H. R. 3963—55 
(1) IN GENERAL.—Section 2105(c) (42 U.S.C. 1397ee(c)), as 
amended by sections 114(a), 116(c), and 211(c), is amended 
by adding at the end the following: 
‘‘(11) STATE OPTION TO OFFER PREMIUM ASSISTANCE.— 
‘‘(A) IN GENERAL.—A State may elect to offer a pre-
mium assistance subsidy (as defined in subparagraph (C)) 
for qualified employer-sponsored coverage (as defined in 
subparagraph (B)) to all targeted low-income children who 
are eligible for child health assistance under the plan and 
have access to such coverage in accordance with the 
requirements of this paragraph. No subsidy shall be pro-
vided to a targeted low-income child under this paragraph 
unless the child (or the child’s parent) voluntarily elects 
to receive such a subsidy. A State may not require such 
an election as a condition of receipt of child health assist-
ance. 
‘‘(B) QUALIFIED EMPLOYER-SPONSORED COVERAGE.— 
‘‘(i) IN
GENERAL.—Subject to clause (ii), in this 
paragraph, the term ‘qualified employer-sponsored cov-
erage’ means a group health plan or health insurance 
coverage offered through an employer— 
‘‘(I) that qualifies as creditable coverage as 
a group health plan under section 2701(c)(1) of 
the Public Health Service Act; 
‘‘(II) for which the employer contribution 
toward any premium for such coverage is at least 
40 percent; and 
‘‘(III) that is offered to all individuals in a 
manner that would be considered a nondiscrim-
inatory eligibility classification for purposes of 
paragraph (3)(A)(ii) of section 105(h) of the 
Internal Revenue Code of 1986 (but determined 
without regard to clause (i) of subparagraph (B) 
of such paragraph). 
‘‘(ii) EXCEPTION.—Such term does not include cov-
erage consisting of— 
‘‘(I) benefits provided under a health flexible 
spending arrangement (as defined in section 
106(c)(2) of the Internal Revenue Code of 1986); 
or 
‘‘(II) a high deductible health plan (as defined 
in section 223(c)(2) of such Code), without regard 
to whether the plan is purchased in conjunction 
with a health savings account (as defined under 
section 223(d) of such Code). 
‘‘(C) PREMIUM ASSISTANCE SUBSIDY.— 
‘‘(i) IN GENERAL.—In this paragraph, the term ‘pre-
mium assistance subsidy’ means, with respect to a 
targeted low-income child, the amount equal to the 
difference between the employee contribution required 
for enrollment only of the employee under qualified 
employer-sponsored coverage and the employee con-
tribution required for enrollment of the employee and 
the child in such coverage, less any applicable premium 
cost-sharing applied under the State child health plan 
(subject to the limitations imposed under section 
2103(e), including the requirement to count the total
H. R. 3963—56 
amount of the employee contribution required for 
enrollment of the employee and the child in such cov-
erage toward the annual aggregate cost-sharing limit 
applied under paragraph (3)(B) of such section). 
‘‘(ii) STATE PAYMENT OPTION.—A State may provide 
a premium assistance subsidy either as reimbursement 
to an employee for out-of-pocket expenditures or, sub-
ject to clause (iii), directly to the employee’s employer. 
‘‘(iii) EMPLOYER OPT-OUT.—An employer may notify 
a State that it elects to opt-out of being directly paid 
a premium assistance subsidy on behalf of an 
employee. In the event of such a notification, an 
employer shall withhold the total amount of the 
employee contribution required for enrollment of the 
employee and the child in the qualified employer-spon-
sored coverage and the State shall pay the premium 
assistance subsidy directly to the employee. 
‘‘(iv) TREATMENT AS CHILD HEALTH ASSISTANCE.— 
Expenditures for the provision of premium assistance 
subsidies shall be considered child health assistance 
described in paragraph (1)(C) of subsection (a) for pur-
poses of making payments under that subsection. 
‘‘(D) APPLICATION OF SECONDARY PAYOR RULES.—The 
State shall be a secondary payor for any items or services 
provided under the qualified employer-sponsored coverage 
for which the State provides child health assistance under 
the State child health plan. 
‘‘(E) REQUIREMENT
TO
PROVIDE
SUPPLEMENTAL
COV-
ERAGE FOR BENEFITS AND COST-SHARING PROTECTION PRO-
VIDED UNDER THE STATE CHILD HEALTH PLAN.— 
‘‘(i) 
IN
GENERAL.—Notwithstanding 
section 
2110(b)(1)(C), the State shall provide for each targeted 
low-income child enrolled in qualified employer-spon-
sored coverage, supplemental coverage consisting of— 
‘‘(I) items or services that are not covered, 
or are only partially covered, under the qualified 
employer-sponsored coverage; and 
‘‘(II) cost-sharing protection consistent with 
section 2103(e). 
‘‘(ii) RECORD
KEEPING
REQUIREMENTS.—For pur-
poses of carrying out clause (i), a State may elect 
to directly pay out-of-pocket expenditures for cost- 
sharing imposed under the qualified employer-spon-
sored coverage and collect or not collect all or any 
portion of such expenditures from the parent of the 
child. 
‘‘(F) APPLICATION OF WAITING PERIOD IMPOSED UNDER 
THE STATE.—Any waiting period imposed under the State 
child health plan prior to the provision of child health 
assistance to a targeted low-income child under the State 
plan shall apply to the same extent to the provision of 
a premium assistance subsidy for the child under this 
paragraph. 
‘‘(G) OPT-OUT PERMITTED FOR ANY MONTH.—A State 
shall establish a process for permitting the parent of a 
targeted low-income child receiving a premium assistance 
subsidy to disenroll the child from the qualified employer-
H. R. 3963—57 
sponsored coverage and enroll the child in, and receive 
child health assistance under, the State child health plan, 
effective on the first day of any month for which the child 
is eligible for such assistance and in a manner that ensures 
continuity of coverage for the child. 
‘‘(H) APPLICATION
TO
PARENTS.—If a State provides 
child health assistance or health benefits coverage to par-
ents of a targeted low-income child in accordance with 
section 2111(b), the State may elect to offer a premium 
assistance subsidy to a parent of a targeted low-income 
child who is eligible for such a subsidy under this para-
graph in the same manner as the State offers such a 
subsidy for the enrollment of the child in qualified 
employer-sponsored coverage, except that— 
‘‘(i) the amount of the premium assistance subsidy 
shall be increased to take into account the cost of 
the enrollment of the parent in the qualified employer- 
sponsored coverage or, at the option of the State if 
the State determines it cost-effective, the cost of the 
enrollment of the child’s family in such coverage; and 
‘‘(ii) any reference in this paragraph to a child 
is deemed to include a reference to the parent or, 
if applicable under clause (i), the family of the child. 
‘‘(I) ADDITIONAL STATE OPTION FOR PROVIDING PREMIUM 
ASSISTANCE.— 
‘‘(i) IN
GENERAL.—A State may establish an 
employer-family premium assistance purchasing pool 
for employers with less than 250 employees who have 
at least 1 employee who is a pregnant woman eligible 
for assistance under the State child health plan 
(including through the application of an option 
described in section 2112(f)) or a member of a family 
with at least 1 targeted low-income child and to provide 
a premium assistance subsidy under this paragraph 
for enrollment in coverage made available through such 
pool. 
‘‘(ii) ACCESS
TO
CHOICE
OF
COVERAGE.—A State 
that elects the option under clause (i) shall identify 
and offer access to not less than 2 private health 
plans that are health benefits coverage that is equiva-
lent to the benefits coverage in a benchmark benefit 
package described in section 2103(b) or benchmark- 
equivalent coverage that meets the requirements of 
section 2103(a)(2) for employees described in clause 
(i). 
‘‘(iii) CLARIFICATION OF PAYMENT FOR ADMINISTRA-
TIVE
EXPENDITURES.—Nothing in this subparagraph 
shall be construed as permitting payment under this 
section for administrative expenditures attributable to 
the establishment or operation of such pool, except 
to the extent that such payment would otherwise be 
permitted under this title. 
‘‘(J) NO EFFECT ON PREMIUM ASSISTANCE WAIVER PRO-
GRAMS.—Nothing in this paragraph shall be construed as 
limiting the authority of a State to offer premium assist-
ance under section 1906 or 1906A, a waiver described 
in paragraph (2)(B) or (3), a waiver approved under section
H. R. 3963—58 
1115, or other authority in effect prior to the date of enact-
ment of the Children’s Health Insurance Program 
Reauthorization Act of 2007. 
‘‘(K) NOTICE OF AVAILABILITY.—If a State elects to pro-
vide premium assistance subsidies in accordance with this 
paragraph, the State shall— 
‘‘(i) include on any application or enrollment form 
for child health assistance a notice of the availability 
of premium assistance subsidies for the enrollment 
of targeted low-income children in qualified employer- 
sponsored coverage; 
‘‘(ii) provide, as part of the application and enroll-
ment process under the State child health plan, 
information describing the availability of such sub-
sidies and how to elect to obtain such a subsidy; and 
‘‘(iii) establish such other procedures as the State 
determines necessary to ensure that parents are fully 
informed of the choices for receiving child health assist-
ance under the State child health plan or through 
the receipt of premium assistance subsidies. 
‘‘(L) APPLICATION TO QUALIFIED EMPLOYER-SPONSORED 
BENCHMARK COVERAGE.—If a group health plan or health 
insurance coverage offered through an employer is certified 
by an actuary as health benefits coverage that is equivalent 
to the benefits coverage in a benchmark benefit package 
described in section 2103(b) or benchmark-equivalent cov-
erage that meets the requirements of section 2103(a)(2), 
the State may provide premium assistance subsidies for 
enrollment of targeted low-income children in such group 
health plan or health insurance coverage in the same 
manner as such subsidies are provided under this para-
graph for enrollment in qualified employer-sponsored cov-
erage, but without regard to the requirement to provide 
supplemental coverage for benefits and cost-sharing protec-
tion provided under the State child health plan under 
subparagraph (E). 
‘‘(M) SATISFACTION OF COST-EFFECTIVENESS TEST.—Pre-
mium assistance subsidies for qualified employer-sponsored 
coverage offered under this paragraph shall be deemed 
to meet the requirement of subparagraph (A) of paragraph 
(3). 
‘‘(N) COORDINATION
WITH
MEDICAID.—In the case of 
a targeted low-income child who receives child health 
assistance through a State plan under title XIX and who 
voluntarily elects to receive a premium assistance subsidy 
under this section, the provisions of section 1906A shall 
apply and shall supersede any other provisions of this 
paragraph that are inconsistent with such section.’’. 
(2) DETERMINATION OF COST-EFFECTIVENESS FOR PREMIUM 
ASSISTANCE OR PURCHASE OF FAMILY COVERAGE.— 
(A) IN
GENERAL.—Section 2105(c)(3)(A) (42 U.S.C. 
1397ee(c)(3)(A)) is amended by striking ‘‘relative to’’ and 
all that follows through the comma and inserting ‘‘relative 
to