphs (B) and (C) of sec-
tion 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 sec-
tion 3507 shall apply.
‘‘(f) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary to carry out the pur-
poses of this section.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 25 of such Code is amended by in-
serting 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 indi-
vidual, and
‘‘(3) such other information as the Secretary
may prescribe.
‘‘(b) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—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 state-
ment 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 de-
scribed in subsection (a) received by such person
from such individual.
The written statement required under the preceding sen-
tence shall be furnished to the individual on or before Jan-
uary 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 redesig-
nating 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 report-
ing of premiums received for health insur-
ance coverage for children),’’.
(B) Paragraph (2) of section 6724(d) of
such Code is amended by redesignating sub-
paragraph (R) and the succeeding subpara-
graphs as subparagraphs (S) and following, re-
spectively, and by inserting after subparagraph
(Q) the following new subparagraph:
‘‘(R) section 6050S(b) (relating to report-
ing of premiums received for health insurance
coverage for children),’’.
(3) CLERICAL AMENDMENT.—The table of sec-
tions 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 in-
surance 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 be-
fore 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 pro-
vided 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 SUB-
SIDY 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 depend-
ent 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 em-
ployees.
SEC. 5. MEDICAID COST-SHARING ASSISTANCE FOR QUALI-
FYING 
CHILDREN 
WITH 
FAMILY 
INCOME
BELOW 150 PERCENT OF THE POVERTY LINE.
(a) IN GENERAL.—Section 1902 of the Social Secu-
rity 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 avail-
able for cost-sharing assistance described in
subsection (aa)(2) for qualifying children de-
scribed in subsection (aa)(1); and’’; and
(2) by adding at the end the following new sub-
section:
‘‘(aa)(1) For purposes of subsection (a)(10)(E)(iv),
individuals described in this paragraph are qualifying chil-
dren (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 Manage-
ment 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 con-
sists of a reduction in the amount of copayment applied
with respect to an item or service for insurance under sec-
tion 35 of the Internal Revenue Code of 1986 to an
amount equal to 20 percent of the copayment amount oth-
erwise 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 chil-
dren for cost-sharing assistance under this subsection.
‘‘(B) The regulations promulgated by the Secretary
under subparagraph (A) shall include the following re-
quirements:
‘‘(i) A State plan shall provide that an individ-
ual may file an application for assistance with an
agency designated by the State at any time, in per-
son 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 signifi-
cant 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 wheth-
er an individual is eligible for assistance, includ-
ing a declaration of estimated income by the in-
dividual; and
‘‘(IV) require attachment of such docu-
mentation as deemed necessary by the Sec-
retary in order to ensure eligibility for assist-
ance.
‘‘(iii) A State plan shall make applications ac-
cessible 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 esti-
mated family incomes, including changes in employ-
ment status of family members, during the year.
The State shall revise the amount of any cost-shar-
ing 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 subpara-
graph (B)(iv) indicates that an individual is no longer eli-
gible for assistance.
‘‘(D) Determinations made pursuant to this para-
graph may be coordinated with determinations of eligi-
bility for state-administered health programs to the extent
that such coordination brings about administrative effi-
ciencies.
‘‘(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 assist-
ance 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 Sec-
retary of Health and Human Services determines requires
State legislation (other than legislation appropriating
funds) in order for the plan to meet the additional require-
ments imposed by the amendments made by subsection
(a), the State plan shall not be regarded as failing to com-
ply 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 legisla-
ture 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 OUT-
REACH AND INFORMATION PROGRAMS.
(a) IN GENERAL.—The Secretary of Health and
Human Services (in this section referred to as the ‘‘Sec-
retary’’) 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 INFORMA-
TION PROGRAMS.—Each outreach and information pro-
gram 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 sec-
tion 1902(aa) of the Social Security Act;
(2) provide comparative information on the poli-
cies 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 contin-
ues 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 quali-
fying 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, as-
surances, 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 (be-
ginning with fiscal year 1998) such sums as may be nec-
essary to carry out this section.
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