202
of the Social Security Act apply with respect to
the taxpayer under section 2105(a) of such Act.
SEC. 613. DEDUCTION FOR PREMIUMS PAID BY SMALL EM-
PLOYERS 
FOR 
INSURANCE 
PROVIDING
QUALIFIED HEALTH COVERAGE.
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
itemized deductions for individuals and corporations) is
amended by adding at the end thereof the following new
section:
‘‘SEC. 197. PREMIUMS PAID BY SMALL EMPLOYERS FOR IN-
SURANCE PROVIDING QUALIFIED HEALTH
COVERAGE.
‘‘(a) IN GENERAL.—In the case of a small employer,
there shall be allowed as a deduction (in addition to any
amount otherwise allowable) an amount equal to 20 per-
cent of the premiums paid during the taxable year for in-
surance providing coverage under a qualified health plan
for employees of such employer.
‘‘(b) SMALL EMPLOYER.—For purposes of this sec-
tion—
‘‘(1) IN GENERAL.—The term ‘small employer’
means, with respect to the taxable year, an employer
that normally employs fewer than 100 employees on
203
a typical business day during the calendar year end-
ing with or within such taxable year.
‘‘(2) CONTROLLED
GROUPS.—All employers
treated as a single employer under subsection (a) or
(b) of section 52 shall be treated as a single em-
ployer.
‘‘(c) QUALIFIED HEALTH PLAN.—For purposes of
this section, the term ‘qualified health plan’ means any
plan which meets the requirements of title XXI of the So-
cial Security Act and which provides only the minimum
benefits required under such title.’’
(b) CLERICAL AMENDMENT.—The table of sections
for part IV of subchapter B of chapter 1 of such Code
is amended by adding at the end thereof the following new
item:
‘‘Sec. 197. Premiums paid by small employers for insurance pro-
viding qualified health coverage.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to premiums for coverage provided
after December 31, 1996.
Subtitle C—State Maintenance of
Effort
SEC. 621. STATE MAINTENANCE OF EFFORT.
(a) CONDITION
OF
COVERAGE.—Notwithstanding
any other provision of this title, no individual who is a
resident of a State is eligible for benefits under title XXII
204
for a month in a calendar year beginning with 1997, un-
less the State provides (in a manner and at a time speci-
fied by the Secretary) for payment to the Public Health
Trust Fund of 1⁄12 of the amount specified in subsection
(b) for the year.
(b) MAINTENANCE
OF
EFFORT
AMOUNT.—The
amount of payment specified in this subsection for a State
for a year is equal to the difference between—
(1) the amount of payment (net of Federal pay-
ments) that would have been made, for required
health benefits (as defined in section 2211(a)(2) of
the Social Security Act), under its State plan under
title XIX of such Act for the year if—
(A) title XXII of such Act were not in ef-
fect in the year, and
(B) the provisions of section 702(a) of this
Act (and section 1902(a)(13)(G) of the Social
Security Act, as added by section 702(b)) ap-
plied during the year as in 1996 (except that in
applying such provisions the references in sec-
tion 702(a)(1)(A)(iii) of this Act and section
1902(a)(13)(G)(ii)(III) of the Social Security
Act to ‘‘90 percent’’ are deemed references to
‘‘100 percent’’), and
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(2) the amount of payment (net of Federal pay-
ments) that is made, for required health benefits (as
defined in section 2211(a)(2) of the Social Security
Act), under its State plan under title XIX of the So-
cial Security Act for the year.
(c) STATE DEFINED.—In this section, the term
‘‘State’’ means the 50 States and the District of Colum-
bia.
TITLE VII—MEDICAID
PROVISIONS
SEC. 701. COORDINATION WITH PUBLIC HEALTH PLAN.
(a) IN GENERAL.—
(1) LIMITING FEDERAL FINANCIAL PARTICIPA-
TION
FOR
SERVICES
COVERED
UNDER
PUBLIC
HEALTH PLAN.—Section 1903(i) of the Social Secu-
rity Act (42 U.S.C. 1396b(i)) is amended—
(A) in the paragraph (10) inserted by sec-
tion 4401(a)(1)(B) of Omnibus Budget Rec-
onciliation Act of 1990, by striking all that fol-
lows ‘‘1927(g)’’ and inserting a semicolon;
(B) by redesignating the paragraph (10)
added by section 4701(b)(2) as paragraph (11),
by transferring and inserting it after the para-
graph (10) inserted by section 4401(a)(1)(B) of
Omnibus Budget Reconciliation Act of 1990,
206
and by striking all that follows ‘‘with respect to
hospitals or facilities’’ and inserting a semi-
colon;
(C) by transferring and inserting the para-
graph (12) inserted by section 4752(a)(2) of
Omnibus Budget Reconciliation Act of 1990
after paragraph (11), as redesignated by sub-
paragraph (B), and by striking the period at
the end and inserting a semicolon;
(D) by redesignating the paragraph (14)
inserted by section 4752(e) of Omnibus Budget
Reconciliation Act of 1990 as paragraph (13),
by transferring and inserting it after paragraph
(12), and by striking the period at the end and
inserting a semicolon;
(E) by redesignating the paragraph (11)
inserted by section 4801(e)(16)(A) of Omnibus
Budget Reconciliation Act of 1990 as para-
graph (14), by transferring and inserting it
after paragraph (13), and by striking the period
at the end and inserting ‘‘; or’’; and
(F) by inserting after paragraph (14), as
so redesignated, the following new paragraph:
‘‘(15) with respect to items and services (in-
cluding medicare cost-sharing) for which payment is
207
made under the public health plan under title
XXII.’’.
(2) CLARIFICATION
OF
NONDUPLICATION
OF
MEDICAL ASSISTANCE WITH BENEFITS UNDER PUB-
LIC
HEALTH
PLAN.—Title XIX of such Act is
amended by adding at the end the following new sec-
tion:
‘‘NONDUPLICATION OF BENEFITS WITH PUBLIC HEALTH
PLAN
‘‘SEC. 1931. Notwithstanding any other provision of
this title, a State is not required under its plan under sec-
tion 1901(a) to provide medical assistance for items and
services (including medicare cost-sharing) for which pay-
ment is made under the public health plan under title
XXII.’’.
(3) CLARIFICATION OF APPLICATION OF THIRD-
PARTY
PAYOR
RULES
TO
QUALIFIED
HEALTH
PLANS.—Section 1902(a)(25)(A) of such Act (42
U.S.C. 1396a(a)(25)(A)) is amended by inserting
‘‘and qualified health plans certified under part F of
title XXII’’ after ‘‘health insurers’’.
(b) CONTINUATION OF MEDICAID BENEFITS NOT
COVERED UNDER PUBLIC HEALTH PLAN.—Nothing in
this Act shall be construed as—