‘‘(2) ADOPTION OF 12-MONTH CONTINUOUS EN-
ROLLMENT.—The State agrees to provide that eligi-
bility for assistance under this title and title XXI 
shall not be regularly redetermined more often than 
once every year for children. 
‘‘(3) ACCEPTANCE OF SELF-DECLARATION OF 
INCOME.—The State agrees to permit the family of 
a child applying for medical assistance under this 
title or child health assistance under title XXI to de-
clare and certify by signature under penalty of per-
jury family income for purposes of collecting finan-
cial eligibility information. 
‘‘(4) ADOPTION
OF
ACCEPTANCE
OF
ELIGI-
BILITY DETERMINATIONS FOR OTHER ASSISTANCE 
PROGRAMS.—The State agrees to accept determina-
tions (made within a reasonable period, as found by 
the State, before its use for this purpose) of an indi-
vidual’s family or household income made by a Fed-
eral or State agency (or a public or private entity 
making such determination on behalf of such agen-
cy), including the agencies administering the Food 
Stamp Act of 1977, the Richard B. Russell National 
School Lunch Act, and the Child Nutrition Act of 
1966, notwithstanding any differences in budget
unit, disregard, deeming, or other methodology, but 
only if—
‘‘(A) such agency has fiscal liabilities or 
responsibilities affected or potentially affected 
by such determinations; and 
‘‘(B) any information furnished by such 
agency pursuant to this subparagraph is used 
solely for purposes of determining eligibility for 
medical assistance under this title or for child 
health assistance under title XXI. 
‘‘(5) NO ASSETS TEST.—The State agrees to 
not (or demonstrates that it does not) apply any as-
sets or resources test for eligibility under this title 
or title XXI with respect to children. 
‘‘(6) ELIGIBILITY DETERMINATIONS AND REDE-
TERMINATIONS.—
‘‘(A) IN GENERAL.—The State agrees for 
purposes of initial eligibility determinations and 
redeterminations of children under this title and 
title XXI not to require a face-to-face interview 
and to permit applications and renewals by 
mail, telephone, and the Internet. 
‘‘(B) 
NONDUPLICATION
OF
INFORMA-
TION.—
‘‘(i) IN
GENERAL.—For purposes of 
redeterminations of eligibility for currently 
or previously enrolled children under this 
title and title XXI, the State agrees to use 
all information in its possession (including 
information available to the State under 
other Federal or State programs) to deter-
mine eligibility or redetermine continued 
eligibility before seeking similar informa-
tion from parents. 
‘‘(ii) 
RULE
OF
CONSTRUCTION.—
Nothing in clause (i) shall be construed as 
limiting any obligation of a State to pro-
vide notice and a fair hearing before deny-
ing, terminating, or reducing a child’s cov-
erage based on such information in the 
possession of the State. 
‘‘(7) NO WAITING LIST FOR CHILDREN UNDER 
SCHIP.—The State agrees to not impose any numer-
ical limitation, waiting list, waiting period, or similar 
limitation on the eligibility of children for child 
health assistance under title XXI or to establish or 
enforce other barriers to the enrollment of eligible 
children based on the date of their application for 
coverage.
‘‘(8) ADEQUATE PROVIDER PAYMENT RATES.—
The State agrees to—
‘‘(A) establish payment rates for children’s 
health care providers under this title that are 
no less than the average of payment rates for 
similar services for such providers provided 
under the benchmark benefit packages de-
scribed in section 2103(b); 
‘‘(B) establish such rates in amounts that 
are sufficient to ensure that children enrolled 
under this title or title XXI have adequate ac-
cess to comprehensive care, in accordance with 
the requirements of section 1902(a)(30)(A); 
and 
‘‘(C) include provisions in its contracts 
with providers under this title guaranteeing 
compliance with these requirements. 
‘‘(d) MAINTENANCE OF MEDICAID ELIGIBILITY LEV-
ELS FOR CHILDREN.—
‘‘(1) IN GENERAL.—The condition described in 
this subsection is that the State agrees to maintain 
eligibility income, resources, and methodologies ap-
plied under this title (including under a waiver of 
such title or under section 1115) with respect to 
children that are no more restrictive than the eligi-
bility income, resources, and methodologies applied 
with respect to children under this title (including 
under such a waiver) as of January 1, 2005. 
‘‘(2) RULE
OF
CONSTRUCTION.—Nothing in 
this section shall be construed as implying that a 
State does not have to comply with the minimum in-
come levels required for children under section 
1902(l)(2). 
‘‘(e) DATE DESCRIBED.—The date described in this 
subsection is the date on which, with respect to a State, 
a plan amendment that satisfies the requirements of sub-
sections (b), (c), and (d) is approved by the Secretary. 
‘‘(f) DEFINITION OF POVERTY LINE.—In this sec-
tion, the term ‘poverty line’ has the meaning given that 
term in section 2110(c)(5).’’. 
(b) CONFORMING AMENDMENTS.—
(1) The third sentence of section 1905(b) of the 
Social Security Act (42 U.S.C. 1396d(b)) is amend-
ed by inserting before the period the following: ‘‘, 
and with respect to amounts expended for medical 
assistance for children on or after the date described 
in subsection (d) of section 1936, in the case of a 
State that has, in accordance with such section, an 
approved plan amendment under this title and title 
XXI’’.
(2) Section 1903(f)(4) of the Social Security 
Act (42 U.S.C. 1396b(f)(4)) is amended—
(A) in subparagraph (C), by adding ‘‘or’’ 
after ‘‘section 1611(b)(1),’’; and 
(B) by inserting after subparagraph (C), 
the following: 
‘‘(D) who would not receive such medical assist-
ance but for State electing the option under section 
1936 and satisfying the conditions described in sub-
sections (b), (c), and (d) of such section,’’. 
SEC. 102. ELIMINATION OF CAP ON SCHIP FUNDING FOR 
STATES 
THAT 
EXPAND 
ELIGIBILITY 
FOR 
CHILDREN. 
(a) IN GENERAL.—Section 2105 of the Social Secu-
rity Act (42 U.S.C. 1397dd) is amended by adding at the 
end the following: 
‘‘(h) GUARANTEED FUNDING FOR CHILD HEALTH 
ASSISTANCE FOR COVERAGE EXPANSION STATES.—
‘‘(1) IN GENERAL.—Only in the case of a State 
that has, in accordance with section 1936, an ap-
proved plan amendment under this title and title 
XIX, any payment cap that would otherwise apply to 
the State under this title as a result of having ex-
pended all allotments available for expenditure by 
the State with respect to a fiscal year shall not apply
with respect to amounts expended by the State on 
or after the date described in section 1936(d). 
‘‘(2) APPROPRIATION.—There is appropriated, 
out of any money in the Treasury not otherwise ap-
propriated, such sums as may be necessary for the 
purpose of paying a State described in paragraph 
(1) for each quarter beginning on or after the date 
described in section 1936(d), an amount equal to the 
enhanced FMAP of expenditures described in para-
graph (1) and incurred during such quarter.’’. 
(b) CONFORMING AMENDMENTS.—Section 2104 of 
the Social Security Act (42 U.S.C. 1397dd) is amended—
(1) in subsection (a), by inserting ‘‘subject to 
section 2105(h),’’ after ‘‘under this section,’’; 
(2) in subsection (b)(1), by inserting ‘‘and sec-
tion 2105(h)’’ after ‘‘Subject to paragraph (4)’’; and 
(3) in subsection (c)(1), by inserting ‘‘subject to 
section 2105(h),’’ after ‘‘for a fiscal year,’’.
TITLE II—STATE OPTIONS FOR 
INCREMENTAL 
CHILD 
COV-
ERAGE EXPANSIONS 
SEC. 201. STATE OPTION TO PROVIDE WRAP-AROUND 
SCHIP COVERAGE TO CHILDREN WHO HAVE 
OTHER HEALTH COVERAGE. 
(a) IN GENERAL.—Section 2110(b) of the Social Se-
curity Act (42 U.S.C. 1397jj(b)) is amended—
(1) in paragraph (1)(C), by inserting ‘‘, subject 
to paragraph (5),’’ after ‘‘under title XIX or’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(5) STATE OPTION TO PROVIDE WRAP-AROUND 
COVERAGE.—
‘‘(A) IN
GENERAL.—A State may waive 
the requirement of paragraph (1)(C) that a tar-
geted low-income child may not be covered 
under a group health plan or under health in-
surance coverage in order to provide—
‘‘(i) items or services that are not cov-
ered, or are only partially covered, under 
such plan or coverage; or 
‘‘(ii) cost-sharing protection. 
‘‘(B) ELIGIBILITY.—In waiving such re-
quirement, a State may limit the application of
the waiver to children whose family income does 
not exceed a level specified by the State, so long 
as the level so specified does not exceed the 
maximum income level otherwise established for 
other children under the State child health 
plan. 
‘‘(C) CONTINUED APPLICATION OF DUTY 
TO PREVENT SUBSTITUTION OF EXISTING COV-
ERAGE.—Nothing in this paragraph shall be 
construed as modifying the application of sec-
tion 2102(b)(3)(C) to a State.’’. 
(b) APPLICATION
OF ENHANCED MATCH UNDER 
MEDICAID.—Section 1905 of such Act (42 U.S.C. 1396d) 
is amended—
(1) in subsection (b), in the fourth sentence, by 
striking ‘‘subsection (u)(3)’’ and inserting ‘‘(u)(3), 
or (u)(4)’’; and 
(2) in subsection (u), by redesignating para-
graph (4) as paragraph (5) and by inserting after 
paragraph (3) the following: 
‘‘(4) For purposes of subsection (b), the expenditures 
described in this paragraph are expenditures for items and 
services for children described in section 2110(b)(5).’’.
(c) APPLICATION
OF SECONDARY PAYOR PROVI-
SIONS.—Section 2107(e)(1) of such Act (42 U.S.C. 
1397gg(e)(1)) is amended—
(1) 
by 
redesignating 
subparagraphs 
(B) 
through (D) as subparagraphs (C) through (E), re-
spectively; and 
(2) by inserting after subparagraph (A) the fol-
lowing new subparagraph: 
‘‘(B) Section 1902(a)(25) (relating to co-
ordination of benefits and secondary payor pro-
visions) with respect to children covered under 
a waiver described in section 2110(b)(5).’’. 
SEC. 202. STATE OPTION TO ENROLL LOW-INCOME CHIL-
DREN OF STATE EMPLOYEES IN SCHIP. 
Section 2110(b)(2) of the Social Security Act (42 
U.S.C. 1397jj(b)(2)) is amended—
(1) by redesignating subparagraphs (A) and 
(B) as clauses (i) and (ii), respectively and realign-
ing the left margins of such clauses appropriately; 
(2) by striking ‘‘Such term’’ and inserting the 
following: 
‘‘(A) IN GENERAL.—Such term’’; and 
(3) by adding at the end the following: 
‘‘(B) STATE OPTION TO ENROLL LOW-IN-
COME
CHILDREN
OF
STATE
EMPLOYEES.—At
the option of a State, subparagraph (A)(ii) shall 
not apply to any low-income child who would 
otherwise be eligible for child health assistance 
under this title but for such subparagraph.’’. 
SEC. 203. OPTIONAL COVERAGE OF LEGAL IMMIGRANT 
CHILDREN UNDER MEDICAID AND SCHIP. 
(a) MEDICAID PROGRAM.—Section 1903(v) of the 
Social Security Act (42 U.S.C. 1396b(v)) is amended—
(1) in paragraph (1), by striking ‘‘paragraph 
(2)’’ and inserting ‘‘paragraphs (2) and (4)’’; and 
(2) by adding at the end the following: 
‘‘(4)(A) A State may elect (in a plan amendment 
under this title) to provide medical assistance under this 
title for aliens who are lawfully residing in the United 
States (including battered aliens described in section 
431(c) of the Personal Responsibility and Work Oppor-
tunity Reconciliation Act of 1996) and who are otherwise 
eligible for such assistance, within any of the following eli-
gibility category: 
‘‘(i) CHILDREN.—Children (as defined under 
such plan), including optional targeted low-income 
children described in section 1905(u)(2)(B). 
‘‘(B)(i) In the case of a State that has elected to pro-
vide medical assistance to a category of aliens under sub-
paragraph (A), no debt shall accrue under an affidavit of