States under section 505(a)(1)(A) of the Social Security
Act (42 U.S.C. 705(a)(1)(A)).
(b) COORDINATION.—A State shall take actions to
ensure that the program established under this section is
coordinated with the programs operated by the State
under title V of the Social Security Act (42 U.S.C. 705).
(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).
SUBTITLE C—DEFINITIONS AND MISCELLANEOUS
PROVISIONS
PART 1—DEFINITIONS
SEC. 141. 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 ‘‘partici-
pating State’’ means any State that elects to estab-
lish a program under subtitle 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 102.
(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 103.
(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 es-
tablished by the State, and has a family income
that falls within the applicable income criteria
(as defined in section 122), for purposes of pro-
viding 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) of the Public
Health Service Act) shall not constitute 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 ad-
justed 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) of the Public Health
Service Act;
(2) ‘‘health insurance coverage’’ has the mean-
ing given the term in section 2791(b)(1) of such Act;
(3) ‘‘health insurance issuer’’ has the meaning
given the term in section 2791(b)(2) of such Act;
(4) ‘‘health maintenance organization’’ has the
meaning given the term in section 2791(b)(3) of
such Act; and
(5) ‘‘network plan’’ has the meaning given the
term in section 2791(B)(10) of such Act.
(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.
PART 2—MISCELLANEOUS PROVISIONS
SEC. 151. 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 subtitle B.
(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.
(c) ENFORCEMENT.—The enforcement provisions ap-
plicable 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. 152. 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 title shall be used
to supplement and not supplant other Federal and State
funds expended to provide services for disabled individ-
uals.
SEC. 153. 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) of the Public Health Service
Act (relating to limitations on preexisting conditions and
increased portability) except those provisions relating to
late enrollees, waiting periods, and election of alternative
methods under sections 2701(c)(3)(B), 2702(a)(1) and (b)
(relating to eligibility to enroll), 2711(a)(1)(A) (relating
to guaranteed availability for eligible individuals), and
2711(c) and (d)(1) (relating to special rules for network
plans and financial capacity) of such Act to health insur-
ance issuers offering a qualifying children’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 offered by a health
insurance issuer in the small group market, 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) of such Act, except that sec-
tion 2701(b) of such Act shall apply to a qualifying chil-
dren’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. 154. REGULATIONS.
The Secretary may issue regulations to implement
the program established under this title.
PART 3—CONFORMING AMENDMENTS; EFFECTIVE DATE
SEC. 161. 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
title I of the Child Health Insurance and Lower
Deficit Act of 1997.’’’.
(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
title I of the Child Health Insurance and Lower
Deficit Act of 1997.’’.
(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. 162. EFFECTIVE DATE.
This title shall become effective on the date of enact-
ment of this Act, except that funds to carry out programs
under this title shall not be available prior to January 1,
1998.
TITLE II—INCREASE IN EXCISE
TAXES ON TOBACCO PRODUCTS
SEC. 201. INCREASE IN EXCISE TAXES ON TOBACCO PROD-
UCTS TO FUND CHILD HEALTH INSURANCE
GRANTS AND LOWER THE DEFICIT.
(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