‘‘(c) MAINTENANCE OF EFFORT.—With respect to a
State that carries out a program under this section, funds
made available under this title for such program shall be
used to supplement and not supplant current State spend-
ing for the needs described in subsection (a).
‘‘PART C—DEFINITIONS AND MISCELLANEOUS
PROVISIONS
‘‘Subpart 1—Definitions
‘‘SEC. 2841. DEFINITIONS.
‘‘(a) IN GENERAL.—In this title:
‘‘(1) ELIGIBLE
CHILD.—The term ‘eligible
child’ means an individual who is 18 years of age or
younger.
‘‘(2) PARTICIPATING
STATE.—The term ‘par-
ticipating State’ means any State that elects to es-
tablish a program under part A.
‘‘(3) POVERTY LINE.—The term ‘poverty line’
means the income 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) that is
applicable to a family of the size involved.
‘‘(4) QUALIFYING
CHILDREN’S
POLICY.—The
term ‘qualifying children’s policy’ means a policy
that meets the standards described in section 2802.
‘‘(5) QUALIFYING CHILDREN’S DIRECT SERVICE
BENEFIT OPTION.—The term ‘qualifying children’s
direct service benefit option’ means the provision of
direct medical assistance under the standards de-
scribed in section 2803.
‘‘(6) STATE.—The term ‘State’ means each of
the several States, the District of Columbia, Puerto
Rico, the Virgin Islands, Guam, American Samoa,
and the Northern Mariana Islands.
‘‘(7) SUBSIDY
ELIGIBLE
CHILD.—The term
‘subsidy eligible child’ means a child who—
‘‘(A) meets reasonable eligibility criteria
established by the State, and has a family in-
come that falls within the applicable income cri-
teria (as defined in section 2822), for purposes
of providing subsidies under the State program;
‘‘(B) is an eligible child;
‘‘(C) is a citizen or qualified alien (as de-
fined in section 431(b) of the Personal Respon-
sibility and Work Opportunity Reconciliation
Act of 1996 (8 U.S.C. 1641(b));
‘‘(D) is not eligible for medical assistance
under the State plan under title XIX of the So-
cial Security Act, except that nothing in this
title shall be construed to require that an indi-
vidual be denied medical assistance under a
State plan under title XIX of the Social Secu-
rity Act (42 U.S.C. 1396 et seq.) in order for
that child to be eligible to receive assistance
under the State program under this title; and
‘‘(E) has not been covered under a group
health plan (unless such coverage was termi-
nated as a result of a change in employment
status) during the 6-month period ending on
the date on which the individual applies for
subsidy-eligible health coverage under this title.
For purposes of subparagraph (E), enrollment in a
health plan under a COBRA continuation provision
(as defined in section 2791(d)(4)) shall not con-
stitute enrollment in a group health plan.
‘‘(b) DEFINITIONS RELATING TO INCOME.—In this
title:
‘‘(1) FAMILY
INCOME.—The term ‘family in-
come’ means, with respect to an individual who—
‘‘(A) is not a dependent of another individ-
ual, the sum of the modified adjusted gross in-
comes for the individual, the individual’s
spouse, and children who are dependents of the
individual; or
‘‘(B) is a dependent of another individual,
the sum of the modified adjusted gross incomes
for the other individual, the other individual’s
spouse, and children who are dependents of the
other individual.
The Secretary may promulgate rules under which
spousal income may be disregarded in instances
where a spouse is not part of a family unit.
‘‘(2) DEPENDENT.—The term ‘dependent’ has
the meaning given such term under section 152 of
the Internal Revenue Code of 1986. For purposes of
this paragraph, a child who is placed in foster care
by a State agency shall not be considered a depend-
ent of another individual.
‘‘(3) MODIFIED
ADJUSTED
GROSS
INCOME.—
The term ‘modified adjusted gross income’ means
adjusted gross income (as defined in section 62(a) of
the Internal Revenue Code of 1986)—
‘‘(A) determined without regard to sections
135, 162(l), 911, 931, and 933 of such Code,
and
‘‘(B) increased by—
‘‘(i) the amount of interest received or
accrued by the individual during the tax-
able year which is exempt from tax, and
‘‘(ii) the amount of the social security
benefits (as defined in section 86(d) of
such Code) received during the taxable
year to the extent not included in gross in-
come under section 86 of such Code.
The determination under the preceding sentence
shall be made without regard to any carryover or
carryback.
‘‘(c) OTHER DEFINITIONS.—The term—
‘‘(1) ‘group health plan’ has the meaning given
the term in section 2791(a);
‘‘(2) ‘health insurance coverage’ has the mean-
ing given the term in section 2791(b)(1);
‘‘(3) ‘health insurance issuer’ has the meaning
given the term in section 2791(b)(2);
‘‘(4) ‘health maintenance organization’ has the
meaning given the term in section 2791(b)(3); and
‘‘(5) ‘network plan’ has the meaning given the
term in section 2791(B)(10).
‘‘(d) REFERENCES TO INDIVIDUAL.—For purposes of
this title, any reference to an individual shall include a
reference to the parent or guardian of such individual.
‘‘Subpart 2—Miscellaneous Provisions
‘‘SEC. 2851. OTHER CONTRIBUTIONS TO PREMIUMS.
‘‘(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 assistance under part B.
‘‘(b) ELIMINATION
OF CONTRIBUTIONS.—An em-
ployer shall not be treated as failing to meet the require-
ments of subsection (a) if the employer ceases to make
employer contributions for health insurance coverage for
all its employees.
‘‘(c) ENFORCEMENT.—The enforcement provisions
applicable to group health insurance coverage under the
amendments made by section 101(e)(2) of the Health In-
surance Portability and Accountability Act of 1996 shall
apply with respect to an employer that violates the provi-
sions of this section in the same manner as such provisions
apply to employers under such amendments.
‘‘SEC. 2852. MAINTENANCE OF EFFORT.
‘‘(a) MEDICAID.—A State that elects to participate
under this title may not modify the eligibility requirements
for children under the State program under title XIX of
the Social Security Act, as in effect on January 1, 1997
(except that such requirements may be modified pursuant
to an application for a waiver under section 1115 of the
Social Security Act (42 U.S.C. 1315) submitted prior to
January 1, 1997), in any manner that would have the ef-
fect of reducing the eligibility of children for coverage
under such program.
‘‘(b) MAINTENANCE
OF EFFORT.—Funds appro-
priated pursuant to the authority of this Act shall be used
to supplement and not supplant other Federal and State
funds expended to provide services for disabled individ-
uals.
‘‘SEC. 2853. APPLICATION OF OTHER REQUIREMENTS AND
STATE FLEXIBILITY.—
‘‘(a) APPLICATION OF INSURANCE REQUIREMENTS
UNDER TITLE XXVII.—For purposes of applying sections
2701(a) through (e) and (g) (relating to limitations on
preexisting conditions and increased portability) except
those provisions relating to late enrollees, waiting periods,
and election of alternative methods under section
2701(c)(3)(B), 2702(a)(1) and (b) (relating to eligibility
to enroll), 2711(a)(1)(A) (relating to guaranteed availabil-
ity for eligible individuals), and 2711(c) and (d)(1) (relat-
ing to special rules for network plans and financial capac-
ity) to health insurance issuers offering a qualifying chil-
dren’s policy and health insurance issuers offering wrap-
around insurance under this title, a qualifying children’s
policy shall be deemed to be health insurance coverage of-
fered by a health insurance issuer in the small group mar-
ket, in connection with a group health plan, and an eligible
individual shall be considered a small employer for the
purposes of section 2711(a)(1)(A), (c) and (d)(1), except
that section 2701(b) shall apply to a qualifying children’s
policy offered to a subsidy eligible child.
‘‘(b) STATE FLEXIBILITY.—Nothing in this section
shall be construed to prevent a State from establishing
or implementing standards or requirements—
‘‘(1) not prescribed in this title; or
‘‘(2) related to the issuance, renewal or port-
ability of health insurance under a qualifying chil-
dren’s policy or a qualifying children’s direct service
benefit option that provide greater protection or ben-
efit to an eligible child.
‘‘SEC. 2854. REGULATIONS.
‘‘The Secretary may issue regulations to implement
the program established under this title.’’.
SEC. 4. INCREASE IN EXCISE TAXES ON TOBACCO PROD-
UCTS.
(a) CIGARETTES.—Section 5701(b) of the Internal
Revenue Code of 1986 is amended—
(1) in paragraph (1), by striking ‘‘$12 per
thousand ($10 per thousand on cigarettes removed
during 1991 or 1992)’’ and inserting ‘‘$33.50 per
thousand’’, and
(2) in paragraph (2), by striking ‘‘$25.20 per
thousand ($21 per thousand on cigarettes removed
during 1991 or 1992)’’ and inserting ‘‘$70.35 per
thousand’’.
(b) CIGARS.—Section 5701(a) of the Internal Reve-
nue Code of 1986 is amended—
(1) in paragraph (1), by striking ‘‘$1.125 cents
per thousand (93.75 cents per thousand on cigars
removed during 1991 or 1992)’’ and inserting
‘‘$3.141 cents per thousand’’, and
(2) by striking ‘‘equal to’’ and all that follows
in paragraph (2) and inserting ‘‘equal to 35.59 per-
cent of the price for which sold but not more than
$83.75 per thousand.’’
(c) CIGARETTE PAPERS.—Section 5701(c) of the In-
ternal Revenue Code of 1986 is amended by striking ‘‘0.75
cent (0.625 cent on cigarette papers removed during 1991
or 1992)’’ and inserting ‘‘2.09 cents’’.
(d) CIGARETTE TUBES.—Section 5701(d) of the In-
ternal Revenue Code of 1986 is amended by striking ‘‘1.5
cents (1.25 cents on cigarette tubes removed during 1991
or 1992)’’ and inserting ‘‘4.18 cents’’.
(e) SMOKELESS TOBACCO.—Section 5701(e) of the
Internal Revenue Code of 1986 is amended—
(1) in paragraph (1), by striking ‘‘36 cents (30
cents on snuff removed during 1991 or 1992)’’ and
inserting ‘‘$6.09’’, and
(2) by striking ‘‘12 cents (10 cents on chewing
tobacco removed during 1991 or 1992)’’ in para-
graph (2) and inserting ‘‘$2.41’’.
(f) PIPE TOBACCO.—Section 5701(f) of the Internal
Revenue Code of 1986 is amended by striking ‘‘67.5 cents
(56.25 cents on pipe tobacco removed during 1991 or
1992)’’ and inserting ‘‘$1.88’’.
(g) EFFECTIVE DATE.—The amendments made by
this section shall apply to articles removed (as defined in
section 5702(k) of the Internal Revenue Code of 1986)
after September 30, 1997.
(h) FLOOR STOCKS TAXES.—
(1) IMPOSITION OF TAX.—On tobacco products
and cigarette papers and tubes manufactured in or
imported into the United States which are removed
before October 1, 1997, and held on such date for
sale by any person, there is hereby imposed a tax in
an amount equal to the excess of—
(A) the tax which would be imposed under
section 5701 of the Internal Revenue Code of
1986 on the article if the article had been re-
moved on such date, over
(B) the prior tax (if any) imposed under
section 5701 or 7652 of such Code on such ar-
ticle.
(2) AUTHORITY TO EXEMPT CIGARETTES HELD
IN VENDING MACHINES.—To the extent provided in
regulations prescribed by the Secretary, no tax shall
be imposed by paragraph (1) on cigarettes held for
retail sale on October 1, 1997, by any person in any
vending machine. If the Secretary provides such a
benefit with respect to any person, the Secretary
may reduce the $500 amount in paragraph (3) with
respect to such person.
(3) CREDIT AGAINST TAX.—Each person shall
be allowed as a credit against the taxes imposed by
paragraph (1) an amount equal to $500. Such credit
shall not exceed the amount of taxes imposed by
paragraph (1) on October 1, 1997, for which such
person is liable.
(4) LIABILITY FOR TAX AND METHOD OF PAY-
MENT.—
(A) LIABILITY FOR TAX.—A person hold-
ing cigarettes on October 1, 1997, to which any
tax imposed by paragraph (1) applies shall be
liable for such tax.
(B) METHOD OF PAYMENT.—The tax im-
posed by paragraph (1) shall be paid in such
manner as the Secretary shall prescribe by reg-
ulations.
(C) TIME
FOR
PAYMENT.—The tax im-
posed by paragraph (1) shall be paid on or be-
fore January 1, 1998.
(5) ARTICLES
IN
FOREIGN
TRADE
ZONES.—
Notwithstanding the Act of June 18, 1934 (48 Stat.
998, 19 U.S.C. 81a) and any other provision of law,
any article which is located in a foreign trade zone
on October 1, 1997, shall be subject to the tax im-
posed by paragraph (1) if—
(A) internal revenue taxes have been deter-
mined, or customs duties liquidated, with re-
spect to such article before such date pursuant
to a request made under the 1st proviso of sec-
tion 3(a) of such Act, or
(B) such article is held on such date under
the supervision of a customs officer pursuant to
the 2d proviso of such section 3(a).
(6) DEFINITIONS.—For purposes of this sub-
section—
(A) IN GENERAL.—Terms used in this sub-
section which are also used in section 5702 of
the Internal Revenue Code of 1986 shall have
the respective meanings such terms have in
such section, as amended by this Act.
(B) SECRETARY.—The term ‘‘Secretary’’
means the Secretary of the Treasury or the
Secretary’s delegate.
(7) CONTROLLED
GROUPS.—Rules similar to
the rules of section 5061(e)(3) of such Code shall
apply for purposes of this subsection.
(8) OTHER LAWS APPLICABLE.—All provisions
of law, including penalties, applicable with respect to
the taxes imposed by section 5701 of such Code
shall, insofar as applicable and not inconsistent with
the provisions of this subsection, apply to the floor
stocks taxes imposed by paragraph (1), to the same
extent as if such taxes were imposed by such section
5701. The Secretary may treat any person who bore
the ultimate burden of the tax imposed by para-
graph (1) as the person to whom a credit or refund
under such provisions may be allowed or made.
SEC. 5. CONFORMING AMENDMENTS.
(a) ERISA.—Section 701(c)(1) of the Employee Re-
tirement Income Security Act of 1974 (as added by section
101(a) of the Health Insurance Portability and Account-
ability Act of 1996) is amended by adding at the end the
following:
‘‘(K) A qualifying children’s policy under
the Child Health Insurance and Lower Deficit
Act.’’.
(b) PUBLIC HEALTH SERVICE ACT.—
(1) Section 2701(c)(1) of the Public Health
Service Act (as added by section 102(a) of the
Health Insurance Portability and Accountability Act
of 1996) is amended by adding at the end the fol-
lowing:
‘‘(K) A qualifying children’s policy under
the Child Health Insurance and Lower Deficit
Act.’’.
(2) Section 2761(b)(1)(A) of the Public Health
Service Act (as added by section 102(a) of the
Health Insurance Portability and Accountability Act
of 1996) is amended—
(A) by striking ‘‘or church plan’’ and in-
serting ‘‘church plan’’; and
(B) by inserting before the semicolon the
following: ‘‘, qualifying children’s policy, or
qualifying children’s direct service benefit op-
tion’’.
SEC. 6. EFFECTIVE DATE.
Except as provided in section 4(g), this Act shall be-
come effective on the date of enactment of this Act, except
that funds to carry out programs under the amendments
made by this Act shall not be available prior to January
1, 1998.
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