‘‘(A) FEDERAL
REIMBURSEMENTS.—The
total of the amounts paid by the State to the
Federal Government under paragraphs (1) and
(2) of this subsection with respect to a family
shall not exceed the Federal share of the
amount assigned with respect to the family pur-
suant to section 408(a)(3).
‘‘(B) 
STATE
REIMBURSEMENTS.—The
total of the amounts retained by the State
under paragraphs (1) and (2) of this subsection
with respect to a family shall not exceed the
State share of the amount assigned with respect
to the family pursuant to section 408(a)(3).
‘‘(4) FAMILIES THAT NEVER RECEIVED ASSIST-
ANCE.—In the case of any other family, the State
shall pay the amount collected to the family.
‘‘(5) 
FAMILIES
UNDER
CERTAIN
AGREE-
MENTS.—Notwithstanding paragraphs (1) through
(4), in the case of an amount collected for a family
in accordance with a cooperative agreement under
section 454(33), the State shall distribute the
amount collected pursuant to the terms of the agree-
ment.
‘‘(6) STATE FINANCING OPTIONS.—To the ex-
tent that the State share of the amount payable to
a family for a month pursuant to paragraph (2)(B)
of this subsection exceeds the amount that the State
estimates (under procedures approved by the Sec-
retary) would have been payable to the family for
the month pursuant to former section 457(a)(2) (as
in effect for the State immediately before the date
this subsection first applies to the State) if such
former section had remained in effect, the State may
elect to use the grant made to the State under sec-
tion 403(a) to pay the amount, or to have the pay-
ment considered a qualified State expenditure for
purposes of section 409(a)(7), but not both.
‘‘(7) STATE OPTION TO PASS THROUGH ADDI-
TIONAL SUPPORT WITH FEDERAL FINANCIAL PAR-
TICIPATION.—
‘‘(A) 
IN
GENERAL.—Notwithstanding
paragraphs (1) and (2), a State shall not be re-
quired to pay to the Federal Government the
Federal share of an amount collected on behalf
of a family that is not a recipient of assistance
under the State program funded under part A,
to the extent that the State pays the amount to
the family.
‘‘(B) RECIPIENTS
OF
TANF
FOR
LESS
THAN 5 YEARS.—
‘‘(i) IN
GENERAL.—Notwithstanding
paragraphs (1) and (2), a State shall not
be required to pay to the Federal Govern-
ment the Federal share of an amount col-
lected on behalf of a family that is a recipi-
ent of assistance under the State program
funded under part A and that has received
the assistance for not more than 5 years
after the date of the enactment of this
paragraph, to the extent that—
‘‘(I) the State pays the amount
to the family; and
‘‘(II) subject to clause (ii), the
amount is disregarded in determining
the amount and type of the assistance
provided to the family.
‘‘(ii) LIMITATION.—Of the amount
disregarded as described in clause (i)(II),
the maximum amount that may be taken
into account for purposes of clause (i) shall
not exceed $400 per month, except that, in
the case of a family that includes two or
more children, the State may elect to in-
crease the maximum amount to not more
than $600 per month.’’.
(B) APPROVAL
OF
ESTIMATION
PROCE-
DURES.—Not later than October 1, 2002, the
Secretary of Health and Human Services, in
consultation with the States (as defined for
purposes of part D of title IV of the Social Se-
curity Act), shall establish the procedures to be
used to make the estimate described in section
457(a)(6) of such Act.
(2) CURRENT
SUPPORT
AMOUNT
DEFINED.—
Section 457(c) of such Act (42 U.S.C. 657(c)) is
amended by adding at the end the following:
‘‘(5) CURRENT SUPPORT AMOUNT.—The term
‘current support amount’ means, with respect to
amounts collected as support on behalf of a family,
the amount designated as the monthly support obli-
gation of the noncustodial parent in the order re-
quiring the support.’’.
(c) BAN ON RECOVERY OF MEDICAID COSTS FOR
CERTAIN BIRTHS.—Section 454 of such Act (42 U.S.C.
654) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(32);
(2) by striking the period at the end of para-
graph (33) and inserting ‘‘; and’’; and
(3) by inserting after paragraph (33) the fol-
lowing:
‘‘(34) provide that the State shall not use the
State program operated under this part to collect
any amount owed to the State by reason of costs in-
curred under the State plan approved under title
XIX for the birth of a child for whom support rights
have been assigned pursuant to section 408(a)(3),
471(a)(17), or 1912.’’.
(d) STATE OPTION TO DISCONTINUE CERTAIN SUP-
PORT ASSIGNMENTS.—Section 457(b) of such Act (42
U.S.C. 657(b)) is amended by striking ‘‘shall’’ and insert-
ing ‘‘may’’.
(e) CONFORMING AMENDMENTS.—
(1) Section 409(a)(7)(B)(i)(I)(aa) of such Act
(42 U.S.C. 609(a)(7)(B)(i)(I)(aa)) is amended by
striking ‘‘457(a)(1)(B)’’ and inserting ‘‘457(a)(1)’’.
(2) Section 404(a) of such Act (42 U.S.C.
604(a)) is amended—
(A) by striking ‘‘or’’ at the end of para-
graph (1);
(B) by striking the period at the end of
paragraph (2) and inserting ‘‘; or’’; and
(C) by adding at the end the following: