(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 
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
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— 
‘‘(i) who are lawfully residing in the United 
States (including battered aliens described in section 
431(c) of the Personal Responsibility and Work Op-
portunity Reconciliation Act of 1996); and 
‘‘(ii) who are otherwise eligible for such assist-
ance, within the eligibility category of 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-
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
paragraph (A), no debt shall accrue under an affidavit of 
support against any sponsor of such an alien on the basis 
of provision of assistance to such category and the cost 
of such assistance shall not be considered as an unreim-
bursed cost. 
‘‘(ii) The provisions of sections 401(a), 402(b), 403, 
and 421 of the Personal Responsibility and Work Oppor-
tunity Reconciliation Act of 1996 shall not apply to a 
State that makes an election under subparagraph (A).’’. 
(b) TITLE XXI.—Section 2107(e)(1) of the Social 
Security Act (42 U.S.C. 1397gg(e)(1)), as amended by 
section 201(c), is amended redesignating subparagraph 
(E) as subparagraph (F) and by inserting after subpara-
graph (D) the following: 
‘‘(E) Section 1903(v)(4) (relating to op-
tional coverage of permanent resident alien chil-
dren), but only if the State has elected to apply 
such section to that category of children under 
title XIX.’’. 
SEC. 204. STATE OPTION FOR PASSIVE RENEWAL OF ELIGI-
BILITY FOR CHILDREN UNDER MEDICAID 
AND SCHIP. 
(a) IN GENERAL.—Section 1902(l) of the Social Se-
curity Act (42 U.S.C. 1396a(l)) is amended by adding at 
the end the following: 
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
‘‘(5) Notwithstanding any other provision of this title, 
a State may provide that an individual who has not at-
tained 21 years of age who has been determined eligible 
for medical assistance under this title shall remain eligible 
for medical assistance until such time as the State has 
information demonstrating that the individual is no longer 
so eligible.’’. 
(b) APPLICATION
UNDER
TITLE
XXI.—Section 
2107(e)(1) of the Social Security Act (42 U.S.C. 
1397gg(e)), as amended by section 201(c) and 203(b), is 
amended— 
(1) by redesignating subparagraphs (C) through 
(F) as subparagraphs (D) through (G), respectively; 
and 
(2) by inserting after subparagraph (B), the 
following: 
‘‘(C) Section 1902(l)(5) (relating to pas-
sive renewal of eligibility for children).’’. 
TITLE III—TAX INCENTIVES FOR 
HEALTH 
INSURANCE 
COV-
ERAGE OF CHILDREN 
SEC. 301. REFUNDABLE CREDIT FOR HEALTH INSURANCE 
COVERAGE OF CHILDREN. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
1986 (relating to refundable credits) is amended by redes-
ignating section 36 as section 37 and by inserting after 
section 35 the following new section: 
‘‘SEC. 36. HEALTH INSURANCE COVERAGE OF CHILDREN. 
‘‘(a) IN GENERAL.—In the case of an individual, 
there shall be allowed as a credit against the tax imposed 
by this subtitle an amount equal to so much of the amount 
paid during the taxable year, not compensated for by in-
surance or otherwise, for qualified health insurance for 
each dependent child of the taxpayer, as exceeds 5 percent 
of the adjusted gross income of such taxpayer for such 
taxable year. 
‘‘(b) DEPENDENT CHILD.—For purposes of this sec-
tion, the term ‘dependent child’ means any child (as de-
fined in section 152(f)(1)) who has not attained the age 
of 19 as of the close of the calendar year in which the 
taxable year of the taxpayer begins and with respect to 
whom a deduction under section 151 is allowable to the 
taxpayer. 
‘‘(c) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified health 
insurance’ means insurance, either employer-pro-
vided or made available under title XIX or XXI of 
the Social Security Act, which constitutes medical 
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
care as defined in section 213(d) without regard 
to— 
‘‘(A) paragraph (1)(C) thereof, and 
‘‘(B) so much of paragraph (1)(D) thereof 
as relates to qualified long-term care insurance 
contracts. 
‘‘(2) EXCLUSION
OF
CERTAIN
OTHER
CON-
TRACTS.—Such term shall not include insurance if a 
substantial portion of its benefits are excepted bene-
fits (as defined in section 9832(c)). 
‘‘(d) MEDICAL SAVINGS ACCOUNT AND HEALTH SAV-
INGS ACCOUNT CONTRIBUTIONS.— 
‘‘(1) IN GENERAL.—If a deduction would (but 
for paragraph (2)) be allowed under section 220 or 
223 to the taxpayer for a payment for the taxable 
year to the medical savings account or health sav-
ings account of an individual, subsection (a) shall be 
applied by treating such payment as a payment for 
qualified health insurance for such individual. 
‘‘(2) DENIAL OF DOUBLE BENEFIT.—No deduc-
tion shall be allowed under section 220 or 223 for 
that portion of the payments otherwise allowable as 
a deduction under section 220 or 223 for the taxable 
year which is equal to the amount of credit allowed 
for such taxable year by reason of this subsection. 
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00027
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
‘‘(e) SPECIAL RULES.— 
‘‘(1) DETERMINATION OF INSURANCE COSTS.— 
The Secretary shall provide rules for the allocation 
of the cost of any qualified health insurance for fam-
ily coverage to the coverage of any dependent child 
under such insurance. 
‘‘(2) COORDINATION
WITH
DEDUCTION
FOR 
HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN-
DIVIDUALS.—In the case of a taxpayer who is eligi-
ble to deduct any amount under section 162(l) for 
the taxable year, this section shall apply only if the 
taxpayer elects not to claim any amount as a deduc-
tion under such section for such year. 
‘‘(3) COORDINATION WITH MEDICAL EXPENSE 
AND
HIGH
DEDUCTIBLE
HEALTH
PLAN
DEDUC-
TIONS.—The amount which would (but for this 
paragraph) be taken into account by the taxpayer 
under section 213 or 223 for the taxable year shall 
be reduced by the credit (if any) allowed by this sec-
tion to the taxpayer for such year. 
‘‘(4) DENIAL OF CREDIT TO DEPENDENTS.—No 
credit shall be allowed under this section to any indi-
vidual with respect to whom a deduction under sec-
tion 151 is allowable to another taxpayer for a tax-
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00028
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
able year beginning in the calendar year in which 
such individual’s taxable year begins. 
‘‘(5) DENIAL OF DOUBLE BENEFIT.—No credit 
shall be allowed under subsection (a) if the credit 
under section 35 is allowed and no credit shall be al-
lowed under 35 if a credit is allowed under this sec-
tion. 
‘‘(6) ELECTION NOT TO CLAIM CREDIT.—This 
section shall not apply to a taxpayer for any taxable 
year if such taxpayer elects to have this section not 
apply for such taxable year.’’. 
(b) INFORMATION REPORTING.— 
(1) IN GENERAL.—Subpart B of part III of 
subchapter A of chapter 61 of the Internal Revenue 
Code of 1986 (relating to information concerning 
transactions with other persons) is amended by in-
serting after section 6050V the following new sec-
tion: 
‘‘SEC. 6050W. RETURNS RELATING TO PAYMENTS FOR 
QUALIFIED HEALTH INSURANCE. 
‘‘(a) IN GENERAL.—Any governmental unit or any 
person who, in connection with a trade or business con-
ducted by such person, receives payments during any cal-
endar year from any individual for coverage of a depend-
ent child (as defined in section 36(b)) of such individual 
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00029
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
under creditable health insurance, shall make the return 
described in subsection (b) (at such time as the Secretary 
may by regulations prescribe) with respect to each indi-
vidual from whom such payments were received. 
‘‘(b) FORM AND MANNER OF RETURNS.—A return 
is described in this subsection if such return— 
‘‘(1) is in such form as the Secretary may pre-
scribe, and 
‘‘(2) contains— 
‘‘(A) the name, address, and TIN of the 
individual from whom payments described in 
subsection (a) were received, 
‘‘(B) the name, address, and TIN of each 
dependent child (as so defined) who was pro-
vided by such person with coverage under cred-
itable health insurance by reason of such pay-
ments and the period of such coverage, and 
‘‘(C) such other information as the Sec-
retary may reasonably prescribe. 
‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur-
poses of this section, the term ‘creditable health insurance’ 
means qualified health insurance (as defined in section 
36(c)). 
‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00030
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
QUIRED.—Every person required to make a return under 
subsection (a) shall furnish to each individual whose name 
is required under subsection (b)(2)(A) to be set forth in 
such return a written statement showing— 
‘‘(1) the name and address of the person re-
quired to make such return and the phone number 
of the information contact for such person, 
‘‘(2) the aggregate amount of payments de-
scribed in subsection (a) received by the person re-
quired to make such return from the individual to 
whom the statement is required to be furnished, and 
‘‘(3) the information required under subsection 
(b)(2)(B) with respect to such payments. 
The written statement required under the preceding sen-
tence shall be furnished on or before January 31 of the 
year following the calendar year for which the return 
under subsection (a) is required to be made. 
‘‘(e) RETURNS WHICH WOULD BE REQUIRED TO BE 
MADE BY 2 OR MORE PERSONS.—Except to the extent 
provided in regulations prescribed by the Secretary, in the 
case of any amount received by any person on behalf of 
another person, only the person first receiving such 
amount shall be required to make the return under sub-
section (a).’’. 
(2) ASSESSABLE PENALTIES.— 
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00031
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
(A) 
Subparagraph 
(B) 
of 
section 
6724(d)(1) of such Code (relating to defini-
tions) is amended by striking ‘‘and’’ at the end 
of clause (xx) and by inserting at the end the 
following new clause: 
‘‘(xxi) section 6050W (relating to re-
turns relating to payments for qualified 
health insurance), and’’. 
(B) Paragraph (2) of section 6724(d) of 
such Code is amended by striking ‘‘or’’ at the 
end of the next to last subparagraph, by strik-
ing the period at the end of the last subpara-
graph and inserting ‘‘, or’’, and by adding at 
the end the following new subparagraph: 
‘‘(DD) section 6050W(d) (relating to re-
turns relating to payments for qualified health 
insurance).’’. 
(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 inserting 
after the item relating to section 6050V the fol-
lowing new item: 
‘‘Sec. 6050W. Returns relating to payments for qualified health insurance.’’. 
(c) CONFORMING AMENDMENTS.— 
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00032
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting be-
fore the period ‘‘, or from section 36 of such Code’’. 
(2) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by striking the last 
item and inserting the following new items: 
‘‘Sec. 36. Health insurance coverage of children. 
‘‘Sec. 37. Overpayments of tax.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
SEC. 302. FORFEITURE OF PERSONAL EXEMPTION FOR ANY 
CHILD NOT COVERED BY HEALTH INSUR-
ANCE. 
(a) IN GENERAL.—Section 151(d) of the Internal 
Revenue Code of 1986 (relating to exemption amount) is 
amended by adding at the end the following new para-
graph: 
‘‘(5) REDUCTION OF EXEMPTION AMOUNT FOR 
ANY
CHILD
NOT
COVERED
BY
HEALTH
INSUR-
ANCE.— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided in this paragraph, the exemption 
amount otherwise determined under this sub-
section for any dependent child (as defined in 
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00033
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
section 36(b)) for any taxable year shall be re-
duced by the same percentage as the percentage 
of such taxable year during which such depend-
ent child was not covered by qualified health in-
surance (as defined in section 36(c)). 
‘‘(B) FULL REDUCTION IF NO PROOF OF 
COVERAGE IS PROVIDED.—For purposes of sub-
paragraph (A), in the case of any taxpayer who 
fails to attach to the return of tax for any tax-
able year a copy of the statement furnished to 
such taxpayer under section 6050W, the per-
centage reduction under such subparagraph 
shall be deemed to be 100 percent. 
‘‘(C) NONAPPLICATION OF PARAGRAPH TO 
TAXPAYERS IN LOWEST TAX BRACKET.—This 
paragraph shall not apply to any taxpayer 
whose taxable income for the taxable year does 
not exceed the initial bracket amount deter-
mined under section 1(i)(1)(B).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00034
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
TITLE IV—MISCELLANEOUS 
SEC. 401. REQUIREMENT FOR GROUP MARKET HEALTH IN-
SURERS TO OFFER DEPENDENT COVERAGE 
OPTION FOR WORKERS WITH CHILDREN. 
(a) ERISA.— 
(1) IN GENERAL.—Subpart B of part 7 of sub-
title B of title I of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1185 et seq.) is 
amended by adding at the end the following: 
‘‘SEC. 714. REQUIREMENT TO OFFER OPTION TO PURCHASE 
DEPENDENT COVERAGE FOR CHILDREN. 
‘‘(a) REQUIREMENTS
FOR
COVERAGE.—A group 
health plan, and a health insurance issuer providing health 
insurance coverage in connection with a group health plan, 
shall offer an individual who is enrolled in such coverage 
the option to purchase dependent coverage for a child of 
the individual. 
‘‘(b) NO EMPLOYER CONTRIBUTION REQUIRED.—An 
employer shall not be required to contribute to the cost 
of purchasing dependent coverage for a child by an indi-
vidual who is an employee of such employer. 
‘‘(c) DEFINITION OF CHILD.—In this section, the 
term ‘child’ means an individual who has not attained 21 
years of age.’’. 
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00035
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
(2) CLERICAL AMENDMENT.—The table of con-
tents in section 1 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1001) is 
amended by inserting after the item relating to sec-
tion 713 the following: 
‘‘Sec. 714. Requirement to offer option to purchase dependent coverage for chil-
dren.’’. 
(b) PUBLIC HEALTH SERVICE ACT.—Subpart 2 of 
part A of title XXVII of the Public Health Service Act 
(42 U.S.C. 300gg–4 et seq.) is amended by adding at the 
end the following: 
‘‘SEC. 2707. REQUIREMENT TO OFFER OPTION TO PUR-
CHASE DEPENDENT COVERAGE FOR CHIL-
DREN. 
‘‘(a) REQUIREMENTS
FOR
COVERAGE.—A group 
health plan, and a health insurance issuer providing health 
insurance coverage in connection with a group health plan, 
shall offer an individual who is enrolled in such coverage 
the option to purchase dependent coverage for a child of 
the individual. 
‘‘(b) NO EMPLOYER CONTRIBUTION REQUIRED.—An 
employer shall not be required to contribute to the cost 
of purchasing dependent coverage for a child by an indi-
vidual who is an employee of such employer. 
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00036
Fmt 6652
Sfmt 6201
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS
‘‘(c) DEFINITION OF CHILD.—In this section, the 
term ‘child’ means an individual who has not attained 21 
years of age.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to plan years begin-
ning on or after January 1, 2007. 
SEC. 402. EFFECTIVE DATE. 
Unless otherwise provided, the amendments made by 
this title shall take effect on October 1, 2007, and shall 
apply to child health assistance and medical assistance 
provided on or after that date without regard to whether 
or not final regulations to carry out such amendments 
have been promulgated by such date. 
Æ 
VerDate Aug 31 2005 
01:29 Feb 27, 2007
Jkt 059200
PO 00000
Frm 00037
Fmt 6652
Sfmt 6301
E:\BILLS\H1111.IH
H1111
ccoleman on PROD1PC60 with BILLS