I
103D CONGRESS
1ST SESSION
H. R. 727
To amend the Internal Revenue Code of 1986 and the Social Security Act
to provide for health insurance coverage for pregnant women and children
through employment-based insurance and through a State-based health
plan.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 2, 1993
Mr. MATSUI introduced the following bill; which was referred jointly to the
Committees on Ways and Means, Energy and Commerce, and Education
and Labor
A BILL
To amend the Internal Revenue Code of 1986 and the Social
Security Act to provide for health insurance coverage
for pregnant women and children through employment-
based insurance and through a State-based health plan.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Children and Pregnant Women Health Insurance Act of
1993’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—REQUIRING EMPLOYERS TO PROVIDE HEALTH
INSURANCE COVERAGE FOR PREGNANT WOMEN AND CHILDREN
Sec. 101. ‘‘Pay-or-play’’ requirement.
Sec. 102. Meeting requirement through enrollment of employees and families
under qualified employer health plans.
‘‘TITLE XXI—REQUIREMENT FOR ENROLLMENT OF EMPLOYEES
UNDER A QUALIFIED EMPLOYER HEALTH PLAN
‘‘Sec. 2100. Relation to ‘pay-or-play’ requirement.
‘‘PART A—EMPLOYER REQUIREMENT TO ENROLL EMPLOYEES AND FAMILIES
IN A QUALIFIED EMPLOYER HEALTH PLAN
‘‘Sec. 2101. Application to full-time employees.
‘‘Sec. 2102. Application to part-time employees.
‘‘Sec. 2103. Application to seasonal and temporary employees.
‘‘Sec. 2104. Treatment of all family members as a unit; uniform treatment
of full-time employees and of part-time employees.
‘‘Sec. 2105. Application of requirement to employers of different sizes.
‘‘Sec. 2106. Timing of enrollment; period of coverage.
‘‘PART B—REQUIREMENTS FOR QUALIFIED EMPLOYER HEALTH PLANS
‘‘Sec. 2121. Qualified employer health plan defined.
‘‘Sec. 2122. Requirements relating to employee premiums and cost-shar-
ing.
‘‘PART C—STANDARDS FOR QUALIFIED HEALTH PLANS
‘‘Sec. 2151. Certification of qualified health plans.
‘‘Sec. 2152. Treatment of family as a unit; coverage period; health plan
cards.
‘‘Sec. 2153. Requirement respecting required health services.
‘‘Sec. 2154. Requirements respecting limits on pre-existing condition exclu-
sions and coverage standards for required health services.
‘‘Sec. 2155. Requirements respecting limits on cost-sharing.
‘‘Sec. 2156. Payment rates.
‘‘Sec. 2157. Coordination and portability of health coverage under quali-
fied health plans.
‘‘Sec. 2158. Consumer protections.
‘‘Sec. 2159. Preemption of certain State and Federal requirements.
‘‘Sec. 2160. Use of uniform claims forms.
‘‘PART D—DEFINITIONS AND MISCELLANEOUS
‘‘Sec. 2181. Definitions.
‘‘Sec. 2182. Nonapplication to residents of Puerto Rico and territories.
TITLE II—PROVISION OF HEALTH INSURANCE FOR PREGNANT
WOMEN AND CHILDREN THROUGH STATE CHILDREN AND
PREGNANT WOMEN HEALTH PLANS
Sec. 201. State children and pregnant women health plans.
‘‘TITLE XXII—STATE CHILDREN AND PREGNANT WOMEN
HEALTH PLANS
‘‘Sec. 2200. Establishment of State children and pregnant women health
plans.
‘‘PART A—PLAN REQUIREMENTS RELATING TO ELIGIBILITY AND
ENROLLMENT
‘‘Sec. 2201. General requirements; application process.
‘‘Sec. 2202. Coverage period; termination of enrollment.
‘‘Sec. 2203. Requirement of health insurance coverage.
‘‘PART B—BENEFITS
‘‘Sec. 2211. Covered health services.
‘‘Sec. 2212. Preventive care services.
‘‘Sec. 2213. Major medical services.
‘‘Sec. 2214. Extended medical services.
‘‘Sec. 2215. Scope of coverage.
‘‘PART C—PAYMENTS FOR BENEFITS; DEDUCTIBLE, COINSURANCE, AND
STOP-LOSS PROTECTION FOR REQUIRED HEALTH SERVICES
‘‘Sec. 2221. Payment rates.
‘‘Sec. 2222. Application of deductible.
‘‘Sec. 2223. Coinsurance for major medical services and extended medical
services.
‘‘Sec. 2224. Limit on cost-sharing for required health services.
‘‘Sec. 2225. Exclusions.
‘‘Sec. 2226. Application of particular qualified health plan requirements.
‘‘PART D—PREMIUMS; FEDERAL CHILDREN AND PREGNANT WOMEN
HEALTH INSURANCE TRUST FUND
‘‘Sec. 2231. Premiums.
‘‘Sec. 2232. Collection of premiums.
‘‘Sec. 2233. Federal Children and Pregnant Women Health Insurance
Trust Fund.
‘‘Sec. 2234. Transfer payments in the case of multiple employers.
‘‘Sec. 2235. Use of uniform claims forms.
‘‘Sec. 2236. Payments to States.
‘‘PART E—ASSISTANCE FOR LOW-INCOME INDIVIDUALS
‘‘Sec. 2241. Assistance for individuals enrolled on a non-employment basis.
‘‘Sec. 2242. Assistance for individuals covered under qualified employer
health plans.
‘‘Sec. 2243. Applications for assistance.
‘‘Sec. 2244. Reconciliation of premium assistance through use of income
statements.
‘‘Sec. 2245. Treatment of certain cash assistance recipients.
‘‘Sec. 2246. Computation of family adjusted total income.
‘‘PART F—ADMINISTRATIVE PROVISIONS
‘‘Sec. 2261. General administration through insurance companies.
‘‘Sec. 2262. Quality assurance.
‘‘Sec. 2263. Beneficiary claims safeguards.
‘‘Sec. 2264. Administrative efficiency standards.
‘‘Sec. 2265. Health maintenance organizations.
‘‘Sec. 2266. Program integrity; miscellaneous provisions.
‘‘Sec. 2267. Demonstration project authority.
‘‘PART G—DEFINITIONS AND MISCELLANEOUS
‘‘Sec. 2281. Incorporation of certain definitions used in other health-relat-
ed titles.
‘‘Sec. 2282. Other definitions.
‘‘Sec. 2283. Nonapplication to residents of Puerto Rico and territories.
Sec. 202. Coordination between State children and pregnant women health
plans and medicaid plans.
TITLE III—HEALTH INSURANCE REFORM FOR SMALL
EMPLOYERS
Sec. 301. Excise tax on premiums received on health insurance policies which
do not meet certain requirements.
Sec. 302. Group health insurance standards.
‘‘TITLE XXIII—INSURANCE REFORM FOR SMALL EMPLOYERS
‘‘Sec. 2301. Application of requirements to insured small employer health
plans.
‘‘Sec. 2302. Establishment of standards.
‘‘Sec. 2303. Enrollment practice and guaranteed renewability requirements
for small employer health plans.
‘‘Sec. 2304. Rating practices for small employer health plans.
‘‘Sec. 2305. Basic benefit package for small employer health plans.
‘‘Sec. 2306. Miscellaneous disclosure and record-keeping requirements for
small employer health plans.
‘‘Sec. 2307. Nonapplication in Puerto Rico and the territories.
‘‘Sec. 2308. Definitions.
TITLE I—REQUIRING EMPLOY-
ERS TO PROVIDE HEALTH IN-
SURANCE 
COVERAGE 
FOR
PREGNANT 
WOMEN 
AND
CHILDREN
SEC. 101. ‘‘PAY-OR-PLAY’’ REQUIREMENT.
(a) PREMIUM TAXES.—
(1) IN GENERAL.—Subtitle C of the Internal
Revenue Code of 1986 (relating to employment
taxes) is amended by inserting after chapter 21 the
following new chapter:
‘‘CHAPTER 21A—CHILDREN AND
PREGNANT WOMEN HEALTH PLAN TAXES
‘‘Sec. 3151. Imposition of tax.
‘‘Sec. 3152. Definitions and special rules.
‘‘SEC. 3151. IMPOSITION OF TAX.
‘‘(a) IMPOSITION
OF TAX.—In addition to other
taxes, if an employee of any employer is not covered under
a qualified employer health plan of such employer—
‘‘(1) TAX ON EMPLOYERS.—There is hereby im-
posed on such employer, with respect to having such
employee in his employ, a tax equal to 3.2 percent
of the wages paid by such employer to such em-
ployee.
‘‘(2) TAX ON EMPLOYEES.—There is hereby im-
posed on the income of such employee a tax equal
to 1 percent of the wages received by such employee
from such employer.
‘‘(3) WAGES
TAKEN
INTO
ACCOUNT.—Wages
shall be taken into account under this subsection
only to the extent attributable to the period during
which such employee is not covered under a qualified
employer health plan of such employer.
‘‘(b) EXCEPTIONS.—
‘‘(1) TRANSITION.—The taxes imposed by this
section shall not take effect before the date on which
the requirements of part A of title XXI of the Social
Security Act apply with respect to the employer
under section 2105(a) of such Act.
‘‘(2) EMPLOYEES COVERED BY ANOTHER EM-
PLOYER’S PLAN.—The taxes imposed by subsection
(a)(2) of this section shall not apply to wages paid
to any employee of an employer for any period such
employee is covered by a qualified employer health
plan of another employer (whether as an employee
or family member of an employee).
‘‘(3) 
EMPLOYEES
COVERED
BY
FEDERAL
HEALTH PLAN.—The taxes imposed by this section
shall not apply to wages paid to any employee of the
United States if, by reason of such employment (or
the employment of a family member), the em-
ployee—
‘‘(A) is enrolled in a health benefits plan
under chapter 89 of title 5, United States Code,
or
‘‘(B) is provided medical and dental bene-
fits under chapter 55 of title 10 of such Code.
‘‘SEC. 3152. DEFINITIONS AND SPECIAL RULES.
‘‘(a) WAGES.—For purposes of this chapter, the term
‘wages’ has the meaning given such term by section
3121(a) except that—
‘‘(1) the modifications of subsection (b) shall
apply in determining whether any service is employ-
ment, and
‘‘(2) the applicable contribution base under sec-
tion 3121(x)(2) (relating to hospital insurance) shall
be used under section 3121(a)(1) for purposes of
this chapter.
‘‘(b) EMPLOYMENT.—For purposes of this chapter—
‘‘(1) IN
GENERAL.—Except as modified in
paragraph (2), the term ‘employment’ has the mean-
ing given such term by section 3121(b).
‘‘(2) MODIFICATIONS.—The modifications re-
ferred to in this paragraph are that—
‘‘(A) paragraphs (5), (6), (7), (8), and (9)
of section 3121(b) shall not apply, and
‘‘(B) subsections (r) and (w) of section
3121 shall not apply.
‘‘(c) EMPLOYEE; EMPLOYER.—For purposes of this
chapter, the terms ‘employee’ and ‘employer’ have the
same meanings as such terms have for purposes of chapter
21.
‘‘(d) QUALIFIED EMPLOYER HEALTH PLAN.—For
purposes of this chapter, the term ‘qualified employer
health plan’ has the meaning given such term in section
2121(a) of the Social Security Act.
‘‘(e) DEDUCTION FROM WAGES.—Rules similar to
the rules of section 3102 shall apply to the tax imposed
by section 3151(a)(2).
‘‘(f) OTHER RULES.—
‘‘(1) IN GENERAL.—Rules similar to the rules
of sections 3123, 3125, and 3126, and subsections
(q) and (s) of section 3121, shall apply for purposes
of this chapter.
‘‘(2) DEPOSITS.—The deposit requirements
under section 6302 applicable to the taxes imposed
by chapter 21 shall apply to the taxes imposed by
this chapter.
‘‘(3) MULTIPLE EMPLOYERS.—
‘‘(A) IN GENERAL.—Except to the extent
inconsistent with subparagraph (B), rules simi-
lar to the rules of section 6413 shall apply to
the tax imposed by section 3151(a)(2).
‘‘(B) CONTRIBUTION BASE TO APPLY TO
WAGES OF ENTIRE FAMILY.—In applying sec-
tion 6413(c)(1) for purposes of subparagraph
(A), the employee and the employee’s spouse
and children (as defined in section 2282 of the
Social Security Act) shall be treated as 1 em-
ployee. The credit or refund allowable by reason
of the preceding sentence shall be allocated
among such individuals in such manner as the
Secretary may by regulations prescribe.’’
(2) CLERICAL
AMENDMENT.—The table of
chapters for such subtitle C is amended by inserting
after the item relating to chapter 21 the following
new item:
‘‘Chapter 21A. Children and pregnant women health plan taxes.’’
(b) PENALTY TAXES.—
(1) IN GENERAL.—Chapter 47 of such Code is
amended by adding at the end thereof the following
new section:
‘‘SEC. 5000A. FAILURE TO ENROLL EMPLOYEES AND DE-
PENDENTS UNDER STATE CHILDREN AND
PREGNANT WOMEN HEALTH PLAN.
‘‘(a) IN GENERAL.—If the tax imposed by section
3151 applies to wages (as defined in section 3152) paid
by an employer to any individual, there is hereby imposed
a tax on the failure by the employer to provide to the State
in which the individual resides (in such form and manner
as such Secretary may specify and no later than the date
enrollment under a qualified employer health plan is re-
quired under section 2105(a) of the Social Security Act)
completed application forms for enrollment with the State
children and pregnant women health plan (under title
XXII of such Act) of employees (and family members) re-
quired to be enrolled under such section and not enrolled
under a qualified employer health plan.
‘‘(b) AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—The amount of the tax im-
posed by subsection (a) on any failure with respect
to an employee shall be $100 for each day in the
noncompliance period with respect to such failure.
‘‘(2) NONCOMPLIANCE PERIOD.—For purposes
of this section, the term ‘noncompliance period’
means, with respect to any failure, the period—
‘‘(A) beginning on the date such failure 1st
occurs, and
‘‘(B) ending on the date such failure is
corrected.
‘‘(c) LIABILITY FOR TAX.—The employer shall be lia-
ble for the tax imposed by subsection (a).
‘‘(d) EXCEPTIONS.—
‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT
DISCOVERED
EXERCISING
REASONABLE
DILI-
GENCE.—No tax shall be imposed by subsection (a)
on any failure during any period for which it is es-
tablished to the satisfaction of the Secretary that the
employer did not know, and exercising reasonable
diligence would not have known, that such failure
existed.
‘‘(2) TAX NOT TO APPLY TO FAILURES COR-
RECTED WITHIN 30 DAYS.—No tax shall be imposed
by subsection (a) on any failure if—
‘‘(A) such failure was due to reasonable
cause and not to willful neglect, and
‘‘(B) such failure is corrected during the
1st 30 days of the noncompliance period with
respect to such failure.
‘‘(3) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that the payment of such tax would be unduly bur-
densome relative to the failure involved.’’
(c) DEFICIENCY PROCEDURES TO APPLY TO CHAP-
TER 47.—
(1) The following provisions of the Internal
Revenue Code of 1986 are each amended by striking
‘‘or 44’’ each place it appears and inserting ‘‘44, or
47’’:
(A) Subsections (a) and (b)(2) of section
6211.
(B) Section 6212(a).
(C) Subsections (a) and (g) of section
6213.
(D) Subsections (c) and (d) of section
6214.
(E) Section 6161(b)(1).
(F) Section 6344(a)(1).
(G) Subsections (a) and (b)(1) of section
6512.
(H) Section 7422(e).
(2) Sections 6211(a) and 6862(a) of such Code
are each amended by striking ‘‘and 44’’ and insert-
ing ‘‘44, and 47’’.
(3) Paragraph (1) of section 6212(b) of such
Code is amended—
(A) by striking ‘‘or chapter 44’’ and insert-
ing ‘‘chapter 44, or chapter 47’’, and
(B) by striking ‘‘chapter 44, and this chap-
ter’’ and inserting ‘‘chapter 44, chapter 47, and
this chapter’’.
(4) Paragraph (1) of section 6212(c) of such
Code is amended by striking ‘‘or of chapter 44 tax
for the same taxable period’’ and inserting ‘‘, of
chapter 44 tax for the same taxable period, or of
chapter 47 for each act or failure to act to which the
petition relates’’.
(d) CLERICAL AMENDMENTS.—
(1) So much of chapter 47 of such Code as pre-
cedes subsection (a) of section 5000 is amended to
read as follows:
‘‘CHAPTER 47—TAXES RELATING TO
GROUP HEALTH PLANS
‘‘Sec. 5000. Contributions to nonconforming large group health
plans.
‘‘Sec. 5000A. Failure to enroll employees under State children
and pregnant women health plan.
‘‘SEC. 5000. CONTRIBUTIONS TO NONCONFORMING LARGE
GROUP HEALTH PLANS.’’
(2) The table of chapters for subtitle D of such
Code is amended by striking the item relating to
chapter 47 and inserting the following:
‘‘Chapter 47. Taxes relating to group health plans.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to remuneration paid after Decem-
ber 31, 1994.
SEC. 102. MEETING REQUIREMENT THROUGH ENROLL-
MENT OF EMPLOYEES AND FAMILIES UNDER
QUALIFIED EMPLOYER HEALTH PLANS.
The Social Security Act is amended by adding at the
end the following new title:
‘‘TITLE 
XXI—REQUIREMENT 
FOR 
ENROLL-
MENT OF EMPLOYEES UNDER A QUALI-
FIED EMPLOYER HEALTH PLAN
‘‘SEC. 2100. RELATION TO ‘PAY-OR-PLAY’ REQUIREMENT.
‘‘If an employer fails to enroll employees (and family
members) under a qualified employer health plan in ac-
cordance with this title—
‘‘(1) the employer and employee are each liable
for payment of an excise tax under section 3151(a)
of the Internal Revenue Code of 1986, and
‘‘(2) the employer is required, under section
5000A of such Code, to provide information nec-
essary to enroll such employees and family members
under the State children and pregnant women health
plan under title XXII for the State in which the em-
ployee resides.
‘‘PART A—EMPLOYER REQUIREMENT TO ENROLL EM-
PLOYEES
AND FAMILIES
IN
A QUALIFIED EM-
PLOYER HEALTH PLAN
‘‘SEC. 2101. APPLICATION TO FULL-TIME EMPLOYEES.
‘‘(a) UNMARRIED EMPLOYEES.—
‘‘(1) IN GENERAL.—Except as provided in this
part, each employer shall, in accordance with this
title, enroll each of its full-time employees who is un-
married in a qualified employer health plan.
‘‘(2) MULTIPLE FULL-TIME EMPLOYMENT.—
‘‘(A) EACH OFFERS QUALIFIED PLAN.—In
the case of an unmarried individual who is a
full-time employee of more than 1 employer, if
more than 1 such employer offers the employee
enrollment under a qualified employer health
plan—
‘‘(i) the individual shall elect (in a
manner specified by the Secretary) the
qualified employer health plan under which
the individual (and family members) will
be enrolled;
‘‘(ii) a nonenrolling employer—
‘‘(I) is not obligated to enroll the
employee (and family members) under
its qualified employer health plan (if
any) and may not charge the individ-
ual any premiums for required cov-
erage under the qualified employer
health plan, and
‘‘(II) is not liable for any tax
under section 3151(a)(1) of the Inter-
nal Revenue Code of 1986 but is lia-
ble for a nonenrolling employer pre-
mium under section 2234(a)(1)(A);
and
‘‘(iii) the enrolling employer is eligible
for a enrolling employer subsidy under sec-
tion 2234(a)(1)(B).
‘‘(B) ONLY 1 OFFERS QUALIFIED PLAN.—
In the case of an unmarried individual who is
a full-time employee of more than 1 employer,
if only 1 employer offers the employee enroll-
ment under a qualified employer health plan—
‘‘(i) the individual shall be enrolled
under such plan and, pursuant to sub-
section (b)(2) of section 3151 of the Inter-
nal Revenue Code of 1986, is not subject
to taxes under subsection (a)(2) of such
section with respect to employment with
nonenrolling employers, and
‘‘(ii) the enrolling employer is eligible
for a enrolling employer subsidy under sec-
tion 2234(a)(1)(B).
‘‘(b) MARRIED EMPLOYEES.—
‘‘(1) IN GENERAL.—Except as provided in this
part, each employer shall, in accordance with this
title, enroll each of its full-time employees who is
married in a qualified employer health plan.
‘‘(2) BOTH
FULL-TIME
EMPLOYEES.—In the
case of married individuals, if both are full-time em-
ployees of 1 or more employers, rules established by
the Secretary based on the rules under subsection
(a)(2) for multiple employment of unmarried individ-
uals shall apply.
‘‘(c) CONSTRUCTION.—Nothing in this section shall
be construed as preventing the nonenrolling plan from
supplementing the benefits of the enrolling plan.
‘‘(d) DEFINITIONS.—In this section, the terms ‘en-
rolling employer’ and ‘enrolling plan’ mean, with respect
to an individual or a married couple, the employer that
offers the qualified employer health plan in which the indi-
vidual or couple is enrolled under subsection (a)(2)(A)(i)
or (b)(2) and such plan, respectively, and the terms
‘nonenrolling employer’ and ‘nonenrolling plan’ mean the
other employer and other qualified employer health plan,
respectively.
‘‘SEC. 2102. APPLICATION TO PART-TIME EMPLOYEES.
‘‘(a) APPLICATION
OF
FULL-TIME
EMPLOYEE
RULES.—Subject to subsection (b), the provisions of sec-
tion 2101 shall apply to part-time employees in the same
manner as they apply to full-time employees.
‘‘(b) SEPARATE TREATMENT
OF PART-TIME
AND
FULL-TIME EMPLOYEES UNDER QUALIFIED EMPLOYER
HEALTH PLANS.—For rule regarding separate, but uni-
form, treatment of full-time and part-time employees (and
family members), see section 2104(b).
‘‘SEC. 2103. APPLICATION TO SEASONAL AND TEMPORARY
EMPLOYEES.
‘‘(a) ENROLLMENT UNDER QUALIFIED EMPLOYER
HEALTH PLAN NOT AFFECTING APPLICATION OF EXCISE
TAX.—The enrolling by an employer of an employee des-
ignated under subsection (b) as a seasonal or temporary
employee (as defined in section 2181(b)(3)), whether a
part-time or full-time employee, under the qualified em-
ployer health plan of the employer shall not be considered,
for purposes of section 3151 of the Internal Revenue Code
of 1986, coverage of the employee under a qualified em-
ployer health plan.
‘‘(b) DESIGNATION OF SEASONAL OR TEMPORARY
EMPLOYEES.—Each employer shall designate, at the time
of initial employment and in a manner specified by the
Secretary, if the individual is to be treated under this title
and title XXII as a seasonal or temporary employee. The
Secretary shall provide appropriate sanctions (that may
include civil money penalties) for the knowing designation
as seasonal or temporary employees of individuals who are
not of seasonal or temporary employees.
‘‘SEC. 2104. TREATMENT OF ALL FAMILY MEMBERS AS A
UNIT; UNIFORM TREATMENT OF FULL-TIME
EMPLOYEES AND OF PART-TIME EMPLOYEES.
‘‘(a) TREATMENT
OF ALL FAMILY MEMBERS
AS
UNIT.—
‘‘(1) IN GENERAL.—In accordance with section
2152(a), enrollment of an employee in a qualified
employer health plan shall include enrollment of the
other family members of the employee. The fact that
an employee is not a pregnant woman or a child (or
has any family members who are pregnant women or
children) does not permit or prevent the enrollment
of the employee under the qualified employer health
plan in accordance with this part.
‘‘(2) TREATMENT OF CHILDREN.—In the case
of an individual who is a child, the employer of the
child is not required to enroll the child in a qualified
employer health plan by virtue of the part-time or
full-time employment of the child (whether or not
the parent of the child is a full-time or part-time
employee). However, the employer is liable for taxes
under section 3151(a)(1) of the Internal Revenue
Code of 1986 (or payment of a nonenrolling em-
ployer premium under section 2234(a)(1)(A)) with
respect to such employment, and the child is, subject
‘‘(2) as of January 1, 1996, to medium-size em-
ployers (as defined in section 2181(c)(2)) that nor-
mally employ at least 50 employees on a typical
business day during the calendar year;
‘‘(3) as of January 1, 1997, to medium-size em-
ployers not described in paragraph (2); and
‘‘(4) as of January 1, 1998, to small employers
(as defined in section 2181(c)(1)).
‘‘(b) TRANSITION
FOR COLLECTIVE BARGAINING
AGREEMENTS.—The requirements of this part shall not
apply to employers with respect to their employees, insofar
as such employees are covered under a collective bargain-
ing agreement ratified before the date of the enactment
of this title, earlier than the date of termination of such
agreement (determined without regard to any extension
thereof agreed to after such date of enactment).
‘‘SEC. 2106. TIMING OF ENROLLMENT; PERIOD OF COV-
ERAGE.
‘‘(a) TIMING OF ENROLLMENT; NOTICES.—
‘‘(1) IN GENERAL.—Enrollment under this part
shall occur not later than the date on which the em-
ployment, for which such enrollment is required
under this part, commences.
‘‘(2) REFERENCE
TO
DISCLOSURE
REQUIRE-
MENT.—For requirement for disclosure to employees
of information respecting the availability of low-in-
come assistance under part E of title XXII, see sec-
tion 2158(a)(1).
‘‘(b) PERIOD OF COVERAGE.—
‘‘(1) BEGINNING
OF
COVERAGE.—Coverage
under a qualified employer health plan shall begin in
accordance with section 2152(b).
‘‘(2) TERMINATION OF COVERAGE.—
‘‘(A) IN GENERAL.—If an enrollment is ef-
fected under this part on the basis of employ-
ment, coverage under such enrollment may be
terminated, subject to subparagraph (B), on the
last day of the month (or of any subsequent
month) during which such employment is termi-
nated.
‘‘(B) NOTICE REQUIRED.—Effective on the
date specified in section 2157(b)(2), coverage
under a qualified employer health plan shall not
be terminated unless notice has been provided
to the Secretary, as required in section
2157(b)(1), of such termination at least 7 days
before the last day of the month in which em-
ployment is terminated (or, if later, 7 days be-
fore the last day of the month in which the cov-
erage is terminated).
‘‘(3) TREATMENT OF FAMILY MEMBERS.—Sub-
ject to section 2152, the period of coverage for fam-
ily members of an employee shall be the same as the
period of coverage for the employee.
‘‘PART B—REQUIREMENTS FOR QUALIFIED EMPLOYER
HEALTH PLANS
‘‘SEC. 2121. QUALIFIED EMPLOYER HEALTH PLAN DEFINED.
‘‘(a) IN GENERAL.—In this title and title XXII, sub-
ject to subsection (b), the term ‘qualified employer health
plan’ means an employment-related health plan (as de-
fined in section 2308(a)(2)) that—
‘‘(1) is a qualified health plan (as defined in
section 2151(a)),
‘‘(2) except as provided in section 2122, does
not impose premiums, deductibles, or copayments on
employees (and family members) required to be en-
rolled in a qualified employer health plan under part
A, and
‘‘(3) 
meets 
the 
requirements 
of 
section
2242(c)(3) (relating to coordination of low-income
assistance for deductibles).
‘‘(b) TYPES
OF QUALIFIED EMPLOYER HEALTH
PLANS.—
‘‘(1) LARGE
EMPLOYERS.—A large employer
may meet the requirements of this title through a
qualified employer health plan that is an insured
plan or that is a self-insured plan.
‘‘(2) MEDIUM-SIZE AND SMALL EMPLOYERS.—
A medium-size or small employer may meet the re-
quirements of this title only through a qualified em-
ployer health plan that is an insured plan that im-
poses premiums only in accordance with sections
2122 and 2304.
‘‘(3) INSURED PLAN DEFINED.—The term ‘in-
sured plan’ has the meaning given the term ‘applica-
ble accident and health insurance contract’ in sec-
tion 5000B(e)(1) of the Internal Revenue Code of
1986.
‘‘SEC. 2122. REQUIREMENTS RELATING TO EMPLOYEE PRE-
MIUMS AND COST-SHARING.
‘‘(a) ENROLLEE
PREMIUMS
AND
COST-SHARING
PERMITTED.—
‘‘(1) IN GENERAL.—A qualified employer health
plan may require an enrollee to pay for—
‘‘(A) premiums for coverage under the
plan, but only if the premiums do not exceed
the limitations imposed under this section, and
‘‘(B) cost-sharing amounts for coverage
under the plan, but only if the cost-sharing does
not exceed the limitations on deductibles,
copayments, and coinsurance imposed with re-
spect to qualified health plans under section
2155.
‘‘(2) TREATMENT OF ADDITIONAL, REQUIRED
COVERAGE.—If a qualified employer health plan pro-
vides benefits in addition to the benefits required
under this title and the employee is not permitted
the option of not accepting such additional benefits,
the plan—
‘‘(A) may not impose a premium, for such
required and additional benefits, that exceeds
the premiums that may be imposed for the
basic benefits, and
‘‘(B) shall assure that cost-sharing is not
imposed with respect to required health services
once the cost-sharing limit has been reached in
a year with respect to benefits for such services.
‘‘(3) 
NONDISCRIMINATION
IN
PREMIUM
AMOUNTS.—Under a qualified employer health plan,
no employee may be charged a different premium for
similar benefits in the same employer health plan for
the same beneficiary class based on the age, sex, or
health status of the employee (or number, age, sex,
or health status of family members).
‘‘(b) LIMITATION ON PREMIUMS.—
‘‘(1) MONTHLY PREMIUM LIMITED TO 20 PER-
CENT OF ACTUARIAL RATE.—
‘‘(A) IN GENERAL.—A qualified employer
health plan may not require an employee to pay
a premium—
‘‘(i) for coverage for a period of longer
than one month, or
‘‘(ii) the amount of which on a month-
ly basis exceeds 20 percent of the monthly
actuarial rate (as defined under subpara-
graph (B)).
‘‘(B) MONTHLY
ACTUARIAL
RATE
DE-
FINED.—For purposes of this subsection, the
term ‘monthly actuarial rate’ means, with re-
spect to a qualified employer health plan in a
plan year, the average monthly per enrollee
amount that the plan estimates, for enrollees
under the plan during the year, would be nec-
essary to pay for the total benefits required
during the year under the plan (with respect to
required health services), including administra-
tive costs for the provision of such benefits and
an appropriate amount for a contingency mar-
gin.
‘‘(C) UNIFORM APPLICATION REGARDLESS
OF
FAMILY
COMPOSITION.—For purposes of
subparagraph (B), a qualified employer health
plan shall provide for the premium to be ap-
plied, and the monthly actuarial rate described
in such subparagraph to be estimated, for re-
quired health services for all covered individuals
within a family (without regard to the age, sex,
health status, or number of such individuals
covered within the family).
‘‘(3) LIABILITY FOR PAYMENT OF PREMIUMS.—
An employee enrolled under a qualified employer
health plan is liable for payment of premiums re-
quired under that plan in accordance with this sub-
section. In no case shall an employee be liable for
premiums with respect to a qualified employer
health plan, other than the portion of the premium
which may be imposed on the employee consistent
with this section.
‘‘(4) WITHHOLDING PERMITTED.—No provision
of State law shall prevent an employer of an em-
ployee enrolled under a qualified employer health
plan from withholding the amount of any premium
due by the employee under this subsection from the
wages paid the employee.
‘‘(5) CONSTRUCTION.—Nothing in this section
shall be construed—
‘‘(A) as preventing an employer from pay-
ing part or all of the employee premium for re-
quired health services or other health services,
or
‘‘(B) subject to subsection (a), from re-
quiring an employee to pay for all or part of the
premium for benefits for services other than re-
quired health services.
‘‘PART C—STANDARDS FOR QUALIFIED HEALTH PLANS
‘‘SEC. 2151. CERTIFICATION OF QUALIFIED HEALTH PLANS.
‘‘(a) QUALIFIED HEALTH PLAN DEFINED.—For
purposes of this title, the term ‘qualified health plan’
means a health plan that the Secretary certifies, upon ap-
plication by the plan, to meet the requirements of this
part.
‘‘(b) REVIEW
AND RECERTIFICATION.—The Sec-
retary shall establish procedures for the periodic review
and recertification of plans as qualified health plans.
‘‘(c) TERMINATION OF CERTIFICATION.—The Sec-
retary shall terminate the certification of a qualified
health plan if the Secretary determines that the plan no
longer meets the requirements for certification. Before
effecting a termination, the Secretary shall provide the
plan notice and opportunity for a hearing on the proposed
termination.
‘‘SEC. 2152. TREATMENT OF FAMILY AS A UNIT; COVERAGE
PERIOD; HEALTH PLAN CARDS.
‘‘(a) TREATMENT OF FAMILY AS A UNIT.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
enrollment of an individual in a qualified health plan
shall include enrollment of the other family members
(as defined in section 2282(3)) of the individual.
‘‘(2) TREATMENT
OF
INELIGIBLE
INDIVID-
UALS.—Nothing in paragraph (1) shall be construed
as requiring a qualified health plan (or permitting a
State children and pregnant women health plan) to
enroll individuals who are not eligible individuals (as
defined in section 2282(2)).
‘‘(b) BEGINNING OF COVERAGE.—
‘‘(1) IN GENERAL.—In the case of an individual
enrolled under any qualified health plan, subject to
subsection (c), the benefits under the plan shall first
become available for required health services fur-
nished beginning on the first day of the month fol-
lowing the month of enrollment.
‘‘(2) SPECIAL RULES.—The Secretary shall pro-
vide for such standards as may be necessary to pro-
vide for the allocation of responsibility among quali-
fied health plans (including State children and preg-
nant women health plans) in the case of an inpatient
hospital stay, or in the case in which a single pay-
ment amount is made for other services provided
over a period of time, that begins during the period
of coverage under one qualified health plan and ends
during a period of coverage under another qualified
health plan.
‘‘(c) STANDARDS TO REFLECT CHANGES IN FAMILY
AND EMPLOYMENT STATUS.—
‘‘(1) IN
GENERAL.—Under standards estab-
lished by the Secretary consistent with this sub-
section, qualified health plans shall provide for ap-
propriate changes in the coverage of family members
to take into account—
‘‘(A) changes in family composition or sta-
tus, including marriage, divorce (or legal sepa-
ration), birth or adoption of children, and the
aging of children into adulthood, and
‘‘(B) changes in employment status.
‘‘(2) MONTHLY CHANGES.—Except as specifi-
cally provided in this subsection, such standards
shall be designed—
‘‘(A) to effect a change in enrollment (or
status of enrollment) as of the first day of the
first month (or, in order to provide for notice
and an opportunity for coordination among
plans, a later month) following the date of the
event causing the change,
‘‘(B) to prevent any periods of noncoverage
under any qualified health plans, and
‘‘(C) to provide, in the case of a change of
family status such as marriage, divorce, or legal
separation, for accounting and crediting of cost-
sharing among family members (described in
section 2157(c)) in an equitable and admin-
istrable manner.
‘‘(3) TREATMENT OF NEWBORNS.—
‘‘(A) BIRTH TO WOMAN DURING PERIOD
OF
COVERAGE.—Any child born to a woman
during the period of coverage under a qualified
health plan shall, as of the date of birth, be
automatically enrolled and covered for benefits
under the plan.
‘‘(B) BIRTH
TO
WOMAN
WITHOUT
COV-
ERAGE.—Any child born in the United States to
a woman who is not, at the time of birth, en-
rolled under a qualified health plan shall be
automatically enrolled and covered for benefits
under the State children and pregnant women
health plan for the State in which the child is
born as of the date of birth if an application for
such enrollment is made not later than 60 days
after the date of birth or, if later, the end of
the year in which the child is born.
‘‘(4) ADOPTION.—
‘‘(A) TREATMENT OF VOLUNTARY RELIN-
QUISHMENT.—Any child who is voluntarily re-
linquished to a public or private agency shall,
upon the application by the agency, be enrolled
and covered for benefits under the State chil-
dren and pregnant women health plan for the
State in which the child resides as of the date
of the relinquishment, until the date of the
child’s placement for adoption.
‘‘(B) TREATMENT
OF
ADOPTED
CHIL-
DREN.—Any child who is placed for adoption
with an individual during the period the individ-
ual is enrolled and covered under a qualified
health plan shall, as of the date of the place-
ment for adoption, be treated as the child of the
individual and be automatically enrolled and
covered under such plan.
‘‘(5) PLACEMENT
IN
CUSTODY
OF
PUBLIC
AGENCY PURSUANT TO COURT ORDER OR OTHER-
WISE.—Any child who is removed from the family
and placed in the temporary custody of a public
agency pursuant to a court order or otherwise shall,
upon application by the public agency on or after the
date of the removal and placement with the public
agency, be deemed to be automatically enrolled and
covered for benefits under the State plan under title
XXII as of the date of the application, until the
child is returned to the family or placed for adop-
tion.
‘‘(6) TREATMENT OF LEGAL WARDS, FOSTER
CHILDREN, ETC.—In cases not described in para-
graph (4) or (5), the Secretary shall establish stand-
ards relating to the time an individual described in
section 2282(1)(B)(ii) is treated as the child of the
person with custody and such other standards as
may be necessary to assure the proper coordination
of enrollment of children and other individuals
among qualified health plans and State children and
pregnant women health plans.
‘‘(d) HEALTH PLAN CARDS.—In conjunction with en-
rollment of individuals under a qualified health plan, the
plan shall provide for the issuance of a card which may
be used for purposes of identification of such enrollment
and the processing of claims for benefits under the plan.
Such card shall—
‘‘(1) identify (as appropriate) the types of bene-
fits to which the individual is entitled under the
plan, and
‘‘(2) contain such other information as the Sec-
retary (and the plan) shall specify.
‘‘SEC. 
2153. 
REQUIREMENT 
RESPECTING 
REQUIRED
HEALTH SERVICES.
‘‘(a) REQUIREMENT.—Each qualified health plan
must provide for benefits for at least all required health
services (as defined in section 2211(a)(2)), in accordance
with standards established under section 2211(d).
‘‘(b) TREATMENT
OF
ADDITIONAL
BENEFITS.—
Nothing in this section shall be construed as preventing
a qualified health plan from including benefits in addition
to benefits for required health services.
‘‘SEC. 2154. REQUIREMENTS RESPECTING LIMITS ON PRE-
EXISTING CONDITION EXCLUSIONS AND COV-
ERAGE STANDARDS FOR REQUIRED HEALTH
SERVICES.
‘‘(a) IN GENERAL.—Except as provided under sub-
section (b), a qualified health plan—
‘‘(1) may not deny, limit, or condition the cov-
erage under (or benefits of) the plan with respect to
required health services based on the health status,
claims experience, receipt of health care, medical his-
tory, or lack of evidence of insurability, of an indi-
vidual, and
‘‘(2) may not provide for exclusions from cov-
erage for required health services that are more re-
strictive than the exclusions for such services under
part C of title XXII.
‘‘(b) PROHIBITION OF PRE-EXISTING CONDITION EX-
CLUSIONS.—A qualified health plan may not exclude cov-
erage with respect to required health services related to
treatment of a pre-existing condition.
‘‘SEC. 2155. REQUIREMENTS RESPECTING LIMITS ON COST-
SHARING.
‘‘(a) IN GENERAL.—Subject to subsection (b), a
qualified health plan may not impose premiums,
deductibles, copayments, or coinsurance with respect to re-
quired health services in excess of the premiums permitted
under this title and the deductible and coinsurance per-
mitted under part C of title XXII with respect to such
services (not taking into account any low-income assist-
ance provided under part E of title XXII).
‘‘(b) ACTUARIALLY EQUIVALENCE PERMITTED FOR
EXTENDED MEDICAL SERVICES.—
‘‘(1) IN GENERAL.—A plan may provide for dif-
ferent premiums, deductibles, and copayments with
respect to extended medical services if the actuarial
value of such benefits (as defined in paragraph (3))
is not less than the equivalent of the actuarial value
of such benefits provided under the plan if this sub-
section did not apply. The previous sentence shall
not be construed as permitting a plan to provide for
a limit on cost-sharing in excess of the limit pro-
vided under section 2224.
‘‘(2) GUIDELINES.—The Secretary shall estab-
lish guidelines for the application of paragraph (1).
Each State shall provide standards (consistent with
such guidelines) for the application of paragraph (1)
to plans offered in the State.
‘‘(3) ACTUARIAL
VALUE
OF
BENEFITS
DE-
FINED.—In paragraph (1), the ‘actuarial value of
benefits’ of a plan is the amount by which the total
of the amounts payable as benefits under the plan
for extended medical services exceeds the amount of
the premiums, deductibles, copayments, and coinsur-
ance payable by the employee under the plan that
are attributable to such services, as determined on
an actuarial basis per enrollee for a plan year.
(4) EXTENDED MEDICAL SERVICES DEFINED.—
In this subsection, the term ‘extended medical serv-
ices’ has the meaning given such term in section
2214(a).
‘‘(c) CONSTRUCTION FOR OTHER THAN REQUIRED
HEALTH SERVICES.—Nothing in this section shall be con-
strued as preventing a qualified health plan from provid-
ing for deductibles, coinsurance, and copayments or other
restrictions with respect to services other than required
health services that are different from those permitted
with respect to required health services.
‘‘SEC. 2156. PAYMENT RATES.
‘‘(a) IN GENERAL.—A qualified health plan shall
make payment for required health services based on the
payment rates established under part C of title XXII.
‘‘(b) TREATMENT OF HEALTH MAINTENANCE ORGA-
NIZATIONS.—Subsection (a) shall not apply to a plan of
an eligible organization (as defined in section 1876(b))
which provides for enrollee protections which are at least
as great as the enrollee protections provided under section
2265 (but without the application of section 2265(b)(5)
or 1876(c)(3)(B)).
‘‘SEC. 2157. COORDINATION AND PORTABILITY OF HEALTH
COVERAGE 
UNDER 
QUALIFIED 
HEALTH
PLANS.
‘‘(a) IN GENERAL.—Each qualified health plan shall
provide for coordination of—
‘‘(1) enrollment and termination of enrollment
among the qualified health plans and State children
and pregnant women health plans, and
‘‘(2) application of deductibles and limitations
on cost-sharing among such plans,
in accordance with standards established by the Secretary
consistent with this section.
‘‘(b) REQUIREMENT OF NOTICES WITH RESPECT TO
COVERAGE.—
‘‘(1) IN GENERAL.—Each qualified health plan
shall provide notice at the time an individual’s cov-
erage under the plan begins or is terminated. Such
notice shall be provided (in a form and manner and
at a time specified by the Secretary)—
‘‘(A) to the individual (or in the case of en-
rollment only of a child or children, to the par-
ent enrolling the child or children), and
‘‘(B) effective (on the date specified in
paragraph (2)) to the Secretary.
The notice under this paragraph shall include the
names and other identifying information of family
members whose coverage is affected by the change.
‘‘(2) DATE OF REQUIREMENT FOR NOTICE TO
STATE CHILDREN AND PREGNANT WOMEN HEALTH
PLANS.—The date specified in this paragraph is
January 1, 1995, or, with respect to a qualified em-
ployer health plan of an employer, the date the re-
quirements of part A apply with respect to the em-
ployer under section 2105(a).
‘‘(3) NOTICE
TO
BENEFICIARY
AND
OTHER
QUALIFIED HEALTH PLANS UPON OBTAINING COV-
ERAGE.—In the case of an individual who begins
coverage under a qualified employer health plan (or
under a State children and pregnant women health
plan on an employment basis), when the Secretary
receives notice under paragraph (1)(B)—
‘‘(A) if, at the time of obtaining such cov-
erage, the individual is enrolled on a non-em-
ployment basis in a State children and pregnant
women health plan, the Secretary shall notify
the individual that coverage for such services on
such a basis or for such benefits shall be termi-
nated effective on the date of coverage under
such a plan, and
‘‘(B) the Secretary shall provide for notice
to any other qualified health plan in which the
Secretary knows the individual is enrolled of the
fact of such new coverage.
‘‘(4) NOTICES OF TERMINATION.—Each notice
of termination under paragraph (1) shall include—
‘‘(A) the effective date of the termination,
‘‘(B) in the case of notice to the Secretary,
sufficient information to permit enrollment of
the individuals affected under a State children
and pregnant women health plan, and
‘‘(C) in the case of an individual whose
coverage under the plan is terminated other
than at the end of a calendar year, the account-
ing statement produced under subsection (c)(2).
‘‘(c) ACCOUNTING FOR COST-SHARING.—
‘‘(1) IN GENERAL.—Each qualified health plan
shall provide for an ongoing accounting, for each en-
rollee (and enrolled family members) on a calendar
year basis, of expenses incurred for required health
services that are counted towards the deductible es-
tablished under section 2222 and that are counted
towards the cost-sharing limit established under sec-
tion 2224. The amount credited for each account
shall be determined in accordance with standards es-
tablished by the Secretary in order to provide con-
sistency among qualified health plans and to pro-
mote portability of benefits across qualified health
plans.
‘‘(2) STATEMENT OF ACCOUNT BALANCE.—In
the case of an individual whose coverage under the
plan is terminated other than at the end of a cal-
endar year, the qualified health plan shall produce
an accounting statement (in a uniform manner es-
tablished by the Secretary) of the amounts that are
credited under the plan towards such deductible and
cost-sharing limitations for the year for each enrollee
(and family members) involved, in accordance with
the accounting under paragraph (1).
‘‘(3) CREDITING OF PREVIOUS EXPENSES TO-
WARDS
DEDUCTIBLES
AND
COINSURANCE.—Each
qualified health plan shall, in the case of an individ-
ual who is enrolled under the plan after the begin-
ning of a year, credit, against the deductible and
cost-sharing limit for required health services under
its plan, the amounts previously accounted against
the deductible and cost-sharing limit under another
qualified health plan for the calendar year. The
credit under this subparagraph shall be based on the
accounting statement produced under paragraph (2).
‘‘(d) COVERAGE UNDER A STATE CHILDREN AND
PREGNANT WOMEN HEALTH PLAN.—
‘‘(1) IN GENERAL.—Except as provided in this
subsection, each State children and pregnant women
health plan shall enroll each eligible individual (as
defined in section 2282(2)) who resides in the State
and whose coverage under a qualified health plan or
under title XVIII is terminated, effective on the date
following the effective date of termination of cov-
erage under such plan.
‘‘(2) OBTAINING
ALTERNATE
COVERAGE.—
Paragraph (1) shall not apply if the individual pro-
vides satisfactory evidence that the individual has
obtained coverage through another qualified health
plan or is a medicare beneficiary enrolled under part
B of title XVIII.
‘‘(3) NO
AUTOMATIC
ENROLLMENT
DURING
TRANSITION.—Paragraphs (1) and (2) shall not
apply to terminations occurring before January 1,
1998. During the period before January 1, 1998, be-
fore an individual described in paragraph (1) enrolls
under a State children and pregnant women health
plan, the State shall provide the individual with a
notice of the minimum enrollment period required
under section 2202(b)(3).
‘‘(4) REFERENCE
TO
ADDITIONAL
REQUIRE-
MENTS.—For addition enrollment requirements for
State children and pregnant women health plans, see
sections 
2152(c)(3)(B), 
2152(c)(4)(A), 
and
2152(c)(5).
‘‘(e) PROVISION OF INFORMATION ON ENROLLEES.—
Each qualfied health plan shall provide the Secretary and
applicable State children and pregnant women health
plans with such information as the Secretary may require
in order to ascertain whether (and the amount of) any
transfer payments to be made under section 2234.
‘‘SEC. 2158. CONSUMER PROTECTIONS.
‘‘(a) DISCLOSURE REQUIREMENTS FOR EMPLOYER
PLANS.—
‘‘(1) NOTICE OF AVAILABILITY OF LOW-INCOME
ASSISTANCE.—At the time of enrollment of an em-
ployee under a qualified employer health plan, the
plan (directly or through the employer) shall provide
the employee with a notice (in a form specified by
the Secretary) of the low-income assistance available
under part E of title XXII with respect to enroll-
ment under the plan.
‘‘(2) FOR
SMALL
EMPLOYER
PLANS.—In the
case of a qualified employer health plan that is of-
fered to a small employer, the plan may not be is-
sued or sold to the employer unless the employer has
been provided the following information:
‘‘(A) A description of the benefits covered
in the plan and cost-sharing required with re-
spect to such benefits.
‘‘(B) A comparison of the benefits and
cost-sharing described in subparagraph (A) with
required health services.
‘‘(3) STANDARD
FORMAT.—The disclosures
under paragraphs (1) and (2) shall be made in a
uniform format established by the Secretary.
‘‘(4) VIOLATIONS.—Any entity that violates
paragraph (1) or (2) is subject to a civil money pen-
alty of an amount not to exceed $5,000 with respect
to each such violation. The provisions of section
1128A (other than the first sentence of subsection
(a) and other than subsection (b)) shall apply to a
civil money penalty under the previous sentence in
the same manner as such provisions apply to a pen-
alty or proceeding under section 1128A(a).
‘‘(b) EFFECTIVE GRIEVANCE PROCEDURES.—Each
qualified health plan shall provide for effective procedures
for hearing and resolving grievances between the plan and
individuals enrolled under the plan.
‘‘(c) RESTRICTION ON CERTAIN PHYSICIAN INCEN-
TIVE PLANS.—
‘‘(1) IN
GENERAL.—A health plan is not a
qualified health plan if it operates a physician incen-
tive plan (as defined in paragraph (2)) unless the re-
quirements specified in clauses (i) through (iii) of
section 1876(i)(8)(A) are met (in the same manner
as they apply to eligible organizations under section
1876).
‘‘(2) PHYSICIAN INCENTIVE PLAN DEFINED.—
In this subsection, the term ‘physician incentive
plan’ means any compensation or other financial ar-
rangement between the qualified health plan and a
physician or physician group that may directly or in-
directly have the effect of reducing or limiting serv-
ices provided with respect to individuals enrolled
under the plan.
‘‘(d) ENROLLEE FINANCIAL PROTECTION.—
‘‘(1) SOLVENCY
PROTECTION
FOR
INSURED
PLANS.—In the case of a qualified health plan that
is an insured plan (as defined by the Secretary) and
is issued in a State, in order for the plan to be cer-
tified under this part the Secretary must find that
the State has established satisfactory protection of
enrollees with respect to potential insolvency of the
plan.
‘‘(2) 
PROTECTION
AGAINST
PROVIDER
CLAIMS.—In the case of a failure of a qualified
health plan to make payments with respect to re-
quired health services, under standards established
by the Secretary, an individual who is enrolled under
the plan is not liable to any health care provider or
practitioner with respect to the provision of required
health services for payments in excess of the amount
for which the enrollee would have been liable if the
plan were to have made payments in a timely man-
ner.
‘‘SEC. 2159. PREEMPTION OF CERTAIN STATE AND FEDERAL
REQUIREMENTS.
‘‘(a) BENEFIT AND COVERAGE RULES.—Effective as
of January 1, 1995, no State shall establish or enforce
any law or regulation that—
‘‘(1) requires the offering, as part of a qualified
employer health plan with respect to any pregnant
woman or child, of any services, category of care, or
services of any class or type of provider that is dif-
ferent from the benefits required to be provided
under section 2153,
‘‘(2) specifies the individuals to be covered
under a qualified employer health plan or the dura-
tion of such coverage, or
‘‘(3) requires a right of conversion from a quali-
fied employer health plan to an individual qualified
health plan.
‘‘(b) STATE DEFINED.—In subsection (a), the term
‘State’ means the 50 States and the District of Columbia.
‘‘SEC. 2160. USE OF UNIFORM CLAIMS FORMS.
‘‘Each qualified health plan shall provide for submis-
sion of claims using uniform claims forms developed by
the Secretary.
‘‘PART D—DEFINITIONS AND MISCELLANEOUS
‘‘SEC. 2181. DEFINITIONS.
‘‘(a) WAGES, EMPLOYMENT, ETC.—In this title—
‘‘(1) WAGES.—The term ‘wages’ has the mean-
ing given such term by section 3121(a) of the Inter-
nal Revenue Code of 1986, except that—
‘‘(A) the modifications of subsection (b)
shall apply in determining whether any service
is employment, and
‘‘(B) the applicable contribution base
under section 3121(x)(2) of such Code (relating
to hospital insurance) shall be used under sec-
tion 3121(a)(1) for purposes of this title.
‘‘(2) EMPLOYMENT.—
‘‘(A) IN GENERAL.—Except as modified in
subparagraph (B), the term ‘employment’ has
the meaning given such term by section
3121(b) of the Internal Revenue Code of 1986.
‘‘(B) MODIFICATIONS.—The modifications
referred to in this paragraph are that—
‘‘(i) paragraphs (5), (6), (7), (8), and
(9) of section 3121(b) of such Code shall
not apply, and
‘‘(ii) subsections (r) and (w) of section
3121 of such Code shall not apply.
‘‘(C) TREATMENT OF FEDERAL EMPLOY-
MENT.—In applying subparagraph (A), the
term ‘employment’ shall not be considered to
include service performed in the employ of the
United States if, in connection with the per-
formance of such service (or the service of a
family member), the individual—
‘‘(i) is enrolled in a health benefits
plan under chapter 89 of title 5, United
States Code, or
‘‘(ii) is provided medical and dental
benefits under chapter 55 of title 10, Unit-
ed States Code.
‘‘(3) EMPLOYEE; EMPLOYER.—The terms ‘em-
ployee’ and ‘employer’ have the same meanings as
such terms have for purposes of chapter 21 of the
Internal Revenue Code of 1986.
‘‘(b) DEFINITIONS RELATING TO EMPLOYEES.—In
this title:
‘‘(1) FULL-TIME EMPLOYEE.—The term ‘full-
time employee’ means, with respect to an employer,
an employee who normally performs on a monthly
basis at least 25 hours of service per week for that
employer.
‘‘(2) PART-TIME EMPLOYEE.—The term ‘part-
time employee’ means, with respect to an employer,
an employee who is not a full-time employee.
‘‘(3) SEASONAL OR TEMPORARY EMPLOYEE.—
The term ‘seasonal or temporary employee’ means,
with respect to an employer, an employee who is em-
ployed by the employer for not more than 4 months
in any 12-month period; except that the Secretary
may extend such period to up to 6 months in any
12-month period in the case of employment that is
sporadic, irregular, and seasonal in nature.
‘‘(4) TREATMENT OF CONSULTANTS AND CON-
TRACTORS.—The term ‘employee’ includes an indi-
vidual who is a consultant or contractor of an em-
ployer if the Secretary determines that the consult-
ing arrangement or contract was entered into to
avoid the requirements of this title.
‘‘(5) EXCLUSION OF FOREIGN EMPLOYMENT.—
The term ‘employee’ does not include an individ-
ual—
‘‘(A) who is not a citizen or resident of the
United States with respect to service performed
outside the United States, or
‘‘(B) who is a citizen or resident of the
United States with respect to services per-
formed outside the United States for an em-
ployer other than an American employer (as de-
fined in section 3121(h) of the Internal Reve-
nue Code of 1986).
‘‘(c) DEFINITIONS RELATING
TO SIZE
OF EM-
PLOYER.—In this title:
‘‘(1) SMALL EMPLOYER.—The term ‘small em-
ployer’ means, with respect to a calendar year, an
employer that normally employs fewer than 25 em-
ployees on a typical business day during the cal-
endar year.
‘‘(2) MEDIUM-SIZE EMPLOYER.—The term ‘me-
dium-size employer’ means, with respect to a cal-
endar year, an employer that normally employs at
least 25, but fewer than 101, employees on a typical
business day during the calendar year.
‘‘(3) LARGE EMPLOYER.—The term ‘large em-
ployer’ means an employer that is not a small em-
ployer or a medium-size employer.
‘‘(4) APPLICATION
OF
CONTROLLED
GROUP
RULES.— For purposes of determining if an em-
ployer is a small, medium-size, or large employer or
the number of hours an individual is normally em-
ployed with respect to an employer, rules similar to
the rules of subsection (b) and (c) of section 414 of
the Internal Revenue Code of 1986 shall apply.
‘‘(d) STATE CHILDREN
AND PREGNANT WOMEN
HEALTH PLAN.—The term ‘State children and pregnant
women health plan’ has the meaning of the term ‘State
plan’ under section 2200(c).
‘‘(e) INCORPORATION OF DEFINITIONS.—Except as
otherwise provided in this title, the terms defined in sec-
tion 2282 shall apply under this title in the same manner
as they apply under title XXII.
‘‘SEC. 2182. NONAPPLICATION TO RESIDENTS OF PUERTO
RICO AND TERRITORIES.
‘‘The provisions of this title shall not apply with re-
spect to an employee who is not a resident of one of the
50 States or the District of Columbia.’’.
TITLE 
II—PROVISION 
OF
HEALTH 
INSURANCE 
FOR
PREGNANT 
WOMEN 
AND
CHILDREN THROUGH STATE
CHILDREN 
AND 
PREGNANT
WOMEN HEALTH PLANS
SEC. 201. STATE 
CHILDREN 
AND 
PREGNANT 
WOMEN
HEALTH PLANS.
The Social Security Act is amended by adding after
the title added by section 102 the following new title:
‘‘TITLE XXII—STATE CHILDREN AND
PREGNANT WOMEN HEALTH PLANS
‘‘SEC. 2200. ESTABLISHMENT OF STATE CHILDREN AND
PREGNANT WOMEN HEALTH PLANS.
‘‘(a) IN GENERAL.—By not later than January 1,
1995, each State shall establish and maintain a pro-
gram—
‘‘(1) to assure the provision in accordance with
this title of health insurance for pregnant women
and children lawfully residing in the State who are
not covered under a qualified employer health plan
or under a Federal health plan, and
‘‘(2) to provide low-income assistance under
part E for eligible individuals enrolled under a quali-
fied employer health plan or under a Federal health
plan.
‘‘(b) FEDERAL BACKUP.—If a State fails to establish
and maintain a State plan, the Secretary shall establish
and maintain such a plan for the State and the State shall
be liable to the Secretary for 105 percent of the minimum
amount the Secretary determines the State would have
been required to expend (net of payments to the State
under section 2236) to establish and maintain a State
plan under this title.
‘‘(c) STATE PLAN DEFINED.—In this title, the term
‘State plan’ means a program established and maintained
by a State under this section, and includes a plan estab-
lished by the Secretary under subsection (b).
‘‘PART A—PLAN REQUIREMENTS RELATING TO
ELIGIBILITY AND ENROLLMENT
‘‘SEC. 2201. GENERAL REQUIREMENTS; APPLICATION PROC-
ESS.
‘‘(a) COVERAGE.—Each State plan shall provide pay-
ment for required health services (as defined in section
2211(a)) furnished to any eligible individual (as defined
in section 2282(2)) who is enrolled under the plan.
‘‘(b) ENROLLMENT.—
‘‘(1) IN GENERAL.—Each State plan shall pro-
vide a process for the enrollment of all eligible indi-
viduals residing in the State who are not enrolled in
a qualified employer health plan or in a Federal
health plan (as defined in section 2282(4)).
‘‘(2) UNIFORM RULES FOR RESIDENCY.—The
Secretary shall establish uniform rules respecting
the determination of the residence of eligible individ-
uals for purposes of this title.
‘‘(c) APPLICATION PROCESS.—
‘‘(1) OPEN ENROLLMENT.—Eligible individuals
residing in a State may enroll under the State plan
at any time.
‘‘(2) ENROLLMENT.—The filing by an eligible
individual of an application for enrollment under a
State plan shall (except as the Secretary may pro-
vide) constitute enrollment under the plan. Such an
application may be filed with the State by mail or
at such locations as the State may specify.
‘‘(3) AVAILABILITY
OF
APPLICATIONS.—Each
State shall make applications for enrollment under
the State plan available—
‘‘(A) at out-reach sites (such as provider
and practitioner locations), and
‘‘(B) at other locations (including post of-
fices) accessible to a broad cross-section of indi-
viduals eligible to enroll.
The Secretary, to the extent practicable, shall make
applications for enrollment under State plans avail-
able at local offices of the Social Security Adminis-
tration.
‘‘(4) APPLICATION
FOR
LOW-INCOME
ASSIST-
ANCE.—An application for enrollment under a State
plan may (but need not) be accompanied by an ap-
plication for low-income assistance under part E.
‘‘(d) ENROLLMENT TERMS.—
‘‘(1) ENROLLMENT UNDER TITLE ON AN EM-
PLOYMENT
AND
NON-EMPLOYMENT
BASIS
DE-
FINED.—An eligible individual is considered, for pur-
poses of this title, to be enrolled under a State
plan—
‘‘(A) on an ‘employment basis’ only if the
individual is enrolled by an employer pursuant
to the requirement of section 5000A of the In-
ternal Revenue Code of 1986, or
‘‘(B) on a ‘non-employment basis’ in any
other case.
‘‘(2) ENROLLMENT UNDER A QUALIFIED EM-
PLOYER HEALTH PLAN DEFINED.—An individual is
considered, for purposes of this title, to be ‘enrolled
under a qualified employer health plan’ if—
‘‘(A) the individual is enrolled under a
qualified employer health plan (as defined in
section 2281(b)(4)) as an employee (or family
member of an employee),
‘‘(B) the employer is required to provide
for such enrollment under part A of title XXI,
and
‘‘(C) the amount of the employee share of
the premium is limited under section 2122(b).
‘‘SEC. 2202. COVERAGE PERIOD; TERMINATION OF ENROLL-
MENT.
‘‘(a) BEGINNING OF COVERAGE.—Each State plan
shall provide for a period of coverage for eligible individ-
uals under the plan in the manner specified for qualified
health plans under section 2152(b).
‘‘(b) TERMINATION OF ENROLLMENT DURING TRAN-
SITION PERIOD.—
‘‘(1) IN GENERAL.—Before January 1, 1998,
except as provided in paragraph (3)—
‘‘(A) an individual enrolled under a State
plan may terminate enrollment on a non-em-
ployment basis by providing written notice to
the State that the individual—
‘‘(i) no longer wishes to be enrolled in
the plan, or
‘‘(ii) is enrolled under a qualified em-
ployer health plan or is a medicare bene-
ficiary; and
‘‘(B) a State plan may terminate enroll-
ment on a non-employment basis of an individ-
ual, after providing the individual (or the indi-
vidual’s representative) written notice, for fail-
ure to pay premiums required with respect to
such enrollment.
The termination of enrollment of an individual shall
terminate the enrollment of other family members
enrolled with the individual.
‘‘(2) EFFECTIVE
DATE
OF
TERMINATION.—A
termination of enrollment under paragraph (1)(A)
shall take effect at the close of the month following
the month in which the notice is filed. A termination
of enrollment under paragraph (1)(B) shall take ef-
fect on a date (determined under regulations of the
Secretary) after the date written notice of such ter-
mination has been provided to the enrollee (or the
enrollee’s representative). Such regulations shall pro-
vide a grace period of at least 1 month after the
date of written notice in which overdue premiums
may be paid and coverage continued.
‘‘(3) MINIMUM PERIOD OF ENROLLMENT DUR-
ING TRANSITION.—Subject to paragraph (4), before
January 1, 1998—
‘‘(A) IN GENERAL.—An individual (other
than a pregnant woman or newborn) who is en-
rolled under a State plan on a non-employment
basis may not terminate enrollment less than
12 months after the date of the enrollment.
‘‘(B) 
PREGNANT
WOMEN
AND
NEWBORNS.—In the case of a pregnant woman
who is enrolled under a State plan on a non-
employment basis—
‘‘(i) the enrollment of the woman may
not be terminated earlier than the end of
the month in which the 60-day period, be-
ginning on the last day of the pregnancy,
ends; and
‘‘(ii) the newborn child shall be
deemed enrolled for purposes of this title
as of the date of birth, and such enroll-
ment may not be terminated earlier than
the end of the month in which the child’s
first birthday occurs.
‘‘(4) TERMINATION
PERMITTED
IF
COVERED
UNDER QUALIFIED EMPLOYER HEALTH PLAN.—The
minimum period of enrollment under paragraph (3)
shall not apply if, at the time of termination of en-
rollment, the individual is immediately covered under
a qualified employer health plan which will provide
coverage during the minimum period for which en-
rollment is otherwise required under such para-
graph.
‘‘(c) TERMINATION OF ENROLLMENT AFTER TRAN-
SITION PERIOD.—For limitations on termination of enroll-
ment under this title on or after January 1, 1998, see
section 2203(c).
‘‘SEC. 2203. REQUIREMENT OF HEALTH INSURANCE COV-
ERAGE.
‘‘(a) REQUIREMENT
FOR ALL ELIGIBLE INDIVID-
UALS.—
‘‘(1) IN GENERAL.—Effective on and after the
date specified in subsection (e), each eligible individ-
ual (as defined in section 2282(2)) who is not an ex-
cepted individual (as defined in paragraph (2)), is
deemed to have enrolled in the State plan in which
the individual resides as of such date or as soon
thereafter as the individual is not an excepted indi-
vidual. If such an individual has not filed an applica-
tion for enrollment under a State plan by such date,
the Secretary shall provide a means to collect infor-
mation sufficient to effect such enrollment as soon
as possible after such date.
‘‘(2) EXCEPTED
INDIVIDUALS.—For purposes
of paragraph (1), the term ‘excepted individual’
means an individual who is enrolled under a quali-
fied employer health plan or under a Federal health
plan.
‘‘(b) AUTOMATIC CONTINUING ENROLLMENT.—For
provisions relating to coordination of enrollment among
qualified health plans and State plans and assuring con-
tinuous coverage for required health services (and port-
ability of health insurance benefits among such plans), see
section 2157 (made applicable to State plans by section
2226).
‘‘(c) LIMITATION
ON TERMINATION
OF ENROLL-
MENT.—Effective on the date specified in subsection (e)—
‘‘(1) EMPLOYMENT-BASED
ENROLLMENT.—An
individual enrolled under a State plan on an employ-
ment basis may not elect to terminate such enroll-
ment.
‘‘(2) NON-EMPLOYMENT BASIS.—An individual
enrolled under a State plan on a non-employment
basis may not terminate such enrollment unless—
‘‘(A) the individual is no longer an eligible
individual because of age or termination of
pregnancy,
‘‘(B) the individual is no longer eligible to
be enrolled under the plan because of a change
of immigration or residency status, or
‘‘(C) the individual demonstrates to the
satisfaction of the Secretary that the individual
is a medicare beneficiary or is enrolled under a
qualified employer health plan or a Federal
health plan.
‘‘(d) ENFORCEMENT.—
‘‘(1) MONITORING
OF
INDIVIDUAL
TAX
RE-
TURNS.—The Secretary of the Treasury shall re-
quire the filing of such information as may be nec-
essary to establish compliance with subsection (a).
‘‘(2) RETROACTIVE ENROLLMENT.—If such an
individual has not provided evidence of enrollment in
a qualified employer health plan or Federal health
plan, the Secretary—
‘‘(A) shall instruct the State to enroll the
individual pursuant to the filing of such return,
and
‘‘(B) shall instruct the State to require
payment of twice the amounts of premiums that
would have been paid if the person had been en-
rolled on a timely basis, unless the individual
has established to the satisfaction of the State
good cause for the failure to enroll on a timely
basis.
‘‘(e) EFFECTIVE DATE
OF REQUIREMENT.—The
date specified in this subsection is January 1, 1998.
‘‘PART B—BENEFITS
‘‘SEC. 2211. COVERED HEALTH SERVICES.
‘‘(a) REQUIRED HEALTH SERVICES.—
‘‘(1) IN GENERAL.—Except as provided in the
succeeding provisions of this part and part C, in the
case of eligible individuals enrolled under a State
plan, the State plan shall provide for payments in
accordance with this title for the following health
services:
‘‘(A) Preventive care services (as defined in
section 2212(a)).
‘‘(B) Major medical services (as defined in
section 2213(a)).
‘‘(C) Extended medical services (as defined
in section 2214(a)).
‘‘(2) REQUIRED HEALTH SERVICES DEFINED.—
In this title and title XXI, the term ‘required health
services’ means the health services described in para-
graph (1), subject to the deductible and coinsurance
permitted with respect to such services under part
C.
‘‘(b) REQUIRED OUTREACH SERVICES.—In addition
to the required health services under subsection (a), each
State plan shall provide (or make payment) for outreach
services to link low-income enrolled individuals with need-
ed required health services. Such outreach services shall
include—
‘‘(1) transportation,
‘‘(2) child care at service sites,
‘‘(3) translation services,
‘‘(4) case/care coordination,
‘‘(5) screening followups, and
‘‘(6) health promotions.
‘‘(c) OPTIONAL ADDITIONAL SOCIAL SERVICES.—In
addition, each State plan may provide (or make payment)
for social services (such as family psycho-social supports,
therapeutic foster care, pediatric day treatment, parent
training, and in-home crisis management) necessary to as-
sure the health of enrolled individuals.
‘‘(d) STANDARDS.—The Secretary shall establish
standards with respect to required health services. The
standards shall be applied under this title and title XXI.
‘‘SEC. 2212. PREVENTIVE CARE SERVICES.
‘‘(a) DEFINED.—In this title, the term ‘preventive
care services’ means the following items and services fur-
nished in accordance with any applicable periodicity sched-
ule established under subsection (b):
‘‘(1) Child preventive care, including—
‘‘(A) routine office visits,
‘‘(B) routine immunizations, and
‘‘(C) routine laboratory tests.
‘‘(2) Prenatal care, including care of all com-
plications of pregnancy.
‘‘(3) Care of newborn infants, including attend-
ance at high-risk deliveries and normal newborn
care.
‘‘(4) Family planning services.
‘‘(5) Child abuse assessment.
‘‘(6) Preventive dental care for children.
‘‘(b) PERIODICITY SCHEDULES.—
‘‘(1) PEDIATRIC CARE.—With respect to pre-
ventive care services furnished to children, the Sec-
retary shall establish a schedule of periodicity which
reflects the general, appropriate frequency with
which such care should be provided routinely to
healthy children. Such schedule shall be established
in consultation with the American Academy of Pedi-
atrics.
‘‘(2) PRENATAL CARE.—With respect to preven-
tive care services for pregnant women, the Secretary
shall establish a schedule of periodicity which re-
flects the appropriate frequency with which such
care should be provided to pregnant women, taking
into account age and other risk factors. Such sched-
ule shall be established in consultation with the
American College of Obstetricians and Gyne-
cologists.
‘‘(c) NO APPLICATION OF DEDUCTIBLE OR COINSUR-
ANCE.—In accordance with sections 2222(b) and 2223(b),
a State plan may not impose deductibles or coinsurance
with respect to preventive care services.
‘‘SEC. 2213. MAJOR MEDICAL SERVICES.
‘‘(a) DEFINED.—In this title, the term ‘major medi-
cal services’ means the following items and services (to
the extent they are not preventive care services and subject
to subsection (b)):
‘‘(1) Inpatient and outpatient hospital services.
‘‘(2) Physicians’ services.
‘‘(3) Professional services of certified nurse
midwives, nurse practitioners, and other health pro-
fessionals (to the extent authorized under State
law).
‘‘(4) Diagnostic tests (including laboratory
tests).
‘‘(5) Ambulance.
‘‘(6) Short-term home health services.
‘‘(7) Medical and surgical supplies and durable
medical equipment.
‘‘(8) Corrective eyeglasses and lenses and hear-
ing aids.
‘‘(9) Prescription drugs, insulin, and medically
recommended nutritional supplements.
‘‘(10) Acute dental care.
‘‘(b) TREATMENT OF MENTAL HEALTH SERVICES,
SUBSTANCE ABUSE SERVICES, AND DEVELOPMENTAL
AND LEARNING DISABILITY SERVICES
AS EXTENDED
MEDICAL SERVICES.—Major medical services do not in-
clude items and services for the treatment of mental ill-
ness, for the treatment of substance abuse, or for the
treatment of developmental and learning disabilities, but
do include psychiatric services. However, such services for
such treatment are included in the definition of extended
medical services under section 2214(a).
‘‘(c) APPLICATION OF DEDUCTIBLE AND COINSUR-
ANCE.—In accordance with sections 2222 and 2223, a
State plan may impose deductibles and coinsurance with
respect to major medical services, subject to the limits
specified in such sections.
‘‘SEC. 2214. EXTENDED MEDICAL SERVICES.
‘‘(a) DEFINED.—In this title, the term ‘extended
medical services’ means the following items and services
(to the extent they are not preventive care services and
subject to subsection (b)):
‘‘(1) Items and services described in section
2213(a) for the treatment of mental illness or sub-
stance abuse and treatment of development and
learning disabilities (other than the educational com-
ponent of such treatment).
‘‘(2) Orthodontia (other than cosmetic ortho-
dontia).
‘‘(3) Substance abuse services.
‘‘(4) Speech, occupational, and physical ther-
apy.
‘‘(5) Hospice care.
‘‘(6) Respite care.
‘‘(7) Short-term skilled nursing facility services.
‘‘(8) Nutritional assessment and counseling.
‘‘(b) PLAN OF CARE REQUIREMENT.—A State plan
shall provide for coverage of extended medical services
only in accordance with a plan of care which—
‘‘(1) is developed in cooperation with the at-
tending primary care physician, and
‘‘(2) applies to all required health services.
‘‘(c) APPLICATION OF DEDUCTIBLE AND COINSUR-
ANCE.—In accordance with sections 2222 and 2223, a
State plan may impose a deductible and coinsurance with
respect to extended medical services, subject to the limits
specified in such sections.
‘‘SEC. 2215. SCOPE OF COVERAGE.
‘‘(a) NO AMOUNT, DURATION OR SCOPE LIMITA-
TIONS.—A State plan may not impose any limitation on
the amount, duration, or scope for required health serv-
ices.
‘‘(b) CONSTRUCTION.—Subsection (a) shall not be
construed as requiring coverage of—
‘‘(1) preventive care services in a frequency
greater than the frequency specified in the appro-
priate periodicity schedule established under section
2212(b),
‘‘(2) extended medical services which are not
specified in a plan of care under section 2214(b), or
‘‘(3) major medical services or extended medical
services which are not reasonable and medically nec-
essary.
‘‘(c) FREEDOM
OF CHOICE
OF PROVIDERS
AND
PRACTITIONERS.—
‘‘(1) IN GENERAL.—Any individual entitled to
benefits under a State plan with respect to required
health services may obtain benefits for such services
provided by any provider or practitioner who is
qualified to provide (and receive payment with re-
spect to) such services under the plan.
‘‘(2) TREATMENT
OF
ENROLLMENT
WITH
HEALTH MAINTENANCE ORGANIZATIONS AND COM-
PETITIVE MEDICAL PLANS.—Nothing in paragraph
(1) shall be construed to prohibit a health mainte-
nance organization or competitive medical plan from
limiting, under a contract entered into pursuant to
section 2265, the number of providers or practition-
ers for which benefits for services are paid.
‘‘PART C—PAYMENTS FOR BENEFITS; DEDUCTIBLE, CO-
INSURANCE, AND STOP-LOSS PROTECTION FOR RE-
QUIRED HEALTH SERVICES
‘‘SEC. 2221. PAYMENT RATES.
‘‘(a) USE OF MEDICARE PAYMENT RULES; ETC.—
Subject to adjustment in payment rates under this section
and subject to differences in deductibles and coinsurance
between a State plan and title XVIII—
‘‘(1) in the case of physicians’ services and in-
patient hospital services, the provisions of section
1848 and 1886 (relating to payment for physicians’
services and to hospitals for inpatient hospital serv-
ices, respectively) shall apply under a State plan to
physicians’ services and inpatient hospital services in
the same manner as they apply under title XVIII;
‘‘(2) in the case of other required health serv-
ices for which payment may be made under title
XVIII, such title shall apply to payment under a
State plan in the same manner as they apply to pay-
ment under title XVIII;
‘‘(3) in the case of other required health serv-
ices for which payment may not be made under title
XVIII, the Secretary shall establish payment rules
that shall apply under State plans that are similar
to the payment rules for similar services under such
title; and
‘‘(4) in the case of services described in sub-
sections (b) and (c) of section 2211, each State shall
establish adequate payment rates (as defined by the
Secretary).
There shall be no administrative or judicial review of the
payment rates or rules established under this section (in-
cluding adjustments made under subsections (b), (c), and
(d)).
‘‘(b) ADJUSTMENT OF MEDICARE PAYMENT RATES
FOR PHYSICIANS’ SERVICES.—
‘‘(1) IN GENERAL.—For purposes of establish-
ing payment rates for physicians’ services under
State plans and qualified employer health plans, the
Secretary, by regulation and in accordance with this
subsection, shall adjust the payment rates otherwise
established under section 1848 to take into ac-
count—
‘‘(A) differences between the population
served under title XVIII and the population re-
ceiving benefits under State plans or under
qualified employer health plans, and
‘‘(B) such other appropriate factors as the
Secretary deems appropriate to assure the
availability of quality health care under such
plans.
‘‘(2) REPORT BY PHYSICIAN PAYMENT REVIEW
COMMISSION.—The Physician Payment Review Com-
mission, in its recommendations to Congress under
section 1845(b) in the year before the first year in
which this title is effective, shall include rec-
ommendations on—
‘‘(A) the relative value units that should be
applied (under paragraph (1)) with respect to
pediatric, obstetrical, and other physicians’
services, and
‘‘(B) data that should be collected in order
to evaluate the number of such units for such
services.
The Commission shall include, in its subsequent rec-
ommendations under section 1845(b), such rec-
ommendations with respect to the payment for phy-
sicians’ services under State plans and qualified em-
ployer health plans as it deems appropriate.
‘‘(3) SECRETARIAL
PUBLICATION.—The Sec-
retary shall cause to be published in the Federal
Register—
‘‘(A) before June 1 before the first year in
which this title is effective, the relative value
units proposed to be applied during such first
year under State plans and qualified employer
health plans, and
‘‘(B) after consideration of public com-
ments submitted pursuant to such proposal and
before October 1 before such year, the relative
value units to be applied during such first year
under such plans.
‘‘(4) SECRETARIAL
REVIEW
AND
REVISION.—
The Secretary shall provide for the periodic review
and adjustment of the relative value units to be ap-
plied under State plans and qualified employer
health plans in the same manner and frequency as
provided under section 1848(c)(2)(B), except that
such review shall first be conducted each year during
the first 3 years and not less often than every 5
years thereafter.
‘‘(5) NATIONAL
ADVISORY
COMMITTEE.—The
Secretary shall establish a national advisory commit-
tee, composed of pediatricians, family physicians,
and obstetricians, and experts and advocates on ma-
ternal and child health—
‘‘(A) to review recommendations made by
the Physician Payment Review Commission
under paragraph (2), and
‘‘(B) to advise the Secretary respecting (i)
the appropriate payment amounts (including
the conversion factor) to be established under
this section for pediatric, obstetrical, and other
physicians’ services, and (ii) factors that influ-
ence the adequacy of health care expenditures
for children and pregnant women (such as qual-
ity of care and distribution of services).
‘‘(c) ADJUSTMENT OF MEDICARE PAYMENT RATES
FOR INPATIENT HOSPITAL SERVICES.—
‘‘(1) IN GENERAL.—For purposes of payment
for inpatient hospital services, the Secretary, by reg-
ulation and in accordance with this section, shall ad-
just the payment rates otherwise established under
title XVIII to take into account—
‘‘(A) differences between the population
served under that title and the population re-
ceiving benefits under State plans or qualified
employer health plans, and
‘‘(B) such other appropriate factors (such
as the special circumstances of hospitals the in-
patients of which are predominantly children)
as the Secretary deems appropriate to assure
the availability of quality health care under
such plans.
‘‘(2) REPORT BY PROSPECTIVE PAYMENT AS-
SESSMENT COMMISSION.—The Prospective Payment
Assessment Commission, in its report to Congress
under section 1886(e)(3)(A) in the year before the
first year in which this title is effective, shall include
its recommendations on—
‘‘(A) the adjustments that should be made
under paragraph (1) in the payment methodol-
ogy for inpatient hospital services in order to
take into account differences and appropriate
factors referred to in such paragraph, and data
that should be collected in order to establish ap-
propriate weighting factors for diagnosis-related
groups used under this section, and
‘‘(B) whether, and if so how, payment for
inpatient hospital services of childrens’ hospitals
(described in section 1886(d)(1)(B)(iii)) may be
made under State plans and qualified employer
health plans using the prospective payment
methodology described in section 1886(d).
The Commission shall include, in its subsequent re-
ports under section 1886(e)(3)(A), such rec-
ommendations with respect to payment for inpatient
hospital services under State plans and qualified em-
ployer health plans as it deems appropriate.
‘‘(3) SECRETARIAL
PUBLICATIONS.—The Sec-
retary shall provide for the publication, in the man-
ner and time specified under section 1886(e)(5), of
adjustments proposed to be made (and to be made)
under this subsection for the calendar year begin-
ning in each fiscal year.
‘‘(4) REPORT ON USE OF PROSPECTIVE PAY-
MENT METHODOLOGY.—By not later than April 1 of
the first year in which this title is effective, the Sec-
retary shall submit to Congress a report on whether,
and if so how, payment for inpatient hospital serv-
ices of childrens’ hospitals (described in section
1886(d)(1)(B)(iii)) may be made under State plans
and qualified employer health plans using the pro-
spective payment methodology described in section
1886(d).
‘‘(d) ADJUSTMENT OF MEDICARE PAYMENT RATES
FOR OTHER SERVICES.—For purposes of payment for
services under subsection (a)(2), the Secretary by regula-
tion shall adjust the payment rates otherwise established
under title XVIII to take into account—
‘‘(1) differences between the population served
under that title and the population receiving benefits
under State plans and qualified employer health
plans, and
‘‘(2) such other appropriate factors as the Sec-
retary deems appropriate to assure the availability of
quality health care under such plans.
‘‘(e) TREATMENT OF HEALTH MAINTENANCE ORGA-
NIZATIONS.—Subsection (a) shall not apply to a plan of
an eligible organization (as defined in section 1876(b))
which provides for enrollee protections which are at least
as great as the enrollee protections provided under section
2265 (but without the application of section 2265(b)(5)
or 1876(c)(3)(B)).
‘‘SEC. 2222. APPLICATION OF DEDUCTIBLE.
‘‘(a) IN GENERAL.—Except as provided in this sec-
tion and part E, a State plan may provide for an annual
deductible with respect to expenses for required health
services of members of a family, but the amount of such
deductible may not exceed $200 with respect to any fam-
ily.
‘‘(b) DEDUCTIBLE DOES NOT APPLY TO PREVEN-
TIVE CARE SERVICES
OR OUTREACH
AND OPTIONAL
SERVICES.—The deductible established under subsection
(a) may not be applied to preventive health services or to
services provided under subsection (b) or (c) of section
2211.
‘‘SEC. 2223. COINSURANCE FOR MAJOR MEDICAL SERVICES
AND EXTENDED MEDICAL SERVICES.
‘‘(a) COINSURANCE RATES.—Subject to subsection
(b), section 2224, and part E, a State plan may require
coinsurance with respect to payment for required health
services, but the coinsurance percentage may not exceed—
‘‘(1) 20 percent for major medical services, and
‘‘(2) 30 percent for extended medical services.
‘‘(b) NO COINSURANCE
FOR PREVENTIVE CARE
SERVICES OR OUTREACH AND OPTIONAL SERVICES.—
There shall be no coinsurance under this title in the case
of preventive care services provided consistent with any
applicable periodicity schedule or to services provided
under subsection (b) or (c) of section 2211.
‘‘SEC. 2224. LIMIT ON COST-SHARING FOR REQUIRED
HEALTH SERVICES.
‘‘(a) LIMITATION.—Whenever in a calendar year the
expenses of family members for the deductible and coin-
surance with respect to required health services under a
State plan and furnished during the year equals $3,000,
payment of benefits under the plan for the family mem-
bers for required health services furnished during the re-
mainder of the year shall be paid without the application
of any coinsurance.
‘‘(b) CREDITING FOR EXPENSES INCURRED UNDER
QUALIFIED EMPLOYER HEALTH PLANS.—For provision
relating to the accounting of cost-sharing incurred for re-
quired health services furnished under this title and the
crediting under this title of cost-sharing incurred for such
services furnished under other qualified health plans, see
section 2157(c).
‘‘SEC. 2225. EXCLUSIONS.
‘‘(a) IN GENERAL.—Except as provided in this sec-
tion, section 1862 shall apply to expenses incurred for
items and services provided under this title in the same
manner as such section applies to items and services pro-
vided under title XVIII.
‘‘(b) PREVENTIVE SERVICES.—In the case of preven-
tive services provided consistent with the applicable perio-
dicity schedule—
‘‘(1) such services shall be considered to be rea-
sonable and medically necessary, and
‘‘(2) shall not be subject to exclusion through
the operation of paragraph (1), (7), or (12) of sec-
tion 1862(a) (as incorporated under paragraph (1)).
‘‘(c) USE OF SAME NATIONAL COVERAGE DECISION
REVIEW PROCESS.—The provisions of section 1869(b)(3)
shall apply under this title in the same manner as they
apply under title XVIII. Any determination under such
title that, under subsection (a), would apply under this
title shall not be subject to review under this subsection.
‘‘SEC. 2226. APPLICATION OF PARTICULAR QUALIFIED
HEALTH PLAN REQUIREMENTS.
‘‘Section 2152 (relating to treatment of family mem-
bers as a unit; coverage period; and health plan cards)
and section 2157 (relating to coordination and portability
of health coverage under qualified health plans) shall
apply to a State plan in the same manner as they apply
to a qualified health plan.
‘‘PART D—PREMIUMS; FEDERAL CHILDREN AND
PREGNANT WOMEN HEALTH INSURANCE TRUST FUND
‘‘SEC. 2231. PREMIUMS.
‘‘(a) AMOUNT OF PREMIUMS.—
‘‘(1) IN GENERAL.—Except as provided in this
section 
(and 
section 
2234 
with 
respect 
to
nonenrolling employer premiums), the premium to
be charged for enrollment under a State plan on a
non-employment basis of all covered individuals in a
family is such rate as the plan may establish. Such
rate shall not vary based on the age, sex, health sta-
tus, or number of covered individuals within a fam-
ily, but may vary based on the community (as de-
fined in subsection (b)) in the State in which the
family is residing.
‘‘(2) CREDIT
FOR
EMPLOYMENT
TAXES
PAID
FOR PART-TIME AND SEASONAL OR TEMPORARY EM-
PLOYEES.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (C), in the case of an individual who is
a covered employee (as defined in subparagraph
(B)), the premium to be charged for enrollment
under this title on a non-employment basis is—
‘‘(i) the rate otherwise applicable
under paragraph (1), less the amount of
the taxes paid by the individual and all
employers with respect to the employee
(and family members of the employee)
under section 3151(a) of the Internal Rev-
enue Code of 1986, or
‘‘(ii) 20 percent of such actuarial rate,
whichever is greater.
‘‘(B) COVERED EMPLOYEE DEFINED.—In
subparagraph (A), the term ‘covered employee’
means an individual—
‘‘(i) who is employed by one or more
employers as a part-time employee or as a
seasonal or temporary employee, and
‘‘(ii) none of whose employers is en-
rolling part-time employees or seasonal or
temporary employees, respectively, under a
qualified employer health plan, but all of
which are required to pay a tax with re-
spect to such employees under section
3151(a)(1) of the Internal Revenue Code
of 1986,
and includes eligible individuals who are family
members of such an employee.
‘‘(C) LIMIT ON PREMIUM WHERE PREMIUM
SUBSIDY.—In no case shall the premium under
subparagraph (A) exceed—
‘‘(i) the rate otherwise applicable
under paragraph (1), reduced by
‘‘(ii) the amount of any premium sub-
sidy under part E.
‘‘(b) COMMUNITY.—For purposes of this section, the
term ‘community’ means a geographic area designated by
the Secretary as—
‘‘(1) encompassing one or more adjacent metro-
politan statistical areas, or
‘‘(2) the remaining area within each State (that
is not designated within any community under para-
graph (1));
except that the Secretary may designate an entire State
as a community if such a designation would better carry
out the purposes of this title and title XXIII. The Sec-
retary from time to time may change the boundaries of
communities designated under paragraph (1) or (2) for
such purposes. There shall be no administrative or judicial
review of the designation of communities under this sub-
section.
‘‘SEC. 2232. COLLECTION OF PREMIUMS.
‘‘(a) INDIVIDUAL ENROLLMENT.—
‘‘(1) IN GENERAL.—In the case of individuals
enrolled on a non-employment basis under a State
plan, the State plan shall require for the payment of
premiums on a monthly or quarterly basis. To the
maximum extent feasible, the State plan shall ar-
range for payment of such premiums through auto-
matic withholding from income sources or accounts
with financial institutions.
‘‘(2) COLLECTION OF UNPAID PREMIUMS.—
‘‘(A) TRANSMISSION OF INFORMATION TO
SECRETARY OF THE TREASURY.—In the case of
premium amounts owing and unpaid under this
subsection, the State shall inform the Secretary,
who shall inform the Secretary of the Treasury
of the individuals owing such amounts and the
amounts owed.
‘‘(B) COLLECTION.—The Secretary of the
Treasury shall assess and collect the amounts
referred to in subparagraph (A) in the same
manner as taxes imposed by subtitle C of the
Internal Revenue Code of 1986.
‘‘(b) NONENROLLING EMPLOYER PREMIUMS.—
‘‘(1) IN GENERAL.—In the case of nonenrolling
employer premiums owed under section 2234, the
applicable State plan shall require the payment of
premiums on a monthly or quarterly basis.
‘‘(2) COLLECTION OF UNPAID PREMIUMS.—
‘‘(A) TRANSMISSION OF INFORMATION TO
SECRETARY OF THE TREASURY.—In the case of
premium amounts owing and unpaid under this
subsection, the State shall inform the Secretary,
who shall inform the Secretary of the Treasury
of the employers owing such amounts and the
amounts owed.
‘‘(B) COLLECTION.—The Secretary of the
Treasury shall assess and collect the amounts
referred to in subparagraph (A) in the same
manner as taxes imposed by subtitle C of the
Internal Revenue Code of 1986.
‘‘(c) DEPOSIT.—Premiums collected under this sec-
tion by the Secretary of the Treasury shall be credited
to the State plan to which the premiums are owing.
‘‘SEC. 2233. FEDERAL CHILDREN AND PREGNANT WOMEN
HEALTH INSURANCE TRUST FUND.
‘‘(a) ESTABLISHMENT.—
‘‘(1) IN GENERAL.—There is hereby created on
the books of the Treasury of the United States a
trust fund to be known as the ‘Federal Children and
Pregnant Women Health Insurance Trust Fund’ (in
this section referred to as the ‘Trust Fund’). The
Trust Fund shall consist of such gifts and bequests
as may be made as provided in paragraph (3) and
such amounts as may be deposited in, or appro-
priated to, the Trust Fund as provided in this part.
‘‘(2) DEPOSIT
OF
TAXES.—There are hereby
appropriated to the Trust Fund amounts equivalent
to 100 percent of the taxes imposed by—
‘‘(A) part VIII of subchapter A of chapter
1 of the Internal Revenue Code of 1986, and
‘‘(B) sections 3151, 5000A, and 5000B of
such Code.
The amounts appropriated by the preceding sentence
shall be transferred from time to time from the gen-
eral fund in the Treasury to the Trust Fund, such
amounts to be determined on the basis of estimates
by the Secretary of the Treasury of the taxes, paid
to or deposited into the Treasury; and proper adjust-
ments shall be made in amounts subsequently trans-
ferred to the extent prior estimates were in excess
of or were less than the taxes specified in such sen-
tence.
‘‘(3) AUTHORIZATION TO ACCEPT GIFTS.—The
Managing Trustee of the Trust Fund is authorized
to accept on behalf of the United States money gifts
and bequests made unconditionally to the Trust
Fund, for the benefit of the Trust Fund, or any ac-
tivity financed through the Trust Fund.
‘‘(b) INCORPORATION OF PROVISIONS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the provisions of subsections (b) through (j) of sec-
tion 1817 shall apply to the Trust Fund in the same
manner as they apply to the Federal Hospital Insur-
ance Trust Fund.
‘‘(2) EXCEPTIONS.—In applying paragraph
(1)—
‘‘(A) the Board of Trustees and Managing
Trustee of the Trust Fund shall be composed of
the members of the Board of Trustees and the
Managing Trustee, respectively, of the Federal
Hospital Insurance Trust Fund; and
‘‘(B) any reference in section 1817 to the
Federal Hospital Insurance Trust Fund, to title
XVIII (or part A thereof), or (in subsection
(f)(1)) to section 3102(b) of the Internal Reve-
nue Code of 1986 is deemed a reference to the
Trust Fund under this section, this title, and to
section 3151(a)(2) of such Code, respectively.
‘‘SEC. 2234. TRANSFER PAYMENTS IN THE CASE OF MUL-
TIPLE EMPLOYERS.
‘‘(a) TREATMENT
OF
MULTIPLE
EMPLOYMENT
WHERE EMPLOYEE COVERED UNDER A QUALIFIED EM-
PLOYER HEALTH PLAN.—
‘‘(1) IN GENERAL.—In the case of a multiple-
employed individual (as defined in subsection (d)(1))
who is covered under a qualified employer health
plan of an employer—
‘‘(A) each nonenrolling employer (as de-
fined in subsection (d)(2)) that offers coverage
under a qualified employer health plan shall pay
to the State plan in which the individual resides
the nonenrolling employer premium specified in
subsection (b);
‘‘(B) the enrolling employer is entitled to
receive from such State plan the enrolling em-
ployer subsidy specified in subsection (c); and
‘‘(C) there will be no tax imposed on the
wages 
of 
the 
individual 
under 
section
3151(a)(2) of the Internal Revenue Code of
1986 with respect to wages paid during the pe-
riod of such coverage.
‘‘(2) APPLICATION ON A MONTHLY BASIS.—The
premiums and subsidies provided under this sub-
section shall be paid with respect to a monthly pe-
riod of coverage.
‘‘(b) AMOUNT OF NONENROLLING EMPLOYER PRE-
MIUM.—
‘‘(1) 
IN
GENERAL.—The 
amount 
of 
the
nonenrolling employer premium described in this
subsection is the applicable percent (as defined in
paragraph (2)) of the rate (established under section
2231(a)) applicable to the employee in the State in
which the employee resides.
‘‘(2) APPLICABLE
PERCENT
DEFINED.—For
purposes of paragraph (1), the term ‘applicable per-
cent’ means, with respect to an employee who is—
‘‘(A) a full-time employee of the employer,
40 percent, or
‘‘(B) a part-time employee of the employer,
20 percent.
‘‘(c) AMOUNT
OF
ENROLLING
EMPLOYER
SUB-
SIDY.—
‘‘(1) IN GENERAL.—The amount of the enroll-
ing employer subsidy described in this subsection is
the applicable percent (as defined in paragraph (2))
of the rate (established under section 2231(a)) appli-
cable to the employee in the State in which the em-
ployee resides.
‘‘(2) APPLICABLE
PERCENT
DEFINED.—For
purposes of paragraph (1), the term ‘applicable per-
cent’ means, with respect to a multiple-employed em-
ployee who (or whose spouse) is—
‘‘(A) a full-time employee of a nonenrolling
employer, 40 percent, or
‘‘(B) not a full-time employee of a
nonenrolling employer, but is a part-time em-
ployee of a nonenrolling employer, 20 percent;
except that in no case shall the applicable percent
with respect to a multiple-employed employee (in-
cluding the employee’s spouse) exceed 40 percent.
‘‘(d) DEFINITIONS.—In this section:
‘‘(1) MULTIPLE-EMPLOYED
INDIVIDUAL.—The
term ‘multiple-employed individual’ means an indi-
vidual who in a month is an employee (whether part-
time or full-time) and—
‘‘(A) who is also employed (whether part-
time or full-time) by 1 or more other employer,
or
‘‘(B) whose spouse or parent is also an em-
ployee (whether part-time or full-time) of 1 or
more employers.
‘‘(2) NONENROLLING
EMPLOYER.—The term
‘nonenrolling employer’ means, with respect to a
multiple-employed individual who is enrolled under a
qualified employer health plan of an employer, any
employer of such individual other than such em-
ployer.
‘‘SEC. 2235. USE OF UNIFORM CLAIMS FORMS.
‘‘Each State plan shall provide for submission of
claims under the plan based on uniform claims forms de-
veloped by the Secretary (after consultation with insurers
and States).
‘‘SEC. 2236. PAYMENTS TO STATES.
‘‘(a) IN GENERAL.—Each State which has in effect
a State plan that meets the requirements of this title is
entitled to receive from the Federal Children and Preg-
nant Women Health Insurance Trust Fund a quarterly
amount equal to the sum of the amounts described in sub-
sections (b)(1) and (c)(1).
‘‘(b) PAYMENT
FOR
REQUIRED
HEALTH
SERV-
ICES.—
‘‘(1) IN GENERAL.—The amounts described in
this subparagraph is 100 percent of the amount ex-
pended during the quarter under the State plan for
required health services (other than administrative
expenses), less the amounts specified in paragraphs
(2) and (3).
‘‘(2) 
STATE
MAINTENANCE
OF
EFFORT
AMOUNT.—The amount specified in this paragraph
for a State for a quarter in a fiscal year is 1⁄4 of the
amount of expenditures (net of Federal payments)
that would have been made for required health bene-
fits for eligible individuals under title XIX during
the fiscal year if this title were not in effect in the
year. The Secretary shall annually determine, for
each State, the amount specified under the preced-
ing sentence and shall take into account inflation in
the provision of required health services that has oc-
curred.
‘‘(3) PREMIUMS
COLLECTED.—The amount
specified in this paragraph for a State for a quarter
is the amount of premiums collected under the State
plan in the quarter.
‘‘(c) PAYMENT
FOR
OUTREACH
AND
OPTIONAL
SERVICES AND ADMINISTRATIVE COSTS.—
‘‘(1) IN GENERAL.—The amount described in
this paragraph is the percentage (specified in para-
graph (2)) of the expenditures under the plan for
other than required health services as found nec-
essary by the Secretary to carry out the provision of
this title and for the proper and efficient administra-
tion of the State plan.
‘‘(2) FEDERAL MATCHING RATE.—The percent-
age specified in this paragraph for a State is the
sum of—
‘‘(A) the percentage that would apply to
the class of expenses under section 1903(a) (as
in effect on the date of the enactment of this
title), and
‘‘(B) for calendar quarters in—
‘‘(i) 1995 or 1996, 10 percent,
‘‘(ii) 1997, 7.5 percent,
‘‘(iii) 1998, 5 percent, or
‘‘(iv) 1999, 2.5 percent.
‘‘(d) PAYMENT RULES.—Payments to States under
this section shall be made in accordance with rules similar
to the rules provided under section 1903 for payments to
States with plans under title XIX.
‘‘PART E—ASSISTANCE FOR LOW-INCOME INDIVIDUALS
‘‘SEC. 2241. ASSISTANCE FOR INDIVIDUALS ENROLLED ON A
NON-EMPLOYMENT BASIS.
‘‘(a) INDIVIDUALS WITH INCOME BELOW 133 PER-
CENT OF POVERTY LEVEL .—Except as otherwise pro-
vided in this section, in the case of an individual—
‘‘(1) who is enrolled under a State plan on a
non-employment basis, and
‘‘(B) 267 percent.
‘‘SEC. 
2242. 
ASSISTANCE 
FOR 
INDIVIDUALS 
COVERED
UNDER 
QUALIFIED 
EMPLOYER 
HEALTH
PLANS.
‘‘(a) IN GENERAL.—In the case of an eligible individ-
ual who is enrolled under a qualified employer health plan
or under a State plan on an employment basis, the State
plan shall provide for—
‘‘(1) payment (in a manner specified by the
Secretary) of the amount of the premium subsidy
under subsection (b) to the individual or another
family member, or, in the case described in sub-
section (b)(1)(D), the employer, and
‘‘(2) in the case of a qualified employer health
plan, payment to the qualified employer health plan
of the amount of the deductible and coinsurance
subsidy under subsection (c) or, in the case of the
State plan, a reduction in the deductible and coin-
surance amounts otherwise established in the
amount specified under section 2241.
Such subsidies shall apply to premiums, deductibles, and
coinsurance for the individual and family member covered
on an employment basis under the employer plan or under
the State plan.
‘‘(b) PREMIUM SUBSIDY.—
‘‘(1) TREATMENT
UNDER
QUALIFIED
EM-
PLOYER HEALTH PLAN.—In the case of an eligible
individual who is enrolled under a qualified employer
health plan—
‘‘(A) AMOUNT.—The amount of the pre-
mium subsidy under this subsection is the pre-
mium subsidy percentage (as defined in section
2241(d)(2)) of the employee share of the pre-
mium. Any premium subsidy under this para-
graph which is not a multiple of $5 shall be
rounded to the nearest multiple of $5.
‘‘(B) USE
OF
LEAST
EXPENSIVE
QUALI-
FIED
PLAN.—In applying subparagraph (A),
the amount of the premium subsidy shall be
based on the qualified employer health plan
available to the employee with the smallest pre-
mium payment required of the employee.
‘‘(C) FREQUENCY
OF
PAYMENT.—Except
as provided in subparagraph (D), the premium
subsidy under this subsection shall be paid not
less frequently than quarterly or, if the amount
of the premium subsidy on a monthly basis ex-
ceeds $20, monthly.
‘‘(D) OPTIONAL, DIRECT
COORDINATION
WITH
EMPLOYERS.—In the case of an em-
ployee—
‘‘(i) who is enrolled under a qualified
employer health plan,
‘‘(ii) who is entitled to assistance
under this part,
‘‘(iii) whose employer agrees to enter
into an arrangement with the State plan
under this subparagraph, and
‘‘(iv) who assigns (in the manner
specified by the Secretary) rights to pre-
mium subsidies under this subsection to
the employer,
the State shall enter into an arrangement with
the employer under which (I) the employer
agrees to reduce premiums otherwise imposed
with respect to the individual by the amount of
the subsidy, and (II) the State agrees to make
payment (not less often than monthly) to the
employer of the amount of such premium sub-
sidy.
‘‘(2) TREATMENT UNDER STATE PLAN.—In the
case of an eligible individual who is enrolled on an
employment basis under a State plan—
‘‘(A) AMOUNT.—The amount of the pre-
mium subsidy under this subsection is the pre-
mium subsidy percentage (as defined in section
2241(d)(2)) of the taxes paid under section
3151(a)(2) of the Internal Revenue Code of
1986.
‘‘(B) FREQUENCY OF PAYMENT.—The pre-
mium subsidy under this subsection shall be
paid not less frequently than quarterly or, if the
amount of the premium subsidy on a monthly
basis exceeds $20, monthly.
‘‘(c) DEDUCTIBLE AND COINSURANCE SUBSIDY.—
‘‘(1) DEDUCTIBLE
SUBSIDY
AMOUNT.—The
amount of the deductible subsidy under this sub-
section is the general subsidy percentage (as defined
in section 2241(d)(1)) of the deductible otherwise
applied. Any deductible subsidy under this para-
graph that is not a multiple of $10 shall be rounded
to the nearest multiple of $10.
‘‘(2) COINSURANCE
SUBSIDY
AMOUNT.—The
amount of the coinsurance subsidy under this sub-
section is the product of the general subsidy percent-
age, the percentage coinsurance otherwise applied,
and the payment amount permitted for required
health services. In applying this paragraph, the gen-
100
eral subsidy percentage shall be rounded to the near-
est multiple of 5 percent.
‘‘(3) DIRECT COORDINATION BY QUALIFIED EM-
PLOYER HEALTH PLAN REQUIRED.—In the case of
an individual enrolled under a qualified employer
health plan, the plan shall provide for—
‘‘(A) acceptance of information, electroni-
cally, from the State on the amount of the de-
ductible and coinsurance subsidy for individuals
(and family members),
‘‘(B) a reduction in the deductibles and co-
insurance otherwise imposed to reflect the de-
ductible and coinsurance subsidies to which the
individual and family members are entitled,
‘‘(C) reasonably prompt payment of bills
for which such charges have been made, and
‘‘(D) transmission of such information as
is necessary to indicate the amount of the de-
ductible and coinsurance subsidies provided
under the plan for specified individuals.
In return, the State plan shall provide for payment,
not less often than monthly, to the qualified em-
ployer health plan of the amount of payments made
by the qualified employer health plan for deductible
and coinsurance subsidies under this subsection.
101
‘‘SEC. 2243. APPLICATIONS FOR ASSISTANCE.
‘‘(a) IN GENERAL.—Subject to section 2245, any in-
dividual who seeks assistance under this part (with respect
to himself or herself or a family member) shall submit a
written application, by person or mail, to the State plan
in the State in which the individual (for whom the assist-
ance is sought) is residing. The application may be sub-
mitted with an application to enroll under the State plan
or separately.
‘‘(b) BASIS FOR DETERMINATION.—Subject to sec-
tion 2245 and reconciliation under section 2244, eligibility
for assistance under this part shall be based on 4 times
the family adjusted total income (as defined in section
2246(2)) during the 3 months preceding the month in
which the application is filed.
‘‘(c) FORM AND CONTENTS.—An application for as-
sistance under this part shall be in a form and manner
specified under the State plan (consistent with guidelines
established by the Secretary) and shall require—
‘‘(1) the provision of information necessary to
make the determinations described in subsection (b),
‘‘(2) the provision of information respecting any
qualified employer health plan in which the individ-
ual is enrolled, and
102
‘‘(3) the individual (if enrolled under such a
plan) to assign rights for deductible and coinsurance
subsidies under this part to such plan.
Such form also shall include an option to execute, as part
of completing the form and in order to meet the condition
described in section 2242(b)(1)(D)(iv), an assignment of
an individual’s right for premium subsidies under this part
to an employer.
‘‘(d) FREQUENCY OF APPLICATIONS.—
‘‘(1) IN GENERAL.—An application for assist-
ance under this part may be filed at any time during
the year and may be resubmitted (but, except as
provided in paragraph (3), not more frequently than
once every 3 months) based upon a change of in-
come or family composition.
‘‘(2) NEED TO REAPPLY.—In the case of an in-
dividual who—
‘‘(A) is entitled to assistance under this
section in September of a year, and
‘‘(B) wishes to remain eligible for benefits
for months beginning with January of the fol-
lowing year,
the individual (or a family member) must file with
the State plan in October of that preceding year a
new application for assistance. If an individual fails
103
to file a new application under this paragraph, an
application for such assistance with respect to any
family member may not be filed during November or
December of that preceding year.
‘‘(3) CORRECTION
OF
INCOME.—Nothing in
paragraph (1) shall be construed as preventing an
individual or family from, at any time, submitting an
application to reduce the amount of assistance under
this part based upon an increase in income from
that stated in the previous application.
‘‘(e) TIMING OF ASSISTANCE.—
‘‘(1) IN GENERAL.—If an application for assist-
ance under this part is filed—
‘‘(A) on or before the 15th day of a month,
assistance under this part shall be available for
premiums for months after such month and,
with respect to the deductible and coinsurance,
for expenses incurred after such month; or
‘‘(B) after the 15th day of a month, assist-
ance under this part shall be available for pre-
miums for months after the month following
such month and, with respect to the deductible
and coinsurance, for expenses incurred after
such following month.
104
‘‘(2) WELFARE RECIPIENTS.—In the case of an
individual or family with respect to whom an appli-
cation for assistance is not required because of sec-
tion 2245, in applying paragraph (1), the date of ap-
proval of aid or benefits described in such section
shall be considered the date of filing of an applica-
tion for assistance under this part.
‘‘(f) VERIFICATION.—Each State plan shall provide
(consistent with guidelines of the Secretary) for verifica-
tion, on a sample basis or other basis, of the information
supplied in applications under this part. This verification
shall be separate from the reconciliation provided under
section 2244.
‘‘(g) HELP IN COMPLETING APPLICATIONS.—Each
State plan shall provide for grants to public or private
nonprofit entities that will make available assistance to in-
dividuals and families in filing applications for assistance
under this part. Each plan shall make grants in a manner
that provides such assistance at a variety of sites (such
as low-income housing projects and shelters for homeless
individuals) that are readily accessible to individuals and
families eligible for assistance under this part. The
amounts paid under such grants shall be considered, for
purposes of section 2236(c)(1), to be expenses reasonably
required in the administration of this title.
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‘‘(h) PENALTIES FOR INACCURATE INFORMATION.—
‘‘(1) INTEREST
FOR
UNDERSTATEMENTS.—
Each individual who knowingly understates income
reported in an application for assistance under this
part or otherwise makes a material misrepresenta-
tion of information in such an application shall be
liable to the State plan for excess payments made
based on such understatement or misrepresentation,
and for interest on such excess payments at a rate
specified by the Secretary.
‘‘(2) PENALTIES FOR MISREPRESENTATION.—
In addition to any penalty under paragraph (1),
each individual who knowingly misrepresents mate-
rial information in an application for assistance
under this part shall be liable to the State plan for
$1,000 or, if greater, three times the excess pay-
ments made based on such misrepresentation.
‘‘(i) FILING OF APPLICATION DEFINED.—Except as
provided in subsection (e)(2), for purposes of this part,
an application under this part is considered to be ‘filed’
on the date on which the complete application, including
all documentation required to act on the application, has
been filed with the State plan.