IB
Union Calendar No. 330
104TH CONGRESS
2D SESSION
H. R. 3734
[Report No. 104–651]
To provide for reconciliation pursuant to section 201(a)(1) of the concurrent
resolution on the budget for fiscal year 1997.
IN THE HOUSE OF REPRESENTATIVES
JUNE 27, 1996
Mr. KASICH, from the Committee on the Budget, reported the following bill;
which was committed to the Committee of the Whole House on the State
of the Union and ordered to be printed
A BILL
To provide for reconciliation pursuant to section 201(a)(1)
of the concurrent resolution on the budget for fiscal
year 1997.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Welfare and Medicaid
Reform Act of 1996’’.
SEC. 2. TABLE OF CONTENTS.
Title I—Committee on Agriculture.
Title II—Committee on Commerce.
Title III—Committee on Economic and Educational Opportunities.
Title IV—Committee on Ways and Means: Welfare Reform.
TITLE I—COMMITTEE ON
AGRICULTURE
SEC. 1001. SHORT TITLE.
This title may be cited as the ‘‘Food Stamp Reform
and Commodity Distribution Act of 1996’’.
SEC. 1002. TABLE OF CONTENTS.
The table of contents of this title is as follows:
TITLE I—FOOD STAMPS AND COMMODITY DISTRIBUTION
Sec. 1001. Short title.
Sec. 1002. Table of contents.
Subtitle A—Food Stamp Program
Sec. 1011. Definition of certification period.
Sec. 1012. Definition of coupon.
Sec. 1013. Treatment of children living at home.
Sec. 1014. Optional additional criteria for separate household determinations.
Sec. 1015. Adjustment of thrifty food plan.
Sec. 1016. Definition of homeless individual.
Sec. 1017. State option for eligibility standards.
Sec. 1018. Earnings of students.
Sec. 1019. Energy assistance.
Sec. 1020. Deductions from income.
Sec. 1021. Vehicle allowance.
Sec. 1022. Vendor payments for transitional housing counted as income.
Sec. 1023. Doubled penalties for violating food stamp program requirements.
Sec. 1024. Disqualification of convicted individuals.
Sec. 1025. Disqualification.
Sec. 1026. Caretaker exemption.
Sec. 1027. Employment and training.
Sec. 1028. Comparable treatment for disqualification.
Sec. 1029. Disqualification for receipt of multiple food stamp benefits.
Sec. 1030. Disqualification of fleeing felons.
Sec. 1031. Cooperation with child support agencies.
Sec. 1032. Disqualification relating to child support arrears.
Sec. 1033. Work requirement.
Sec. 1034. Encourage electronic benefit transfer systems.
Sec. 1035. Value of minimum allotment.
Sec. 1036. Benefits on recertification.
Sec. 1037. Optional combined allotment for expedited households.
Sec. 1038. Failure to comply with other means-tested public assistance pro-
grams.
Sec. 1039. Allotments for households residing in centers.
Sec. 1040. Condition precedent for approval of retail food stores and wholesale
food concerns.
Sec. 1041. Authority to establish authorization periods.
Sec. 1042. Information for verifying eligibility for authorization.
Sec. 1043. Waiting period for stores that fail to meet authorization criteria.
Sec. 1044. Operation of food stamp offices.
Sec. 1045. State employee and training standards.
Sec. 1046. Exchange of law enforcement information.
Sec. 1047. Expedited coupon service.
Sec. 1048. Withdrawing fair hearing requests.
Sec. 1049. Income, eligibility, and immigration status verification systems.
Sec. 1050. Disqualification of retailers who intentionally submit falsified appli-
cations.
Sec. 1051. Disqualification of retailers who are disqualified under the WIC pro-
gram.
Sec. 1052. Collection of overissuances.
Sec. 1053. Authority to suspend stores violating program requirements pending
administrative and judicial review.
Sec. 1054. Expanded criminal forfeiture for violations.
Sec. 1055. Limitation of Federal match.
Sec. 1056. Standards for administration.
Sec. 1057. Work supplementation or support program.
Sec. 1058. Waiver authority.
Sec. 1059. Response to waivers.
Sec. 1060. Employment initiatives program.
Sec. 1061. Reauthorization.
Sec. 1062. Simplified food stamp program.
Sec. 1063. State food assistance block grant.
Sec. 1064. A study of the use of food stamps to purchase vitamins and minerals.
Sec. 1065. Investigations.
Sec. 1066. Food stamp eligibility.
Sec. 1067. Report by the Secretary.
Sec. 1068. Deficit reduction.
Subtitle B—Commodity Distribution Programs
Sec. 1071. Emergency food assistance program.
Sec. 1072. Food bank demonstration project.
Sec. 1073. Hunger prevention programs.
Sec. 1074. Report on entitlement commodity processing.
Subtitle C—Electronic Benefit Transfer Systems
Sec. 1091. Provisions to encourage electronic benefit transfer systems.
Subtitle A—Food Stamp Program
SEC. 1011. DEFINITION OF CERTIFICATION PERIOD.
Section 3(c) of the Food Stamp Act of 1977 (7
U.S.C. 2012(c)) is amended by striking ‘‘Except as pro-
vided’’ and all that follows and inserting the following:
‘‘The certification period shall not exceed 12 months, ex-
cept that the certification period may be up to 24 months
if all adult household members are elderly or disabled. A
State agency shall have at least 1 contact with each cer-
tified household every 12 months.’’.
SEC. 1012. DEFINITION OF COUPON.
Section 3(d) of the Food Stamp Act of 1977 (7
U.S.C. 2012(d)) is amended by striking ‘‘or type of certifi-
cate’’ and inserting ‘‘type of certificate, authorization
card, cash or check issued in lieu of a coupon, or an access
device, including an electronic benefit transfer card or per-
sonal identification number,’’.
SEC. 1013. TREATMENT OF CHILDREN LIVING AT HOME.
The second sentence of section 3(i) of the Food
Stamp Act of 1977 (7 U.S.C. 2012(i)) is amended by
striking ‘‘(who are not themselves parents living with their
children or married and living with their spouses)’’.
SEC. 1014. OPTIONAL ADDITIONAL CRITERIA FOR SEPA-
RATE HOUSEHOLD DETERMINATIONS.
Section 3(i) of the Food Stamp Act of 1977 (7 U.S.C.
2012(i)) is amended by inserting after the third sentence
the following: ‘‘Notwithstanding the preceding sentences,
a State may establish criteria that prescribe when individ-
uals who live together, and who would be allowed to par-
ticipate as separate households under the preceding sen-
tences, shall be considered a single household, without re-
gard to the common purchase of food and preparation of
meals.’’.
SEC. 1015. ADJUSTMENT OF THRIFTY FOOD PLAN.
The second sentence of section 3(o) of the Food
Stamp Act of 1977 (7 U.S.C. 2012(o)) is amended—
(1) by striking ‘‘shall (1) make’’ and inserting
the following: ‘‘shall—
‘‘(1) make’’;
(2) by striking ‘‘scale, (2) make’’ and inserting
‘‘scale;
‘‘(2) make’’;
(3) by striking ‘‘Alaska, (3) make’’ and insert-
ing the following: ‘‘Alaska;
‘‘(3) make’’; and
(4) by striking ‘‘Columbia, (4) through’’ and all
that follows through the end of the subsection and
inserting the following: ‘‘Columbia; and
‘‘(4) on October 1, 1996, and each October 1
thereafter, adjust the cost of the diet to reflect the
cost of the diet, in the preceding June, and round
the result to the nearest lower dollar increment for
each household size, except that on October 1, 1996,
the Secretary may not reduce the cost of the diet in
effect on September 30, 1996.’’.
SEC. 1016. DEFINITION OF HOMELESS INDIVIDUAL.
Section 3(s)(2)(C) of the Food Stamp Act of 1977
(7 U.S.C. 2012(s)(2)(C)) is amended by inserting ‘‘for not
more than 90 days’’ after ‘‘temporary accommodation’’.
SEC. 1017. STATE OPTION FOR ELIGIBILITY STANDARDS.
Section 5(b) of the Food Stamp Act of 1977 (7
U.S.C. 2014(d)) is amended by striking ‘‘(b) The Sec-
retary’’ and inserting the following:
‘‘(b) ELIGIBILITY STANDARDS.—Except as otherwise
provided in this Act, the Secretary’’.
SEC. 1018. EARNINGS OF STUDENTS.
Section 5(d)(7) of the Food Stamp Act of 1977 (7
U.S.C. 2014(d)(7)) is amended by striking ‘‘21’’ and in-
serting ‘‘19’’.
SEC. 1019. ENERGY ASSISTANCE.
(a) IN GENERAL.—Section 5(d) of the Food Stamp
Act of 1977 (7 U.S.C. 2014(d)) is amended by striking
paragraph (11) and inserting the following: ‘‘(11) a 1-time
payment or allowance made under a Federal or State law
for the costs of weatherization or emergency repair or re-
placement of an unsafe or inoperative furnace or other
heating or cooling device,’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 5(k) of the Act (7 U.S.C. 2014(k))
is amended—
(A) in paragraph (1)—
(i) in subparagraph (A), by striking
‘‘plan for aid to families with dependent
children approved’’ and inserting ‘‘program
funded’’; and
(ii) in subparagraph (B), by striking
‘‘, not including energy or utility-cost as-
sistance,’’;
(B) in paragraph (2), by striking subpara-
graph (C) and inserting the following:
‘‘(C) a payment or allowance described in sub-
section (d)(11);’’; and
(C) by adding at the end the following:
‘‘(4) THIRD PARTY ENERGY ASSISTANCE PAY-
MENTS.—
‘‘(A) ENERGY
ASSISTANCE
PAYMENTS.—
For purposes of subsection (d)(1), a payment
made under a Federal or State law to provide
energy assistance to a household shall be con-
sidered money payable directly to the house-
hold.
‘‘(B) ENERGY
ASSISTANCE
EXPENSES.—
For purposes of subsection (e)(7), an expense
paid on behalf of a household under a Federal
or State law to provide energy assistance shall
be considered an out-of-pocket expense incurred
and paid by the household.’’.
(2) Section 2605(f) of the Low-Income Home
Energy Assistance Act of 1981 (42 U.S.C. 8624(f))
is amended—
(A) by striking ‘‘(f)(1) Notwithstanding’’
and inserting ‘‘(f) Notwithstanding’’;
(B) in paragraph (1), by striking ‘‘food
stamps,’’; and
(C) by striking paragraph (2).
SEC. 1020. DEDUCTIONS FROM INCOME.
(a) IN GENERAL.—Section 5 of the Food Stamp Act
of 1977 (7 U.S.C. 2014) is amended by striking sub-
section (e) and inserting the following:
‘‘(e) DEDUCTIONS FROM INCOME.—
‘‘(1) STANDARD
DEDUCTION.—The Secretary
shall allow a standard deduction for each household
in the 48 contiguous States and the District of Co-
lumbia, Alaska, Hawaii, Guam, and the Virgin Is-
lands of the United States of $134, $229, $189,
$269, and $118, respectively.
‘‘(2) EARNED INCOME DEDUCTION.—
‘‘(A) DEFINITION OF EARNED INCOME.—
In this paragraph, the term ‘earned income’
does not include income excluded by subsection
(d) or any portion of income earned under a
work supplementation or support program, as
defined under section 16(b), that is attributable
to public assistance.
‘‘(B) DEDUCTION.—Except as provided in
subparagraph (C), a household with earned in-
come shall be allowed a deduction of 20 percent
of all earned income to compensate for taxes,
other mandatory deductions from salary, and
work expenses.
‘‘(C) 
EXCEPTION.—The 
deduction 
de-
scribed in subparagraph (B) shall not be al-
lowed with respect to determining an overissu-
ance due to the failure of a household to report
earned income in a timely manner.
‘‘(3) DEPENDENT CARE DEDUCTION.—
‘‘(A) IN GENERAL.—A household shall be
entitled, with respect to expenses (other than
excluded expenses described in subparagraph
(B)) for dependent care, to a dependent care
deduction, the maximum allowable level of
which shall be $200 per month for each depend-
ent child under 2 years of age and $175 per
month for each other dependent, for the actual
cost of payments necessary for the care of a de-
pendent if the care enables a household member
to accept or continue employment, or training
or education that is preparatory for employ-
ment.
‘‘(B) EXCLUDED
EXPENSES.—The ex-
cluded expenses referred to in subparagraph
(A) are—
‘‘(i) expenses paid on behalf of the
household by a third party;
‘‘(ii) amounts made available and ex-
cluded for the expenses referred to in sub-
paragraph (A) under subsection (d)(3);
and
‘‘(iii) expenses that are paid under
section 6(d)(4).
‘‘(4) DEDUCTION
FOR
CHILD
SUPPORT
PAY-
MENTS.—
‘‘(A) IN GENERAL.—A household shall be
entitled to a deduction for child support pay-
ments made by a household member to or for
an individual who is not a member of the
household if the household member is legally
obligated to make the payments.
‘‘(B) 
METHODS
FOR
DETERMINING
AMOUNT.—The Secretary may prescribe by reg-
ulation the methods, including calculation on a
retrospective basis, that a State agency shall
use to determine the amount of the deduction
for child support payments.
‘‘(5) HOMELESS
SHELTER
ALLOWANCE.—A
State agency may develop a standard homeless shel-
ter allowance, which shall not exceed $143 per
month, for such expenses as may reasonably be ex-
pected to be incurred by households in which all
members are homeless individuals but are not receiv-
ing free shelter throughout the month. A State agen-
cy that develops the allowance may use the allow-
ance in determining eligibility and allotments for the
households, except that the State agency may pro-
hibit the use of the allowance for households with
extremely low shelter costs.
‘‘(6) EXCESS MEDICAL EXPENSE DEDUCTION.—
‘‘(A) IN GENERAL.—A household contain-
ing an elderly or disabled member shall be enti-
tled, with respect to expenses other than ex-
penses paid on behalf of the household by a
third party, to an excess medical expense de-
duction for the portion of the actual costs of al-
lowable medical expenses, incurred by the elder-
ly or disabled member, exclusive of special diets,
that exceeds $35 per month.
‘‘(B) METHOD
OF
CLAIMING
DEDUC-
TION.—
‘‘(i) IN
GENERAL.—A State agency
shall offer an eligible household under sub-
paragraph (A) a method of claiming a de-
duction for recurring medical expenses that
are initially verified under the excess medi-
cal expense deduction in lieu of submitting
information or verification on actual ex-
penses on a monthly basis.
‘‘(ii) 
METHOD.—The 
method 
de-
scribed in clause (i) shall—
‘‘(I) be designed to minimize the
burden for the eligible elderly or dis-
abled household member choosing to
deduct the recurrent medical expenses
of the member pursuant to the meth-
od;
‘‘(II) rely on reasonable estimates
of the expected medical expenses of
the member for the certification pe-
riod (including changes that can be
reasonably anticipated based on avail-
‘‘(II) does incur a heating or
cooling expense but is located in a
public housing unit that has central
utility meters and charges households,
with regard to the expense, only for
excess utility costs; or
‘‘(III) shares the expense with,
and lives with, another individual not
participating in the food stamp pro-
gram, another household participating
in the food stamp program, or both,
unless the allowance is prorated be-
tween the household and the other in-
dividual, household, or both.
‘‘(iii) MANDATORY ALLOWANCE.—
‘‘(I) 
IN
GENERAL.—A 
State
agency may make the use of a stand-
ard utility allowance mandatory for all
households 
with 
qualifying 
utility
costs if—
‘‘(aa) the State agency has
developed 1 or more standards
that include the cost of heating
and cooling and 1 or more stand-
ards that do not include the cost
of heating and cooling; and
‘‘(bb) the Secretary finds
that the standards will not result
in an increased cost to the Sec-
retary.
‘‘(II) HOUSEHOLD
ELECTION.—
A State agency that has not made the
use of a standard utility allowance
mandatory under subclause (I) shall
allow a household to switch, at the
end of a certification period, between
the standard utility allowance and a
deduction based on the actual utility
costs of the household.
‘‘(iv) AVAILABILITY
OF
ALLOWANCE
TO RECIPIENTS OF ENERGY ASSISTANCE.—
‘‘(I) IN
GENERAL.—Subject to
subclause (II), if a State agency elects
to use a standard utility allowance
that reflects heating or cooling costs,
the standard utility allowance shall be
made available to households receiving
a payment, or on behalf of which a
payment is made, under the Low-In-
come Home Energy Assistance Act of
1981 (42 U.S.C. 8621 et seq.) or
other similar energy assistance pro-
gram, if the household still incurs out-
of-pocket heating or cooling expenses
in excess of any assistance paid on be-
half of the household to an energy
provider.
‘‘(II) SEPARATE ALLOWANCE.—A
State agency may use a separate
standard utility allowance for house-
holds on behalf of which a payment
described in subclause (I) is made,
but may not be required to do so.
‘‘(III) STATES NOT ELECTING TO
USE SEPARATE ALLOWANCE.—A State
agency that does not elect to use a
separate allowance but makes a single
standard utility allowance available to
households incurring heating or cool-
ing expenses (other than a household
described in subclause (I) or (II) of
subparagraph (C)(ii)) may not be re-
quired to reduce the allowance due to
the provision (directly or indirectly) of
assistance 
under 
the 
Low-Income
Home Energy Assistance Act of 1981
(42 U.S.C. 8621 et seq.).
‘‘(IV) PRORATION
OF
ASSIST-
ANCE.—For the purpose of the food
stamp program, assistance provided
under the Low-Income Home Energy
Assistance Act of 1981 (42 U.S.C.
8621 et seq.) shall be considered to be
prorated over the entire heating or
cooling season for which the assist-
ance was provided.’’.
(b) CONFORMING AMENDMENT.—Section 11(e)(3) of
the Act (7 U.S.C. 2020(e)(3)) is amended by striking
‘‘Under rules prescribed’’ and all that follows through
‘‘verifies higher expenses;’’.
SEC. 1021. VEHICLE ALLOWANCE.
Section 5(g) of the Food Stamp Act of 1977 (7
U.S.C. 2014(g)) is amended by striking paragraph (2) and
inserting the following:
‘‘(2) INCLUDED ASSETS.—
‘‘(A) IN GENERAL.—Subject to the other
provisions of this paragraph, the Secretary
shall, in prescribing inclusions in, and exclu-
sions from, financial resources, follow the regu-
lations in force as of June 1, 1982 (other than
those relating to licensed vehicles and inacces-
sible resources).
‘‘(B) ADDITIONAL
INCLUDED
ASSETS.—
The Secretary shall include in financial re-
sources—
‘‘(i) any boat, snowmobile, or airplane
used for recreational purposes;
‘‘(ii) any vacation home;
‘‘(iii) any mobile home used primarily
for vacation purposes;
‘‘(iv) subject to subparagraph (C), any
licensed vehicle that is used for household
transportation or to obtain or continue em-
ployment to the extent that the fair market
value of the vehicle exceeds $4,600; and
‘‘(v) any savings or retirement ac-
count (including an individual account), re-
gardless of whether there is a penalty for
early withdrawal.
‘‘(C) EXCLUDED
VEHICLES.—A vehicle
(and any other property, real or personal, to the
extent the property is directly related to the
maintenance or use of the vehicle) shall not be
included in financial resources under this para-
graph if the vehicle is—
‘‘(i) used to produce earned income;
‘‘(ii) necessary for the transportation
of a physically disabled household member;
or
‘‘(iii) depended on by a household to
carry fuel for heating or water for home
use and provides the primary source of fuel
or water, respectively, for the household.’’.
SEC. 1022. VENDOR PAYMENTS FOR TRANSITIONAL HOUS-
ING COUNTED AS INCOME.
Section 5(k)(2) of the Food Stamp Act of 1977 (7
U.S.C. 2014(k)(2)) is amended—
(1) by striking subparagraph (F); and
(2) by redesignating subparagraphs (G) and
(H) as subparagraphs (F) and (G), respectively.
SEC. 1023. DOUBLED PENALTIES FOR VIOLATING FOOD
STAMP PROGRAM REQUIREMENTS.
Section 6(b)(1) of the Food Stamp Act of 1977 (7
U.S.C. 2015(b)(1)) is amended—
(1) in clause (i), by striking ‘‘six months’’ and
inserting ‘‘1 year’’; and
(2) in clause (ii), by striking ‘‘1 year’’ and in-
serting ‘‘2 years’’.
SEC. 1024. DISQUALIFICATION OF CONVICTED INDIVID-
UALS.
Section 6(b)(1)(iii) of the Food Stamp Act of 1977
(7 U.S.C. 2015(b)(1)(iii)) is amended—
(1) in subclause (II), by striking ‘‘or’’ at the
end;
(2) in subclause (III), by striking the period at
the end and inserting ‘‘; or’’; and
(3) by inserting after subclause (III) the follow-
ing:
‘‘(IV) a conviction of an offense under sub-
section (b) or (c) of section 15 involving an
item covered by subsection (b) or (c) of section
15 having a value of $500 or more.’’.
SEC. 1025. DISQUALIFICATION.
(a) IN GENERAL.—Section 6(d) of the Food Stamp
Act of 1977 (7 U.S.C. 2015(d)) is amended by striking
‘‘(d)(1) Unless otherwise exempted by the provisions’’ and
all that follows through the end of paragraph (1) and in-
serting the following:
‘‘(d) CONDITIONS OF PARTICIPATION.—
‘‘(1) WORK REQUIREMENTS.—
‘‘(A) IN
GENERAL.—No physically and
mentally fit individual over the age of 15 and
under the age of 60 shall be eligible to partici-
pate in the food stamp program if the individ-
ual—
‘‘(i) refuses, at the time of application
and every 12 months thereafter, to register
for employment in a manner prescribed by
the Secretary;
‘‘(ii) refuses without good cause to
participate in an employment and training
program under paragraph (4), to the ex-
tent required by the State agency;
‘‘(iii) refuses without good cause to
accept an offer of employment, at a site or
plant not subject to a strike or lockout at
the time of the refusal, at a wage not less
than the higher of—
‘‘(I) the applicable Federal or
State minimum wage; or
‘‘(II) 80 percent of the wage that
would have governed had the mini-
mum 
hourly 
rate 
under 
section
6(a)(1) of the Fair Labor Standards
Act of 1938 (29 U.S.C. 206(a)(1))
been applicable to the offer of employ-
ment;
‘‘(iv) refuses without good cause to
provide a State agency with sufficient in-
formation to allow the State agency to de-
termine the employment status or the job
availability of the individual;
‘‘(v) voluntarily and without good
cause—
‘‘(I) quits a job; or
‘‘(II) reduces work effort and,
after the reduction, the individual is
working less than 30 hours per week;
or
‘‘(vi) fails to comply with section 20.
‘‘(B) HOUSEHOLD
INELIGIBILITY.—If an
individual who is the head of a household be-
comes ineligible to participate in the food stamp
program under subparagraph (A), the house-
hold shall, at the option of the State agency,
become ineligible to participate in the food
stamp program for a period, determined by the
State agency, that does not exceed the lesser
of—
‘‘(i) the duration of the ineligibility of
the individual determined under subpara-
graph (C); or
‘‘(ii) 180 days.
‘‘(C) DURATION OF INELIGIBILITY.—
‘‘(i) FIRST
VIOLATION.—The first
time that an individual becomes ineligible
to participate in the food stamp program
under subparagraph (A), the individual
shall remain ineligible until the later of—
‘‘(I) the date the individual be-
comes eligible under subparagraph
(A);
‘‘(II) the date that is 1 month
after the date the individual became
ineligible; or
‘‘(III) a date determined by the
State agency that is not later than 3
months after the date the individual
became ineligible.
‘‘(ii) SECOND
VIOLATION.—The sec-
ond time that an individual becomes ineli-
gible to participate in the food stamp pro-
gram under subparagraph (A), the individ-
ual shall remain ineligible until the later
of—
‘‘(I) the date the individual be-
comes eligible under subparagraph
(A);
‘‘(II) the date that is 3 months
after the date the individual became
ineligible; or
‘‘(III) a date determined by the
State agency that is not later than 6
months after the date the individual
became ineligible.
‘‘(iii) THIRD OR SUBSEQUENT VIOLA-
TION.—The third or subsequent time that
an individual becomes ineligible to partici-
pate in the food stamp program under sub-
paragraph (A), the individual shall remain
ineligible until the later of—
‘‘(I) the date the individual be-
comes eligible under subparagraph
(A);
‘‘(II) the date that is 6 months
after the date the individual became
ineligible;
‘‘(III) a date determined by the
State agency; or
‘‘(IV) at the option of the State
agency, permanently.
‘‘(D) ADMINISTRATION.—
‘‘(i) GOOD
CAUSE.—The Secretary
shall determine the meaning of good cause
for the purpose of this paragraph.
‘‘(ii) VOLUNTARY
QUIT.—The Sec-
retary shall determine the meaning of vol-
untarily quitting and reducing work effort
for the purpose of this paragraph.
‘‘(iii) 
DETERMINATION
BY
STATE
AGENCY.—
‘‘(I) IN
GENERAL.—Subject to
subclause (II) and clauses (i) and (ii),
a State agency shall determine—
‘‘(aa) the meaning of any
term in subparagraph (A);
‘‘(bb) the procedures for de-
termining whether an individual
is in compliance with a require-
ment under subparagraph (A);
and
‘‘(cc) whether an individual
is in compliance with a require-
ment under subparagraph (A).
‘‘(II) NOT LESS RESTRICTIVE.—
A State agency may not determine a
meaning, procedure, or determination
under subclause (I) to be less restric-
tive than a comparable meaning, pro-
cedure, or determination under a
State program funded under part A of
title IV of the Social Security Act (42
U.S.C. 601 et seq.).
‘‘(iv) STRIKE AGAINST THE GOVERN-
MENT.—For the purpose of subparagraph
(A)(v), an employee of the Federal Govern-
ment, a State, or a political subdivision of
a State, who is dismissed for participating
in a strike against the Federal Govern-
ment, the State, or the political subdivision
of the State shall be considered to have
voluntarily quit without good cause.
‘‘(v) SELECTING A HEAD OF HOUSE-
HOLD.—
‘‘(I) IN GENERAL.—For the pur-
pose of this paragraph, the State
agency shall allow the household to se-
lect any adult parent of a child in the
household as the head of the house-
hold if all adult household members
making application under the food
stamp program agree to the selection.
‘‘(II) TIME
FOR
MAKING
DES-
IGNATION.—A household may des-
ignate the head of the household
under subclause (I) each time the
household is certified for participation
in the food stamp program, but may
not change the designation during a
certification period unless there is a
change in the composition of the
household.
‘‘(vi) CHANGE
IN
HEAD
OF
HOUSE-
HOLD.—If the head of a household leaves
the household during a period in which the
household is ineligible to participate in the
food stamp program under subparagraph
(B)—
‘‘(I) the household shall, if other-
wise eligible, become eligible to par-
ticipate in the food stamp program;
and
‘‘(II) if the head of the household
becomes the head of another house-
hold, the household that becomes
headed by the individual shall become
ineligible to participate in the food
stamp program for the remaining pe-
riod of ineligibility.’’.
(b) CONFORMING AMENDMENT.—
(1) The second sentence of section 17(b)(2) of
the Act (7 U.S.C. 2026(b)(2)) is amended by strik-
ing ‘‘6(d)(1)(i)’’ and inserting ‘‘6(d)(1)(A)(i)’’.
(2) Section 20 of the Act (7 U.S.C. 2029) is
amended by striking subsection (f) and inserting the
following:
‘‘(f) DISQUALIFICATION.—An individual or a house-
hold may become ineligible under section 6(d)(1) to par-
ticipate in the food stamp program for failing to comply
with this section.’’.
SEC. 1026. CARETAKER EXEMPTION.
Section 6(d)(2) of the Food Stamp Act of 1977 (7
U.S.C. 2015(d)(2)) is amended by striking subparagraph
(B) and inserting the following: ‘‘(B) a parent or other
member of a household with responsibility for the care of
(i) a dependent child under the age of 6 or any lower age
designated by the State agency that is not under the age
of 1, or (ii) an incapacitated person;’’.
SEC. 1027. EMPLOYMENT AND TRAINING.
(a) IN GENERAL.—Section 6(d)(4) of the Food
Stamp Act of 1977 (7 U.S.C. 2015(d)(4)) is amended—
(1) in subparagraph (A)—
(A) by striking ‘‘Not later than April 1,
1987, each’’ and inserting ‘‘Each’’;
(B) by inserting ‘‘work,’’ after ‘‘skills,
training,’’; and
(C) by adding at the end the following:
‘‘Each component of an employment and train-
ing program carried out under this paragraph
shall be delivered through a statewide workforce
development system, unless the component is
not available locally through the statewide
workforce development system.’’;
(2) in subparagraph (B)—
(A) in the matter preceding clause (i), by
striking the colon at the end and inserting the
following: ‘‘, except that the State agency shall
retain the option to apply employment require-
ments prescribed under this subparagraph to a
program applicant at the time of application:’’;
(B) in clause (i), by striking ‘‘with terms
and conditions’’ and all that follows through
‘‘time of application’’; and
(C) in clause (iv)—
(i) by striking subclauses (I) and (II);
and
(ii) by redesignating subclauses (III)
and (IV) as subclauses (I) and (II), respec-
tively;
(3) in subparagraph (D)—
(A) in clause (i), by striking ‘‘to which the
application’’ and all that follows through ‘‘30
days or less’’;
(B) in clause (ii), by striking ‘‘but with re-
spect’’ and all that follows through ‘‘child
care’’; and
(C) in clause (iii), by striking ‘‘, on the
basis of’’ and all that follows through ‘‘clause
(ii)’’ and inserting ‘‘the exemption continues to
be valid’’;
(4) in subparagraph (E), by striking the third
sentence;
(5) in subparagraph (G)—
(A) by striking ‘‘(G)(i) The State’’ and in-
serting ‘‘(G) The State’’; and
(B) by striking clause (ii);
(6) in subparagraph (H), by striking ‘‘(H)(i)
The Secretary’’ and all that follows through ‘‘(ii)
Federal funds’’ and inserting ‘‘(H) Federal funds’’;
(A) by striking ‘‘(L)(i) The Secretary’’ and
inserting ‘‘(L) The Secretary’’; and
(B) by striking clause (ii).
(b) FUNDING.—Section 16(h) of the Act (7 U.S.C.
2025(h)) is amended by striking ‘‘(h)(1)(A) The Sec-
retary’’ and all that follows through the end of paragraph
(1) and inserting the following:
‘‘(h) FUNDING
OF EMPLOYMENT
AND TRAINING
PROGRAMS.—
‘‘(1) IN GENERAL.—
‘‘(A) AMOUNTS.—To carry out employ-
ment and training programs, the Secretary
shall reserve for allocation to State agencies
from funds made available for each fiscal year
under section 18(a)(1) the amount of—
‘‘(i) for fiscal year 1996, $75,000,000;
‘‘(ii) 
for 
fiscal 
year 
1997,
$79,000,000;
‘‘(iii) 
for 
fiscal 
year 
1998,
$81,000,000;
‘‘(iv) 
for 
fiscal 
year 
1999,
$84,000,000;
‘‘(v) 
for 
fiscal 
year 
2000,
$86,000,000;
‘‘(vi) 
for 
fiscal 
year 
2001,
$88,000,000; and
‘‘(vii) 
for 
fiscal 
year 
2002,
$90,000,000.
‘‘(B) ALLOCATION.—The Secretary shall
allocate the amounts reserved under subpara-
graph (A) among the State agencies using a
reasonable formula (as determined by the Sec-
retary) that gives consideration to the popu-
lation in each State affected by section 6(o).
‘‘(C) REALLOCATION.—
‘‘(i) NOTIFICATION.—A State agency
shall promptly notify the Secretary if the
State agency determines that the State
agency will not expend all of the funds al-
located to the State agency under subpara-
graph (B).
‘‘(ii) REALLOCATION.—On notification
under clause (i), the Secretary shall reallo-
cate the funds that the State agency will
not expend as the Secretary considers ap-
propriate and equitable.
‘‘(D) MINIMUM
ALLOCATION.—Notwith-
standing subparagraphs (A) through (C), the
Secretary shall ensure that each State agency
operating an employment and training program
shall receive not less than $50,000 in each fis-
cal year.’’.
(c) 
ADDITIONAL
MATCHING
FUNDS.—Section
16(h)(2) of the Act (7 U.S.C. 2025(h)(2)) is amended by
inserting before the period at the end the following: ‘‘, in-
cluding the costs for case management and casework to
facilitate the transition from economic dependency to self-
sufficiency through work’’.
(d) REPORTS.—Section 16(h) of the Act (7 U.S.C.
2025(h)) is amended—
(1) in paragraph (5)—
(A) by striking ‘‘(5)(A) The Secretary’’
and inserting ‘‘(5) The Secretary’’; and
(B) by striking subparagraph (B); and
(2) by striking paragraph (6).
SEC. 1028. COMPARABLE TREATMENT FOR DISQUALIFICA-
TION.
(a) IN GENERAL.—Section 6 of the Food Stamp Act
of 1977 (7 U.S.C. 2015) is amended by adding at the end
the following:
‘‘(i) COMPARABLE TREATMENT FOR DISQUALIFICA-
TION.—
‘‘(1) IN GENERAL.—If a disqualification is im-
posed on a member of a household for a failure of
the member to perform an action required under a
Federal, State, or local law relating to a means-test-
ed public assistance program, the State agency may
impose the same disqualification on the member of
the household under the food stamp program.
‘‘(2) RULES AND PROCEDURES.—If a disquali-
fication is imposed under paragraph (1) for a failure
of an individual to perform an action required under
part A of title IV of the Social Security Act (42
U.S.C. 601 et seq.), the State agency may use the
rules and procedures that apply under part A of title
IV of the Act to impose the same disqualification
under the food stamp program.
‘‘(3) APPLICATION
AFTER
DISQUALIFICATION
PERIOD.—A member of a household disqualified
under paragraph (1) may, after the disqualification
period has expired, apply for benefits under this Act
and shall be treated as a new applicant, except that
a prior disqualification under subsection (d) shall be
considered in determining eligibility.’’.
(b) STATE PLAN PROVISIONS.—Section 11(e) of the
Act (7 U.S.C. 2020(e)) is amended—
(1) in paragraph (24), by striking ‘‘and’’ at the
end;
(2) in paragraph (25), by striking the period at
the end and inserting a semicolon; and
(3) by adding at the end the following:
‘‘(26) the guidelines the State agency uses in
carrying out section 6(i); and’’.
(c) CONFORMING AMENDMENT.—Section 6(d)(2)(A)
of the Act (7 U.S.C. 2015(d)(2)(A)) is amended by strik-
ing ‘‘that is comparable to a requirement of paragraph
(1)’’.
SEC. 1029. DISQUALIFICATION FOR RECEIPT OF MULTIPLE
FOOD STAMP BENEFITS.
Section 6 of the Food Stamp Act of 1977 (7 U.S.C.
2015), as amended by section 1028, is amended by adding
at the end the following:
‘‘(j) DISQUALIFICATION FOR RECEIPT OF MULTIPLE
FOOD STAMP BENEFITS.—An individual shall be ineligible
to participate in the food stamp program as a member
of any household for a 10-year period if the individual is
found by a State agency to have made, or is convicted
in a Federal or State court of having made, a fraudulent
statement or representation with respect to the identity
or place of residence of the individual in order to receive
multiple benefits simultaneously under the food stamp
program.’’.
‘‘(1) IN GENERAL.—At the option of a State
agency, subject to paragraphs (2) and (3), no natu-
ral or adoptive parent or other individual (collec-
tively referred to in this subsection as ‘the individ-
ual’) who is living with and exercising parental con-
trol over a child under the age of 18 who has an ab-
sent parent shall be eligible to participate in the food
stamp program unless the individual cooperates with
the State agency administering the program estab-
lished under part D of title IV of the Social Security
Act (42 U.S.C. 651 et seq.)—
‘‘(A) in establishing the paternity of the
child (if the child is born out of wedlock); and
‘‘(B) in obtaining support for—
‘‘(i) the child; or
‘‘(ii) the individual and the child.
‘‘(2) GOOD
CAUSE
FOR
NONCOOPERATION.—
Paragraph (1) shall not apply to the individual if
good cause is found for refusing to cooperate, as de-
termined by the State agency in accordance with
standards prescribed by the Secretary in consulta-
tion with the Secretary of Health and Human Serv-
ices. The standards shall take into consideration cir-
cumstances under which cooperation may be against
the best interests of the child.
‘‘(3) FEES.—Paragraph (1) shall not require
the payment of a fee or other cost for services pro-
vided under part D of title IV of the Social Security
Act (42 U.S.C. 651 et seq.).
‘‘(m) NONCUSTODIAL PARENT’S COOPERATION WITH
CHILD SUPPORT AGENCIES.—
‘‘(1) IN GENERAL.—At the option of a State
agency, subject to paragraphs (2) and (3), a puta-
tive or identified noncustodial parent of a child
under the age of 18 (referred to in this subsection
as ‘the individual’) shall not be eligible to participate
in the food stamp program if the individual refuses
to cooperate with the State agency administering the
program established under part D of title IV of the
Social Security Act (42 U.S.C. 651 et seq.)—
‘‘(A) in establishing the paternity of the
child (if the child is born out of wedlock); and
‘‘(B) in providing support for the child.
‘‘(2) REFUSAL TO COOPERATE.—
‘‘(A) GUIDELINES.—The Secretary, in con-
sultation with the Secretary of Health and
Human Services, shall develop guidelines on
what constitutes a refusal to cooperate under
paragraph (1).
‘‘(B) PROCEDURES.—The State agency
shall develop procedures, using guidelines devel-
oped under subparagraph (A), for determining
whether an individual is refusing to cooperate
under paragraph (1).
‘‘(3) FEES.—Paragraph (1) shall not require
the payment of a fee or other cost for services pro-
vided under part D of title IV of the Social Security
Act (42 U.S.C. 651 et seq.).
‘‘(4) PRIVACY.—The State agency shall provide
safeguards to restrict the use of information col-
lected by a State agency administering the program
established under part D of title IV of the Social Se-
curity Act (42 U.S.C. 651 et seq.) to purposes for
which the information is collected.’’.
SEC. 1032. DISQUALIFICATION RELATING TO CHILD SUP-
PORT ARREARS.
Section 6 of the Food Stamp Act of 1977 (7 U.S.C.
2015), as amended by sections 1028 through 1031, is
amended by adding at the end the following:
‘‘(n) DISQUALIFICATION FOR CHILD SUPPORT AR-
REARS.—
‘‘(1) IN GENERAL.—At the option of the State
agency, no individual shall be eligible to participate
in the food stamp program as a member of any
household during any month that the individual is
delinquent in any payment due under a court order
for the support of a child of the individual.
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not
apply if—
‘‘(A) a court is allowing the individual to
delay payment; or
‘‘(B) the individual is complying with a
payment plan approved by a court or the State
agency designated under part D of title IV of
the Social Security Act (42 U.S.C. 651 et seq.)
to provide support for the child of the individ-
ual.’’.
SEC. 1033. WORK REQUIREMENT.
(a) IN GENERAL.—Section 6 of the Food Stamp Act
of 1977 (7 U.S.C. 2015), as amended by sections 1028
through 1032, is amended by adding at the end the follow-
ing:
‘‘(o) WORK REQUIREMENT.—
‘‘(1) DEFINITION OF WORK PROGRAM.—In this
subsection, the term ‘work program’ means—
‘‘(A) a program under the Job Training
Partnership Act (29 U.S.C. 1501 et seq.);
‘‘(B) a program under section 236 of the
Trade Act of 1974 (19 U.S.C. 2296); or
‘‘(C) a program of employment and train-
ing operated or supervised by a State or politi-
cal subdivision of a State that meets standards
approved by the Governor of the State, includ-
ing a program under section 6(d)(4), other than
a job search program or a job search training
program.
‘‘(2) WORK
REQUIREMENT.—Subject to the
other provisions of this subsection, no individual
shall be eligible to participate in the food stamp pro-
gram as a member of any household if, during the
preceding 12-month period, the individual received
food stamp benefits for not less than 4 months dur-
ing which the individual did not—
‘‘(A) work 20 hours or more per week,
averaged monthly; or
‘‘(B) participate in and comply with the re-
quirements of a work program for 20 hours or
more per week, as determined by the State
agency; or
‘‘(C) participate in a program under sec-
tion 20 or a comparable program established by
a State or political subdivision of a State.
‘‘(3) EXCEPTION.—Paragraph (2) shall not
apply to an individual if the individual is—
‘‘(A) under 18 or over 50 years of age;
‘‘(B) medically certified as physically or
mentally unfit for employment;
‘‘(C) a parent or other member of a house-
hold with responsibility for a dependent child;
‘‘(D) otherwise exempt under section
6(d)(2); or
‘‘(E) a pregnant woman.
‘‘(4) WAIVER.—
‘‘(A) IN GENERAL.—On the request of a
State agency, the Secretary may waive the ap-
plicability of paragraph (2) to any group of in-
dividuals in the State if the Secretary makes a
determination that the area in which the indi-
viduals reside—
‘‘(i) has an unemployment rate of over
10 percent; or
‘‘(ii) does not have a sufficient num-
ber of jobs to provide employment for the
individuals.
‘‘(B) REPORT.—The Secretary shall report
the basis for a waiver under subparagraph (A)
to the Committee on Agriculture of the House
of Representatives and the Committee on Agri-
culture, Nutrition, and Forestry of the Senate.
‘‘(5) SUBSEQUENT ELIGIBILITY.—
‘‘(A) IN
GENERAL.—Paragraph (2) shall
cease to apply to an individual if, during a 30-
day period, the individual—
‘‘(i) works 80 or more hours;
‘‘(ii) participates in and complies with
the requirements of a work program for 80
or more hours, as determined by a State
agency; or
‘‘(iii) participates in a program under
section 20 or a comparable program estab-
lished by a State or political subdivision of
a State.
‘‘(B) LIMITATION.—During the subsequent
12-month period, the individual shall be eligible
to participate in the food stamp program for
not more than 4 months during which the indi-
vidual does not—
‘‘(i) work 20 hours or more per week,
averaged monthly;
‘‘(ii) participate in and comply with
the requirements of a work program for 20
hours or more per week, as determined by
the State agency; or
‘‘(iii) participate in a program under
section 20 or a comparable program estab-
lished by a State or political subdivision of
a State.’’.
(b) TRANSITION PROVISION.—Prior to 1 year after
the date of enactment of this Act, the term ‘‘preceding
12-month period’’ in section 6(o) of the Food Stamp Act
of 1977, as amended by subsection (a), means the preced-
ing period that begins on the date of enactment of this
Act.
SEC. 1034. ENCOURAGE ELECTRONIC BENEFIT TRANSFER
SYSTEMS.
(a) IN GENERAL.—Section 7(i) of the Food Stamp
Act of 1977 (7 U.S.C. 2016(i)) is amended—
(1) by striking paragraph (1) and inserting the
following:
‘‘(1) ELECTRONIC BENEFIT TRANSFERS.—
‘‘(A) 
IMPLEMENTATION.—Each 
State
agency shall implement an electronic benefit
transfer system in which household benefits de-
termined under section 8(a) or 26 are issued
from and stored in a central databank before
October 1, 2002, unless the Secretary provides
a waiver for a State agency that faces unusual
barriers to implementing an electronic benefit
transfer system.
‘‘(B) TIMELY
IMPLEMENTATION.—State
agencies are encouraged to implement an elec-
tronic benefit transfer system under subpara-
graph (A) as soon as practicable.
‘‘(C) STATE
FLEXIBILITY.—Subject to
paragraph (2), a State agency may procure and
implement an electronic benefit transfer system
under the terms, conditions, and design that
the State agency considers appropriate.
‘‘(D) OPERATION.—An electronic benefit
transfer system should take into account gen-
erally accepted standard operating rules based
on—
‘‘(i) 
commercial 
electronic 
funds
transfer technology;
‘‘(ii) the need to permit interstate op-
eration and law enforcement monitoring;
and
‘‘(iii) the need to permit monitoring
and investigations by authorized law en-
forcement agencies.’’;
(2) in paragraph (2)—
(A) by striking ‘‘effective no later than
April 1, 1992,’’;
(B) in subparagraph (A)—
(i) by striking ‘‘, in any 1 year,’’; and
(ii) by striking ‘‘on-line’’;
(C) by striking subparagraph (D) and in-
serting the following:
‘‘(D)(i) measures to maximize the security of a
system using the most recent technology available
that the State agency considers appropriate and cost
effective and which may include personal identifica-
tion numbers, photographic identification on elec-
tronic benefit transfer cards, and other measures to
protect against fraud and abuse; and
‘‘(ii) effective not later than 2 years after the
effective date of this clause, to the extent prac-
ticable, measures that permit a system to differen-
tiate items of food that may be acquired with an al-
lotment from items of food that may not be acquired
with an allotment.’’;
(D) in subparagraph (G), by striking
‘‘and’’ at the end;
(E) in subparagraph (H), by striking the
period at the end and inserting ‘‘; and’’; and
(F) by adding at the end the following:
‘‘(I) procurement standards.’’; and
(3) by adding at the end the following:
‘‘(7) REPLACEMENT
OF
BENEFITS.—Regula-
tions issued by the Secretary regarding the replace-
ment of benefits and liability for replacement of ben-
efits under an electronic benefit transfer system
shall be similar to the regulations in effect for a
paper food stamp issuance system.
‘‘(8) REPLACEMENT CARD FEE.—A State agen-
cy may collect a charge for replacement of an elec-
tronic benefit transfer card by reducing the monthly
allotment of the household receiving the replacement
card.
‘‘(9) OPTIONAL
PHOTOGRAPHIC
IDENTIFICA-
TION.—
‘‘(A) IN GENERAL.—A State agency may
require that an electronic benefit card contain
a photograph of 1 or more members of a house-
hold.
‘‘(B) OTHER
AUTHORIZED
USERS.—If a
State agency requires a photograph on an elec-
tronic benefit card under subparagraph (A), the
State agency shall establish procedures to en-
sure that any other appropriate member of the
household or any authorized representative of
the household may utilize the card.
‘‘(10) APPLICATION
OF
ANTI-TYING
RESTRIC-
TIONS
TO
ELECTRONIC
BENEFIT
TRANSFER
SYS-
TEMS.—
‘‘(A) IN GENERAL.—A company shall not
sell or provide electronic benefit transfer serv-
ices, or fix or vary the consideration for such
services, on the condition or requirement that
the customer—
‘‘(i) obtain some additional point-of-
sale service from the company or any affili-
ate of the company; or
‘‘(ii) not obtain some additional point-
of-sale service from a competitor of the
company or competitor of any affiliate of
the company.
‘‘(B) DEFINITIONS.—In this paragraph—
‘‘(i) AFFILIATE.—The term ‘affiliate’
shall have the same meaning as in section
2(k) of the Bank Holding Company Act.
‘‘(ii) COMPANY.—The term ‘company’
shall have the same meaning as in section
106(a) of the Bank Holding Company Act
Amendments of 1970, but shall not include
a bank, bank holding company, or any sub-
sidiary of a bank holding company.
‘‘(iii) ELECTRONIC
BENEFIT
TRANS-
FER SERVICE.—The term ‘electronic bene-
fit transfer service’ means the processing
of electronic transfers of household bene-
fits determined under section 8(a) or 26
where the benefits are—
‘‘(I) issued from and stored in a
central databank;
‘‘(II) electronically accessed by
household members at the point of
sale; and
‘‘(III) provided by a Federal or
state government.
‘‘(iv) POINT-OF-SALE
SERVICE.—The
term ‘point-of-sale service’ means any
product or service related to the electronic
authorization and processing of payments
for merchandise at a retail food store, in-
cluding but not limited to credit or debit
card services, automated teller machines,
point-of-sale terminals, or access to on-line
systems.
‘‘(C) CONSULTATION WITH THE FEDERAL
RESERVE BOARD.—Before promulgating regula-
tions or interpretations of regulations to carry
out this paragraph, the Secretary shall consult
with the Board of Governors of the Federal Re-
serve System.’’.
(b) SENSE OF CONGRESS.—It is the sense of Con-
gress that a State that operates an electronic benefit
transfer system under the Food Stamp Act of 1977 (7
U.S.C. 2011 et seq.) should operate the system in a man-
ner that is compatible with electronic benefit transfer sys-
tems operated by other States.
SEC. 1035. VALUE OF MINIMUM ALLOTMENT.
The proviso in section 8(a) of the Food Stamp Act
of 1977 (7 U.S.C. 2017(a)) is amended by striking ‘‘, and
shall be adjusted’’ and all that follows through ‘‘$5’’.
SEC. 1036. BENEFITS ON RECERTIFICATION.
Section 8(c)(2)(B) of the Food Stamp Act of 1977
(7 U.S.C. 2017(c)(2)(B)) is amended by striking ‘‘of more
than one month’’.
SEC. 1037. OPTIONAL COMBINED ALLOTMENT FOR EXPE-
DITED HOUSEHOLDS.
Section 8(c) of the Food Stamp Act of 1977 (7
U.S.C. 2017(c)) is amended by striking paragraph (3) and
inserting the following:
‘‘(3) OPTIONAL
COMBINED
ALLOTMENT
FOR
EXPEDITED
HOUSEHOLDS.—A State agency may
provide to an eligible household applying after the
15th day of a month, in lieu of the initial allotment
of the household and the regular allotment of the
household for the following month, an allotment that
is equal to the total amount of the initial allotment
and the first regular allotment. The allotment shall
be provided in accordance with section 11(e)(3) in
the case of a household that is not entitled to expe-
dited service and in accordance with paragraphs (3)
and (9) of section 11(e) in the case of a household
that is entitled to expedited service.’’.
SEC. 1038. FAILURE TO COMPLY WITH OTHER MEANS-
TESTED PUBLIC ASSISTANCE PROGRAMS.
Section 8 of the Food Stamp Act of 1977 (7 U.S.C.
2017) is amended by striking subsection (d) and inserting
the following:
‘‘(d) REDUCTION
OF PUBLIC ASSISTANCE BENE-
FITS.—
‘‘(1) IN GENERAL.—If the benefits of a house-
hold are reduced under a Federal, State, or local law
relating to a means-tested public assistance program
for the failure of a member of the household to per-
form an action required under the law or program,
for the duration of the reduction—
‘‘(A) the household may not receive an in-
creased allotment as the result of a decrease in
the income of the household to the extent that
the decrease is the result of the reduction; and
‘‘(B) the State agency may reduce the al-
lotment of the household by not more than 25
percent.
‘‘(2) RULES AND PROCEDURES.—If the allot-
ment of a household is reduced under this subsection
for a failure to perform an action required under
part A of title IV of the Social Security Act (42
U.S.C. 601 et seq.), the State agency may use the
rules and procedures that apply under part A of title
IV of the Act to reduce the allotment under the food
stamp program.’’.
SEC. 1039. ALLOTMENTS FOR HOUSEHOLDS RESIDING IN
CENTERS.
Section 8 of the Food Stamp Act of 1977 (7 U.S.C.
2017) is amended by adding at the end the following:
‘‘(f) ALLOTMENTS FOR HOUSEHOLDS RESIDING IN
CENTERS.—
‘‘(1) IN GENERAL.—In the case of an individual
who resides in a center for the purpose of a drug or
alcoholic treatment program described in the last
sentence of section 3(i), a State agency may provide
an allotment for the individual to—
‘‘(A) the center as an authorized represent-
ative of the individual for a period that is less
than 1 month; and
‘‘(B) the individual, if the individual leaves
the center.
‘‘(2) DIRECT PAYMENT.—A State agency may
require an individual referred to in paragraph (1) to
designate the center in which the individual resides
as the authorized representative of the individual for
the purpose of receiving an allotment.’’.
SEC. 1040. CONDITION PRECEDENT FOR APPROVAL OF RE-
TAIL FOOD STORES AND WHOLESALE FOOD
CONCERNS.
Section 9(a)(1) of the Food Stamp Act of 1977 (7
U.S.C. 2018(a)(1)) is amended by adding at the end the
following: ‘‘No retail food store or wholesale food concern
of a type determined by the Secretary, based on factors
that include size, location, and type of items sold, shall
be approved to be authorized or reauthorized for participa-
tion in the food stamp program unless an authorized em-
ployee of the Department of Agriculture, a designee of the
Secretary, or, if practicable, an official of the State or local
government designated by the Secretary has visited the
store or concern for the purpose of determining whether
the store or concern should be approved or reauthorized,
as appropriate.’’.
SEC. 1041. AUTHORITY TO ESTABLISH AUTHORIZATION PE-
RIODS.
Section 9(a) of the Food Stamp Act of 1977 (7
U.S.C. 2018(a)) is amended by adding at the end the fol-
lowing:
‘‘(3) AUTHORIZATION PERIODS.—The Secretary
shall establish specific time periods during which au-
thorization to accept and redeem coupons, or to re-
deem benefits through an electronic benefit transfer
system, shall be valid under the food stamp pro-
gram.’’.
SEC. 1042. INFORMATION FOR VERIFYING ELIGIBILITY FOR
AUTHORIZATION.
Section 9(c) of the Food Stamp Act of 1977 (7
U.S.C. 2018(c)) is amended—
(1) in the first sentence, by inserting ‘‘, which
may include relevant income and sales tax filing doc-
uments,’’ after ‘‘submit information’’; and
(2) by inserting after the first sentence the fol-
lowing: ‘‘The regulations may require retail food
stores and wholesale food concerns to provide writ-
ten authorization for the Secretary to verify all rel-
evant tax filings with appropriate agencies and to
obtain corroborating documentation from other
sources so that the accuracy of information provided
by the stores and concerns may be verified.’’.
SEC. 1043. WAITING PERIOD FOR STORES THAT FAIL TO
MEET AUTHORIZATION CRITERIA.
Section 9(d) of the Food Stamp Act of 1977 (7
U.S.C. 2018(d)) is amended by adding at the end the fol-
lowing: ‘‘A retail food store or wholesale food concern that
is denied approval to accept and redeem coupons because
the store or concern does not meet criteria for approval
established by the Secretary may not, for at least 6
months, submit a new application to participate in the
program. The Secretary may establish a longer time pe-
riod under the preceding sentence, including permanent
disqualification, that reflects the severity of the basis of
the denial.’’.
SEC. 1044. OPERATION OF FOOD STAMP OFFICES.
Section 11 of the Food Stamp Act of 1977 (7 U.S.C.
2020), as amended by sections 1020(b) and 1028(b), is
amended—
(1) in subsection (e)—
(A) by striking paragraph (2) and insert-
ing the following:
‘‘(2)(A) that the State agency shall establish
procedures governing the operation of food stamp of-
fices that the State agency determines best serve
households in the State, including households with
special needs, such as households with elderly or dis-
abled members, households in rural areas with low-
income members, homeless individuals, households
residing on reservations, and households in areas in
which a substantial number of members of low-in-
come households speak a language other than Eng-
lish;
‘‘(B) that in carrying out subparagraph (A), a
State agency—
‘‘(i) shall provide timely, accurate, and fair
service to applicants for, and participants in,
the food stamp program;
‘‘(ii) shall develop an application contain-
ing the information necessary to comply with
this Act;
‘‘(iii) shall permit an applicant household
to apply to participate in the program on the
same day that the household first contacts a
food stamp office in person during office hours;
‘‘(iv) shall consider an application that
contains the name, address, and signature of
the applicant to be filed on the date the appli-
cant submits the application;
‘‘(v) shall require that an adult representa-
tive of each applicant household certify in writ-
ing, under penalty of perjury, that—
‘‘(I) the information contained in the
application is true; and
‘‘(II) all members of the household
are citizens or are aliens eligible to receive
food stamps under section 6(f);
‘‘(vi) shall provide a method of certifying
and issuing coupons to eligible homeless individ-
uals, to ensure that participation in the food
stamp program is limited to eligible households;
and
‘‘(vii) may establish operating procedures
that vary for local food stamp offices to reflect
regional and local differences within the State;
‘‘(C) that nothing in this Act shall prohibit the
use of signatures provided and maintained electroni-
cally, storage of records using automated retrieval
systems only, or any other feature of a State agen-
cy’s application system that does not rely exclusively
on the collection and retention of paper applications
or other records;
‘‘(D) that the signature of any adult under this
paragraph shall be considered sufficient to comply
with any provision of Federal law requiring a house-
hold member to sign an application or statement;’’;
(B) in paragraph (3), as amended by sec-
tion 1020(b)—
(i) by striking ‘‘shall—’’ and all that
follows through ‘‘provide each’’ and insert-
ing ‘‘shall provide each’’; and
(ii) by striking ‘‘(B) assist’’ and all
that follows through ‘‘representative of the
State agency;’’;
(C) by striking paragraphs (14) and (25);
(D)(i) by redesignating paragraphs (15)
through (24) as paragraphs (14) through (23),
respectively; and
(ii) by redesignating paragraph (26), as
added by section 1028(b), as paragraph (24);
and
(2) in subsection (i)—
(A) by striking ‘‘(i) Notwithstanding’’ and
all that follows through ‘‘(2)’’ and inserting the
following:
‘‘(i) APPLICATION AND DENIAL PROCEDURES.—
‘‘(1) 
APPLICATION
PROCEDURES.—Notwith-
standing any other provision of law,’’; and
(B) by striking ‘‘; (3) households’’ and all
that follows through ‘‘title IV of the Social Se-
curity Act. No’’ and inserting a period and the
following:
‘‘(2) DENIAL AND TERMINATION.—Other than
in a case of disqualification as a penalty for failure
to comply with a public assistance program rule or
regulation, no’’.
SEC. 1045. STATE EMPLOYEE AND TRAINING STANDARDS.
Section 11(e)(6) of the Food Stamp Act of 1977 (7
U.S.C. 2020(e)(6)) is amended—
(1) by striking ‘‘that (A) the’’ and inserting
‘‘that—
‘‘(A) the’’;
(2) by striking ‘‘Act; (B) the’’ and inserting
‘‘Act; and
‘‘(B) the’’;
(3) in subparagraph (B), by striking ‘‘United
States Civil Service Commission’’ and inserting ‘‘Of-
fice of Personnel Management’’; and
(4) by striking subparagraphs (C) through (E).
SEC. 1046. EXCHANGE OF LAW ENFORCEMENT INFORMA-
TION.
Section 11(e)(8) of the Food Stamp Act of 1977 (7
U.S.C. 2020(e)(8)) is amended—
(1) by striking ‘‘that (A) such’’ and inserting
the following: ‘‘that—
‘‘(A) the’’;
(2) by striking ‘‘law, (B) notwithstanding’’ and
inserting the following: ‘‘law;
‘‘(B) notwithstanding’’;
(3) by striking ‘‘Act, and (C) such’’ and insert-
ing the following: ‘‘Act;
‘‘(C) the’’; and
(4) by adding at the end the following:
‘‘(D) notwithstanding any other provision
of law, the address, social security number, and,
if available, photograph of any member of a
household shall be made available, on request,
to any Federal, State, or local law enforcement
officer if the officer furnishes the State agency
with the name of the member and notifies the
agency that—
‘‘(i) the member—
‘‘(I) is fleeing to avoid prosecu-
tion, or custody or confinement after
conviction, for a crime (or attempt to
commit a crime) that, under the law
of the place the member is fleeing, is
a felony (or, in the case of New Jer-
sey, a high misdemeanor), or is violat-
ing a condition of probation or parole
imposed under Federal or State law;
or
‘‘(II) has information that is nec-
essary for the officer to conduct an of-
ficial duty related to subclause (I);
‘‘(ii) locating or apprehending the
member is an official duty; and
‘‘(iii) the request is being made in the
proper exercise of an official duty; and
‘‘(E) the safeguards shall not prevent com-
pliance with paragraph (16);’’.
SEC. 1047. EXPEDITED COUPON SERVICE.
Section 11(e)(9) of the Food Stamp Act of 1977 (7
U.S.C. 2020(e)(9)) is amended—
(1) in subparagraph (A)—
(A) by striking ‘‘five days’’ and inserting
‘‘7 days’’; and
(B) by inserting ‘‘and’’ at the end;
(2) by striking subparagraphs (B) and (C);
(3) by redesignating subparagraph (D) as sub-
paragraph (B); and
(4) in subparagraph (B), as redesignated by
paragraph (3), by striking ‘‘, (B), or (C)’’.
SEC. 1048. WITHDRAWING FAIR HEARING REQUESTS.
Section 11(e)(10) of the Food Stamp Act of 1977 (7
U.S.C. 2020(e)(10)) is amended by inserting before the
semicolon at the end a period and the following: ‘‘At the
option of a State, at any time prior to a fair hearing deter-
mination under this paragraph, a household may with-
draw, orally or in writing, a request by the household for
the fair hearing. If the withdrawal request is an oral re-
quest, the State agency shall provide a written notice to
the household confirming the withdrawal request and pro-
viding the household with an opportunity to request a
hearing’’.
SEC. 1049. INCOME, ELIGIBILITY, AND IMMIGRATION STA-
TUS VERIFICATION SYSTEMS.
Section 11 of the Food Stamp Act of 1977 (7 U.S.C.
2020) is amended—
(1) in subsection (e)(18), as redesignated by
section 1044(1)(D)—
(A) by striking ‘‘that information is’’ and
inserting ‘‘at the option of the State agency,
that information may be’’; and
(B) by striking ‘‘shall be requested’’ and
inserting ‘‘may be requested’’; and
(2) by adding at the end the following:
‘‘(p) STATE VERIFICATION OPTION.—Notwithstand-
ing any other provision of law, in carrying out the food
stamp program, a State agency shall not be required to
use an income and eligibility or an immigration status ver-
ification system established under section 1137 of the So-
cial Security Act (42 U.S.C. 1320b–7).’’.
SEC. 1050. DISQUALIFICATION OF RETAILERS WHO INTEN-
TIONALLY SUBMIT FALSIFIED APPLICATIONS.
Section 12(b) of the Food Stamp Act of 1977 (7
U.S.C. 2021(b)) is amended—
(1) in paragraph (2), by striking ‘‘and’’ at the
end;
(2) in paragraph (3), by striking the period at
the end and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(4) for a reasonable period of time to be deter-
mined by the Secretary, including permanent dis-
qualification, on the knowing submission of an appli-
cation for the approval or reauthorization to accept
and redeem coupons that contains false information
about a substantive matter that was a part of the
application.’’.
SEC. 1051. DISQUALIFICATION OF RETAILERS WHO ARE
DISQUALIFIED UNDER THE WIC PROGRAM.
Section 12 of the Food Stamp Act of 1977 (7 U.S.C.
2021) is amended by adding at the end the following:
‘‘(g) DISQUALIFICATION OF RETAILERS WHO ARE
DISQUALIFIED UNDER THE WIC PROGRAM.—
‘‘(1) IN GENERAL.—The Secretary shall issue
regulations providing criteria for the disqualification
under this Act of an approved retail food store and
a wholesale food concern that is disqualified from
accepting benefits under the special supplemental
nutrition program for women, infants, and children
established under section 17 of the Child Nutrition
Act of 1966 (7 U.S.C. 1786).
‘‘(2) TERMS.—A disqualification under para-
graph (1)—
‘‘(A) shall be for the same length of time
as the disqualification from the program re-
ferred to in paragraph (1);
‘‘(B) may begin at a later date than the
disqualification from the program referred to in
paragraph (1); and
‘‘(C) notwithstanding section 14, shall not
be subject to judicial or administrative review.’’.
SEC. 1052. COLLECTION OF OVERISSUANCES.
(a) COLLECTION OF OVERISSUANCES.—Section 13 of
the Food Stamp Act of 1977 (7 U.S.C. 2022) is amend-
ed—
(1) by striking subsection (b) and inserting the
following:
‘‘(b) COLLECTION OF OVERISSUANCES.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, a State agency shall collect
any overissuance of coupons issued to a household
by—
‘‘(A) reducing the allotment of the house-
hold;
‘‘(B) withholding amounts from unemploy-
ment compensation from a member of the
household under subsection (c);
‘‘(C) recovering from Federal pay or a
Federal income tax refund under subsection
(d); or
‘‘(D) any other means.
‘‘(2) COST
EFFECTIVENESS.—Paragraph (1)
shall not apply if the State agency demonstrates to
the satisfaction of the Secretary that all of the
means referred to in paragraph (1) are not cost ef-
fective.
fund as authorized by section 3720A of title 31,
United States Code’’.
(b) CONFORMING AMENDMENTS.—Section 11(e)(8)
of the Act (7 U.S.C. 2020(e)(8)) is amended—
(1) by striking ‘‘and excluding claims’’ and all
that follows through ‘‘such section’’; and
(2) by inserting before the semicolon at the end
the following: ‘‘or a Federal income tax refund as
authorized by section 3720A of title 31, United
States Code’’.
(c) RETENTION RATE.—Section 16(a) of the Act (7
U.S.C. 2025(a)) is amended by striking ‘‘25 percent dur-
ing the period beginning October 1, 1990’’ and all that
follows through ‘‘error of a State agency’’ and inserting
the following: ‘‘25 percent of the overissuances collected
by the State agency under section 13, except those
overissuances arising from an error of the State agency’’.
SEC. 1053. AUTHORITY TO SUSPEND STORES VIOLATING
PROGRAM REQUIREMENTS PENDING ADMIN-
ISTRATIVE AND JUDICIAL REVIEW.
Section 14(a) of the Food Stamp Act of 1977 (7
U.S.C. 2023(a)) is amended—
(1) by redesignating the first through seven-
teenth sentences as paragraphs (1) through (17), re-
spectively; and
(2) by adding at the end the following:
‘‘(18) SUSPENSION
OF
STORES
PENDING
RE-
VIEW.—Notwithstanding any other provision of this
subsection, any permanent disqualification of a retail
food store or wholesale food concern under para-
graph (3) or (4) of section 12(b) shall be effective
from the date of receipt of the notice of disqualifica-
tion. If the disqualification is reversed through ad-
ministrative or judicial review, the Secretary shall
not be liable for the value of any sales lost during
the disqualification period.’’.
SEC. 1054. EXPANDED CRIMINAL FORFEITURE FOR VIOLA-
TIONS.
(a) FORFEITURE OF ITEMS EXCHANGED IN FOOD
STAMP TRAFFICKING.—The first sentence of section
15(g) of the Food Stamp Act of 1977 (7 U.S.C. 2024(g))
is amended by striking ‘‘or intended to be furnished’’.
(b) CRIMINAL FORFEITURE.—Section 15 of the Act
(7 U.S.C. 2024) is amended by adding at the end the fol-
lowing:
‘‘(h) CRIMINAL FORFEITURE.—
‘‘(1) IN GENERAL.—In imposing a sentence on
a person convicted of an offense in violation of sub-
section (b) or (c), a court shall order, in addition to
any other sentence imposed under this subsection,
that the person forfeit to the United States all prop-
erty described in paragraph (2).
‘‘(2) PROPERTY SUBJECT TO FORFEITURE.—All
property, real and personal, used in a transaction or
attempted transaction, to commit, or to facilitate the
commission of, a violation (other than a mis-
demeanor) of subsection (b) or (c), or proceeds
traceable to a violation of subsection (b) or (c), shall
be subject to forfeiture to the United States under
paragraph (1).
‘‘(3) INTEREST
OF
OWNER.—No interest in
property shall be forfeited under this subsection as
the result of any act or omission established by the
owner of the interest to have been committed or
omitted without the knowledge or consent of the
owner.
‘‘(4) PROCEEDS.—The proceeds from any sale
of forfeited property and any monies forfeited under
this subsection shall be used—
‘‘(A) first, to reimburse the Department of
Justice for the costs incurred by the Depart-
ment to initiate and complete the forfeiture pro-
ceeding;
‘‘(B) second, to reimburse the Department
of Agriculture Office of Inspector General for
any costs the Office incurred in the law enforce-
ment effort resulting in the forfeiture;
‘‘(C) third, to reimburse any Federal or
State law enforcement agency for any costs in-
curred in the law enforcement effort resulting
in the forfeiture; and
‘‘(D) fourth, by the Secretary to carry out
the approval, reauthorization, and compliance
investigations of retail stores and wholesale
food concerns under section 9.’’.
SEC. 1055. LIMITATION OF FEDERAL MATCH.
Section 16(a)(4) of the Food Stamp Act of 1977 (7
U.S.C. 2025(a)(4)) is amended by inserting after the
comma at the end the following: ‘‘but not including re-
cruitment activities,’’.
SEC. 1056. STANDARDS FOR ADMINISTRATION.
(a) IN GENERAL.—Section 16 of the Food Stamp Act
of 1977 (7 U.S.C. 2025) is amended by striking sub-
section (b).
(b) CONFORMING AMENDMENTS.—
(1) The first sentence of section 11(g) of the
Act (7 U.S.C. 2020(g)) is amended by striking ‘‘the
Secretary’s standards for the efficient and effective
administration of the program established under sec-
tion 16(b)(1) or’’.
(2) Section 16(c)(1)(B) of the Act (7 U.S.C.
2025(c)(1)(B)) is amended by striking ‘‘pursuant to
subsection (b)’’.
SEC. 1057. WORK SUPPLEMENTATION OR SUPPORT PRO-
GRAM.
Section 16 of the Food Stamp Act of 1977 (7 U.S.C.
2025), as amended by section 1056(a), is amended by in-
serting after subsection (a) the following:
‘‘(b) WORK SUPPLEMENTATION OR SUPPORT PRO-
GRAM.—
‘‘(1) DEFINITION OF WORK SUPPLEMENTATION
OR
SUPPORT
PROGRAM.—In this subsection, the
term ‘work supplementation or support program’
means a program under which, as determined by the
Secretary, public assistance (including any benefits
provided under a program established by the State
and the food stamp program) is provided to an em-
ployer to be used for hiring and employing a public
assistance recipient who was not employed by the
employer at the time the public assistance recipient
entered the program.
‘‘(2) PROGRAM.—A State agency may elect to
use an amount equal to the allotment that would
otherwise be issued to a household under the food
stamp program, but for the operation of this sub-
section, for the purpose of subsidizing or supporting
a job under a work supplementation or support pro-
gram established by the State.
‘‘(3) PROCEDURE.—If a State agency makes an
election under paragraph (2) and identifies each
household that participates in the food stamp pro-
gram that contains an individual who is participat-
ing in the work supplementation or support pro-
gram—
‘‘(A) the Secretary shall pay to the State
agency an amount equal to the value of the al-
lotment that the household would be eligible to
receive but for the operation of this subsection;
‘‘(B) the State agency shall expend the
amount received under subparagraph (A) in ac-
cordance with the work supplementation or sup-
port program in lieu of providing the allotment
that the household would receive but for the op-
eration of this subsection;
‘‘(C) for purposes of—
‘‘(i) sections 5 and 8(a), the amount
received under this subsection shall be ex-
cluded from household income and re-
sources; and
‘‘(ii) section 8(b), the amount received
under this subsection shall be considered to
be the value of an allotment provided to
the household; and
‘‘(D) the household shall not receive an al-
lotment from the State agency for the period
during which the member continues to partici-
pate in the work supplementation or support
program.
‘‘(4) OTHER WORK REQUIREMENTS.—No indi-
vidual shall be excused, by reason of the fact that
a State has a work supplementation or support pro-
gram, from any work requirement under section
6(d), except during the periods in which the individ-
ual is employed under the work supplementation or
support program.
‘‘(5) LENGTH
OF
PARTICIPATION.—A State
agency shall provide a description of how the public
assistance recipients in the program shall, within a
specific period of time, be moved from supplemented
or supported employment to employment that is not
supplemented or supported.
‘‘(6) DISPLACEMENT.—A work supplementation
or support program shall not displace the employ-
ment of individuals who are not supplemented or
supported.’’.
SEC. 1058. WAIVER AUTHORITY.
Section 17(b)(1) of the Food Stamp Act of 1977 (7
U.S.C. 2026(b)(1)) is amended—
(1) by redesignating subparagraph (B) as sub-
paragraph (C); and
(2) in subparagraph (A)—
(A) by striking the second sentence; and
(B) by striking ‘‘benefits to eligible house-
holds, including’’ and inserting the following:
‘‘benefits to eligible households, and may waive
any requirement of this Act to the extent nec-
essary for the project to be conducted.
‘‘(B) PROJECT REQUIREMENTS.—
‘‘(i) PROGRAM GOAL.—The Secretary
may not conduct a project under subpara-
graph (A) unless the project is consistent
with the goal of the food stamp program of
providing food assistance to raise levels of
nutrition among low-income individuals.
‘‘(ii) PERMISSIBLE
PROJECTS.—The
Secretary may conduct a project under
subparagraph (A) to—
‘‘(I) improve program adminis-
tration;
‘‘(II) increase the self-sufficiency
of food stamp recipients;
‘‘(III) test innovative welfare re-
form strategies; and
‘‘(IV) allow greater conformity
with the rules of other programs than
would be allowed but for this para-
graph.
‘‘(iii) IMPERMISSIBLE
PROJECTS.—
The Secretary may not conduct a project
under subparagraph (A) that—
‘‘(I) involves the payment of the
value of an allotment in the form of
cash, unless the project was approved
prior to the date of enactment of this
subparagraph;
‘‘(II) 
substantially 
transfers
funds made available under this Act
to services or benefits provided pri-
marily through another public assist-
ance program; or
‘‘(III) is not limited to a specific
time period.
‘‘(iv) 
ADDITIONAL
INCLUDED
PROJECTS.—Pilot or experimental projects
may include’’.
SEC. 1059. RESPONSE TO WAIVERS.
Section 17(b)(1) of the Food Stamp Act of 1977 (7
U.S.C. 2026(b)(1)), as amended by section 1058, is
amended by adding at the end the following:
‘‘(D) RESPONSE TO WAIVERS.—
‘‘(i) RESPONSE.—Not later than 60
days after the date of receiving a request
for a waiver under subparagraph (A), the
Secretary shall provide a response that—
‘‘(I) approves the waiver request;
‘‘(II) denies the waiver request
and explains any modification needed
for approval of the waiver request;
‘‘(III) denies the waiver request
and explains the grounds for the de-
nial; or
‘‘(IV) requests clarification of the
waiver request.
‘‘(ii) FAILURE TO RESPOND.—If the
Secretary does not provide a response in
accordance with clause (i), the waiver shall
be considered approved, unless the ap-
proval is specifically prohibited by this Act.
‘‘(iii) NOTICE OF DENIAL.—On denial
of a waiver request under clause (i)(III),
the Secretary shall provide a copy of the
waiver request and a description of the
reasons for the denial to the Committee on
Agriculture of the House of Representa-
tives and the Committee on Agriculture,
Nutrition, and Forestry of the Senate.’’.
SEC. 1060. EMPLOYMENT INITIATIVES PROGRAM.
Section 17 of the Food Stamp Act of 1977 (7 U.S.C.
2026) is amended by striking subsection (d) and inserting
the following:
‘‘(d) EMPLOYMENT INITIATIVES PROGRAM.—
‘‘(1) ELECTION TO PARTICIPATE.—
‘‘(A) IN GENERAL.—Subject to the other
provisions of this subsection, a State may elect
to carry out an employment initiatives program
under this subsection.
‘‘(B) REQUIREMENT.—A State shall be eli-
gible to carry out an employment initiatives
program under this subsection only if not less
than 50 percent of the households that received
food stamp benefits during the summer of 1993
also received benefits under a State program
funded under part A of title IV of the Social
Security Act (42 U.S.C. 601 et seq.) during the
summer of 1993.
‘‘(2) PROCEDURE.—
‘‘(A) IN
GENERAL.—A State that has
elected to carry out an employment initiatives
program under paragraph (1) may use amounts
equal to the food stamp allotments that would
otherwise be issued to a household under the
food stamp program, but for the operation of
this subsection, to provide cash benefits in lieu
of the food stamp allotments to the household
if the household is eligible under paragraph (3).
‘‘(B) PAYMENT.—The Secretary shall pay
to each State that has elected to carry out an
employment initiatives program under para-
graph (1) an amount equal to the value of the
allotment that each household would be eligible
to receive under this Act but for the operation
of this subsection.
‘‘(C) OTHER
PROVISIONS.—For purposes
of the food stamp program (other than this
subsection)—
‘‘(i) cash assistance under this sub-
section shall be considered to be an allot-
ment; and
‘‘(ii) each household receiving cash
benefits under this subsection shall not re-
ceive any other food stamp benefit for the
period for which the cash assistance is pro-
vided.
‘‘(D) 
ADDITIONAL
PAYMENTS.—Each
State that has elected to carry out an employ-
ment initiatives program under paragraph (1)
shall—
‘‘(i) increase the cash benefits pro-
vided to each household under this sub-
section to compensate for any State or
local sales tax that may be collected on
purchases of food by any household receiv-
ing cash benefits under this subsection, un-
less the Secretary determines on the basis
of information provided by the State that
the increase is unnecessary on the basis of
the limited nature of the items subject to
the State or local sales tax; and
‘‘(ii) pay the cost of any increase in
cash benefits required by clause (i).
‘‘(3) ELIGIBILITY.—A household shall be eligi-
ble to receive cash benefits under paragraph (2) if
an adult member of the household—
‘‘(A) has worked in unsubsidized employ-
ment for not less than the preceding 90 days;
‘‘(B) has earned not less than $350 per
month from the employment referred to in sub-
paragraph (A) for not less than the preceding
90 days;
‘‘(C)(i) is receiving benefits under a State
program funded under part A of title IV of the
Social Security Act (42 U.S.C. 601 et seq.); or
‘‘(ii) was receiving benefits under a State
program funded under part A of title IV of the
Social Security Act (42 U.S.C. 601 et seq.) at
the time the member first received cash benefits
under this subsection and is no longer eligible
for the State program because of earned in-
come;
‘‘(D) is continuing to earn not less than
$350 per month from the employment referred
to in subparagraph (A); and
‘‘(E) elects to receive cash benefits in lieu
of food stamp benefits under this subsection.
‘‘(4) EVALUATION.—A State that operates a
program under this subsection for 2 years shall pro-
vide to the Secretary a written evaluation of the im-
pact of cash assistance under this subsection. The
State agency, with the concurrence of the Secretary,
shall determine the content of the evaluation.’’.
SEC. 1061. REAUTHORIZATION.
The first sentence of section 18(a)(1) of the Food
Stamp Act of 1977 (7 U.S.C. 2027(a)(1)) is amended by
striking ‘‘1991 through 1997’’ and inserting ‘‘1996
through 2002’’.
SEC. 1062. SIMPLIFIED FOOD STAMP PROGRAM.
(a) IN GENERAL.—The Food Stamp Act of 1977 (7
U.S.C. 2011 et seq.) is amended by adding at the end
the following:
‘‘SEC. 26. SIMPLIFIED FOOD STAMP PROGRAM.
‘‘(a) DEFINITION OF FEDERAL COSTS.—In this sec-
tion, the term ‘Federal costs’ does not include any Federal
costs incurred under section 17.
‘‘(b) ELECTION.—Subject to subsection (d), a State
may elect to carry out a Simplified Food Stamp Program
(referred to in this section as a ‘Program’), statewide or
in a political subdivision of the State, in accordance with
this section.
‘‘(c) OPERATION OF PROGRAM.—If a State elects to
carry out a Program, within the State or a political sub-
division of the State—
‘‘(1) a household in which all members receive
assistance under a State program funded under part
A of title IV of the Social Security Act (42 U.S.C.
601 et seq.) shall automatically be eligible to partici-
pate in the Program; and
‘‘(2) subject to subsection (f), benefits under
the Program shall be determined under rules and
procedures established by the State under—
‘‘(A) a State program funded under part A
of title IV of the Social Security Act (42 U.S.C.
601 et seq.);
‘‘(B) the food stamp program (other than
section 27); or
‘‘(C) a combination of a State program
funded under part A of title IV of the Social
Security Act (42 U.S.C. 601 et seq.) and the
food stamp program (other than section 27).
‘‘(d) APPROVAL OF PROGRAM.—
‘‘(1) STATE PLAN.—A State agency may not
operate a Program unless the Secretary approves a
State plan for the operation of the Program under
paragraph (2).
‘‘(2) APPROVAL OF PLAN.—The Secretary shall
approve any State plan to carry out a Program if
the Secretary determines that the plan—
‘‘(A) complies with this section; and
‘‘(B) contains sufficient documentation
that the plan will not increase Federal costs for
any fiscal year.
‘‘(e) INCREASED FEDERAL COSTS.—
‘‘(1) DETERMINATION.—During each fiscal
year and not later than 90 days after the end of
each fiscal year, the Secretary shall determine
whether a Program being carried out by a State
agency is increasing Federal costs under this Act
above the Federal costs incurred under the food
stamp program in operation in the State or political
subdivision of the State for the fiscal year prior to
the implementation of the Program, adjusted for any
changes in—
‘‘(A) participation;
‘‘(B) the income of participants in the food
stamp program that is not attributable to pub-
lic assistance; and
‘‘(C) the thrifty food plan under section
3(o).
‘‘(2) NOTIFICATION.—If the Secretary deter-
mines that the Program has increased Federal costs
under this Act for any fiscal year or any portion of
any fiscal year, the Secretary shall notify the State
not later than 30 days after the Secretary makes the
determination under paragraph (1).
‘‘(3) ENFORCEMENT.—
‘‘(A) CORRECTIVE
ACTION.—Not later
than 90 days after the date of a notification
under paragraph (2), the State shall submit a
plan for approval by the Secretary for prompt
corrective action that is designed to prevent the
Program from increasing Federal costs under
this Act.
‘‘(B) TERMINATION.—If the State does not
submit a plan under subparagraph (A) or carry
out a plan approved by the Secretary, the Sec-
retary shall terminate the approval of the State
agency operating the Program and the State
agency shall be ineligible to operate a future
Program.
‘‘(f) RULES AND PROCEDURES.—
‘‘(1) IN GENERAL.—In operating a Program, a
State or political subdivision of a State may follow
the rules and procedures established by the State or
political subdivision under a State program funded
under part A of title IV of the Social Security Act
(42 U.S.C. 601 et seq.) or under the food stamp
program.
‘‘(2) STANDARDIZED DEDUCTIONS.—In operat-
ing a Program, a State or political subdivision of a
State may standardize the deductions provided
under section 5(e). In developing the standardized
deduction, the State shall consider the work ex-
penses, dependent care costs, and shelter costs of
participating households.
‘‘(3) REQUIREMENTS.—In operating a Pro-
gram, a State or political subdivision shall comply
with the requirements of—
‘‘(A) subsections (a) through (g) of section
7;
‘‘(B) section 8(a) (except that the income
of a household may be determined under a
State program funded under part A of title IV
of the Social Security Act (42 U.S.C. 601 et
seq.));
‘‘(C) subsection (b) and (d) of section 8;
‘‘(D) subsections (a), (c), (d), and (n) of
section 11;
‘‘(E) paragraphs (8), (12), (16), (18),
(20), (24), and (25) of section 11(e);
‘‘(F) section 11(e)(10) (or a comparable
requirement established by the State under a
State program funded under part A of title IV
of the Social Security Act (42 U.S.C. 601 et
seq.)); and
‘‘(G) section 16.
‘‘(4) LIMITATION
ON
ELIGIBILITY.—Notwith-
standing any other provision of this section, a house-
hold may not receive benefits under this section as
a result of the eligibility of the household under a
State program funded under part A of title IV of the
Social Security Act (42 U.S.C. 601 et seq.), unless
the Secretary determines that any household with in-
come above 130 percent of the poverty guidelines is
not eligible for the program.’’.
(b) STATE PLAN PROVISIONS.—Section 11(e) of the
Act (7 U.S.C. 2020(e)), as amended by sections 1020(b),
1028(b), and 1044, is amended by adding at the end the
following:
‘‘(25) if a State elects to carry out a Simplified
Food Stamp Program under section 26, the plans of
the State agency for operating the program, includ-
ing—
‘‘(A) the rules and procedures to be fol-
lowed by the State agency to determine food
stamp benefits;
‘‘(B) how the State agency will address the
needs of households that experience high shelter
costs in relation to the incomes of the house-
holds; and
‘‘(C) a description of the method by which
the State agency will carry out a quality control
system under section 16(c).’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 8 of the Act (7 U.S.C. 2017), as
amended by section 1039, is amended—
(A) by striking subsection (e); and
(B) by redesignating subsection (f) as sub-
section (e).
(2) Section 17 of the Act (7 U.S.C. 2026) is
amended—
(A) by striking subsection (i); and
(B) 
by 
redesignating 
subsections 
(j)
through (l) as subsections (i) through (k), re-
spectively.
SEC. 1063. STATE FOOD ASSISTANCE BLOCK GRANT.
(a) IN GENERAL.—The Food Stamp Act of 1977 (7
U.S.C. 2011 et seq.), as amended by section 1062, is
amended by adding at the end the following:
‘‘SEC. 27. STATE FOOD ASSISTANCE BLOCK GRANT.
‘‘(a) DEFINITIONS.—In this section:
‘‘(1) FOOD ASSISTANCE.—The term ‘food as-
sistance’ means assistance that may be used only to
obtain food, as defined in section 3(g).
‘‘(2) STATE.—The term ‘State’ means each of
the 50 States, the District of Columbia, Guam, and
the Virgin Islands of the United States.
‘‘(b) ESTABLISHMENT.—The Secretary shall estab-
lish a program to make grants to States in accordance
with this section to provide—
‘‘(1) food assistance to needy individuals and
families residing in the State; and
‘‘(2) funds for administrative costs incurred in
providing the assistance.
‘‘(c) ELECTION.—
‘‘(1) IN GENERAL.—A State may annually elect
to participate in the program established under sub-
section (b) if the State—
‘‘(A) has fully implemented an electronic
benefit transfer system that operates in the en-
tire State;
‘‘(B) has a payment error rate under sec-
tion 16(c) that is not more than 6 percent as
announced most recently by the Secretary; or
‘‘(C) has a payment error rate in excess of
6 percent and agrees to contribute non-Federal
funds for the fiscal year of the grant, for bene-
fits and administration of the State’s food as-
sistance program, the amount determined under
paragraph (2).
‘‘(2) STATE MANDATORY CONTRIBUTIONS.—
‘‘(A) IN GENERAL.—In the case of a State
that elects to participate in the program under
paragraph (1)(C), the State shall agree to con-
tribute, for a fiscal year, an amount equal to—
‘‘(i) the benefits issued in the State;
multiplied by
‘‘(ii) the payment error rate of the
State; minus
‘‘(B)(i) the benefits issued in the State;
multiplied by
‘‘(ii) 6 percent.
‘‘(B) DETERMINATION.—Notwithstanding
sections 13 and 14, the calculation of the con-
tribution shall be based solely on the determina-
tion of the Secretary of the payment error rate.
‘‘(C) DATA.—For purposes of implement-
ing subparagraph (A) for a fiscal year, the Sec-
retary shall use the data for the most recent
fiscal year available.
‘‘(3) ELECTION LIMITATION.—
‘‘(A) RE-ENTERING
FOOD
STAMP
PRO-
GRAM.—A State that elects to participate in the
program under paragraph (1) may in a subse-
quent year decline to elect to participate in the
program and instead participate in the food
stamp program in accordance with the other
sections of this Act.
‘‘(B) LIMITATION.—Subsequent to re-en-
tering the food stamp program under subpara-
graph (A), the State shall only be eligible to
participate in the food stamp program in ac-
cordance with the other sections of this Act and
shall not be eligible to elect to participate in the
program established under subsection (b).
‘‘(4) PROGRAM EXCLUSIVE.—
‘‘(A) IN GENERAL.—A State that is par-
ticipating in the program established under sub-
section (b) shall not be subject to, or receive
any benefit under, this Act except as provided
in this section.
‘‘(B) CONTRACT WITH FEDERAL GOVERN-
MENT.—Nothing in this section shall prohibit a
State from contracting with the Federal Gov-
ernment for the provision of services or mate-
rials necessary to carry out a program under
this section.
‘‘(d) LEAD AGENCY.—A State desiring to receive a
grant under this section shall designate, in an application
submitted to the Secretary under subsection (e)(1), an ap-
propriate State agency responsible for the administration
of the program under this section as the lead agency.
‘‘(e) APPLICATION AND PLAN.—
‘‘(1) APPLICATION.—To be eligible to receive
assistance under this section, a State shall prepare
and submit to the Secretary an application at such
time, in such manner, and containing such informa-
tion as the Secretary shall by regulation require, in-
cluding—
‘‘(A) an assurance that the State will com-
ply with the requirements of this section;
‘‘(B) a State plan that meets the require-
ments of paragraph (3); and
‘‘(C) an assurance that the State will com-
ply with the requirements of the State plan
under paragraph (3).
‘‘(2) ANNUAL PLAN.—The State plan contained
in the application under paragraph (1) shall be sub-
mitted for approval annually.
‘‘(3) REQUIREMENTS OF PLAN.—
‘‘(A) LEAD AGENCY.—The State plan shall
identify the lead agency.
‘‘(B) USE OF BLOCK GRANT FUNDS.—The
State plan shall provide that the State shall use
the amounts provided to the State for each fis-
cal year under this section—
‘‘(i) to provide food assistance to
needy individuals and families residing in
the State, other than residents of institu-
tions who are ineligible for food stamps
under section 3(i); and
‘‘(ii) to pay administrative costs in-
curred in providing the assistance.
‘‘(C) GROUPS
SERVED.—The State plan
shall describe how and to what extent the pro-
gram will serve specific groups of individuals
and families and how the treatment will differ
from treatment under the food stamp program
under the other sections of this Act of the indi-
viduals and families, including—
‘‘(i) elderly individuals and families;
‘‘(ii) migrants or seasonal farm-
workers;
‘‘(iii) homeless individuals and fami-
lies;
‘‘(iv) individuals and families who live
in institutions eligible under section 3(i);
‘‘(v) individuals and families with
earnings; and
‘‘(vi) members of Indian tribes or trib-
al organizations.
‘‘(D) ASSISTANCE FOR ENTIRE STATE.—
The State plan shall provide that benefits under
this section shall be available throughout the
entire State.
‘‘(E) NOTICE AND HEARINGS.—The State
plan shall provide that an individual or family
who applies for, or receives, assistance under
this section shall be provided with notice of, and
an opportunity for a hearing on, any action
under this section that adversely affects the in-
dividual or family.
‘‘(F) ASSESSMENT OF NEEDS.—The State
plan shall assess the food and nutrition needs
of needy persons residing in the State.
‘‘(G) ELIGIBILITY STANDARDS.—The State
plan shall describe the income, resource, and
other eligibility standards that are established
for the receipt of assistance under this section.
‘‘(H) DISQUALIFICATION OF FLEEING FEL-
ONS.—The State plan shall provide for the dis-
qualification of any individual who would be
disqualified from participating in the food
stamp program under section 6(k).
‘‘(I) RECEIVING BENEFITS IN MORE THAN
1 JURISDICTION.—The State plan shall estab-
lish a system for the exchange of information
with other States to verify the identity and re-
ceipt of benefits by recipients.
‘‘(J) PRIVACY.—The State plan shall pro-
vide for safeguarding and restricting the use
and disclosure of information about any individ-
ual or family receiving assistance under this
section.
‘‘(K) OTHER
INFORMATION.—The State
plan shall contain such other information as
may be required by the Secretary.
‘‘(4) APPROVAL OF APPLICATION AND PLAN.—
The Secretary shall approve an application and
State plan that satisfies the requirements of this
section.
‘‘(f) NO INDIVIDUAL OR FAMILY ENTITLEMENT TO
ASSISTANCE.—Nothing in this section—
‘‘(1) entitles any individual or family to assist-
ance under this section; or
‘‘(2) limits the right of a State to impose addi-
tional limitations or conditions on assistance under
this section.
‘‘(g) BENEFITS FOR ALIENS.—
‘‘(1) ELIGIBILITY.—No individual who is an
alien shall be eligible to receive benefits under a
State plan approved under subsection (e)(4) if the
individual is not eligible to participate in the food
stamp program due to the alien status of the indi-
vidual.
‘‘(2) INCOME.—The State plan shall provide
that the income of an alien shall be determined in
accordance with section 5(i).
‘‘(h) EMPLOYMENT AND TRAINING.—
‘‘(1) WORK REQUIREMENTS.—No individual or
household shall be eligible to receive benefits under
a State plan funded under this section if the individ-
ual or household is not eligible to participate in the
food stamp program under subsection (d) or (o) of
section 6.
‘‘(2) WORK PROGRAMS.—Each State shall im-
plement an employment and training program in ac-
cordance with the terms and conditions of section
6(d)(4) for individuals under the program and shall
be eligible to receive funding under section 16(h).
‘‘(i) ENFORCEMENT.—
‘‘(1) REVIEW
OF
COMPLIANCE
WITH
STATE
PLAN.—The Secretary shall review and monitor
State compliance with this section and the State
plan approved under subsection (e)(4).
‘‘(2) NONCOMPLIANCE.—
‘‘(A) IN GENERAL.—If the Secretary, after
reasonable notice to a State and opportunity for
a hearing, finds that—
‘‘(i) there has been a failure by the
State to comply substantially with any pro-
vision or requirement set forth in the State
plan approved under subsection (e)(4); or
‘‘(ii) in the operation of any program
or activity for which assistance is provided
under this section, there is a failure by the
State to comply substantially with any pro-
vision of this section;
the Secretary shall notify the State of the find-
ing and that no further grants will be made to
the State under this section (or, in the case of
noncompliance in the operation of a program or
activity, that no further grants to the State will
be made with respect to the program or activ-
ity) until the Secretary is satisfied that there
is no longer any failure to comply or that the
noncompliance will be promptly corrected.
‘‘(B) OTHER PENALTIES.—In the case of a
finding of noncompliance made pursuant to
subparagraph (A), the Secretary may, in addi-
tion to, or in lieu of, imposing the penalties de-
scribed in subparagraph (A), impose other ap-
propriate penalties, including recoupment of
money improperly expended for purposes pro-
hibited or not authorized by this section and
disqualification from the receipt of financial as-
sistance under this section.
‘‘(C) NOTICE.—The notice required under
subparagraph (A) shall include a specific identi-
fication of any additional penalty being imposed
under subparagraph (B).
‘‘(3) ISSUANCE
OF
REGULATIONS.—The Sec-
retary shall establish by regulation procedures for—
100
‘‘(A) receiving, processing, and determin-
ing the validity of complaints made to the Sec-
retary concerning any failure of a State to com-
ply with the State plan or any requirement of
this section; and
‘‘(B) imposing penalties under this section.
‘‘(j) GRANT.—
‘‘(1) IN GENERAL.—For each fiscal year, the
Secretary shall pay to a State that has an applica-
tion approved by the Secretary under subsection
(e)(4) an amount that is equal to the grant of the
State under subsection (m) for the fiscal year.
‘‘(2) METHOD OF GRANT.—The Secretary shall
make a grant to a State for a fiscal year under this
section by issuing 1 or more letters of credit for the
fiscal year, with necessary adjustments on account
of overpayments or underpayments, as determined
by the Secretary.
‘‘(3) SPENDING OF GRANTS BY STATE.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), a grant to a State deter-
mined under subsection (m)(1) for a fiscal year
may be expended by the State only in the fiscal
year.
101
‘‘(B) CARRYOVER.—The State may reserve
up to 10 percent of a grant determined under
subsection (m)(1) for a fiscal year to provide
assistance under this section in subsequent fis-
cal years, except that the reserved funds may
not exceed 30 percent of the total grant re-
ceived under this section for a fiscal year.
‘‘(4) FOOD ASSISTANCE AND ADMINISTRATIVE
EXPENDITURES.—In each fiscal year, not more than
6 percent of the Federal and State funds required
to be expended by a State under this section shall
be used for administrative expenses.
‘‘(5) PROVISION
OF
FOOD
ASSISTANCE.—A
State may provide food assistance under this section
in any manner determined appropriate by the State,
such as electronic benefit transfer limited to food
purchases, coupons limited to food purchases, or di-
rect provision of commodities.
‘‘(k) QUALITY CONTROL.—Each State participating
in the program established under this section shall main-
tain a system in accordance with, and shall be subject to
section 16(c), including sanctions and eligibility for incen-
tive payment under section 16(c), adjusted for State spe-
cific characteristics under regulations issued by the Sec-
retary.
102
‘‘(l) NONDISCRIMINATION.—
‘‘(1) IN
GENERAL.—The Secretary shall not
provide financial assistance for any program,
project, or activity under this section if any person
with responsibilities for the operation of the pro-
gram, project, or activity discriminates with respect
to the program, project, or activity because of race,
religion, color, national origin, sex, or disability.
‘‘(2) ENFORCEMENT.—The powers, remedies,
and procedures set forth in title VI of the Civil
Rights Act of 1964 (42 U.S.C. 2000d et seq.) may
be used by the Secretary to enforce paragraph (1).
‘‘(m) GRANT CALCULATION.—
‘‘(1) STATE GRANT.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), from the amounts made
available under section 18 for each fiscal year,
the Secretary shall provide a grant to each
State participating in the program established
under this section an amount that is equal to
the sum of—
‘‘(i) the greater of, as determined by
the Secretary—
‘‘(I) the total dollar value of all
benefits issued under the food stamp
103
program established under this Act by
the State during fiscal year 1994; or
‘‘(II) the average per fiscal year
of the total dollar value of all benefits
issued under the food stamp program
by the State during each of fiscal
years 1992 through 1994; and
‘‘(ii) the greater of, as determined by
the Secretary—
‘‘(I) the total amount received by
the State for administrative costs
under section 16(a) (not including any
adjustment under section 16(c)) for
fiscal year 1994; or
‘‘(II) the average per fiscal year
of the total amount received by the
State for administrative costs under
section 16(a) (not including any ad-
justment under section 16(c)) for each
of fiscal years 1992 through 1994.
‘‘(B) INSUFFICIENT FUNDS.—If the Sec-
retary finds that the total amount of grants to
which States would otherwise be entitled for a
fiscal year under subparagraph (A) will exceed
the amount of funds that will be made available
104
to provide the grants for the fiscal year, the
Secretary shall reduce the grants made to
States under this subsection, on a pro rata
basis, to the extent necessary.
‘‘(2) REDUCTION.—The Secretary shall reduce
the grant of a State by the amount a State has
agreed to contribute under subsection (c)(1)(C).’’.
(b) EMPLOYMENT AND TRAINING FUNDING.—Sec-
tion 16(h) of the Act (7 U.S.C. 2025(a)), as amended by
section 1027(d)(2), is amended by adding at the end the
following:
‘‘(6) BLOCK GRANT STATES.—Each State elect-
ing to operate a program under section 27 shall—
‘‘(A) receive the greater of—
‘‘(i) the total dollar value of the funds
received under paragraph (1) by the State
during fiscal year 1994; or
‘‘(ii) the average per fiscal year of the
total dollar value of all funds received
under paragraph (1) by the State during
each of fiscal years 1992 through 1994;
and
‘‘(B) be eligible to receive funds under
paragraph (2), within the limitations in section
6(d)(4)(K).’’.
105
(c) RESEARCH ON OPTIONAL STATE FOOD ASSIST-
ANCE BLOCK GRANT.—Section 17 of the Act (7 U.S.C.
2026), as amended by section 1062(c)(2), is amended by
adding at the end the following:
‘‘(l) RESEARCH ON OPTIONAL STATE FOOD ASSIST-
ANCE BLOCK GRANT.—The Secretary may conduct re-
search on the effects and costs of a State program carried
out under section 27.’’.
SEC. 1064. A STUDY OF THE USE OF FOOD STAMPS TO PUR-
CHASE VITAMINS AND MINERALS.
The Secretary of Agriculture shall, in consultation
with the National Academy of Sciences and the Center for
Disease Control and Prevention, conduct a study of the
use of food stamps to purchase vitamins and minerals.
The study shall include an analysis of scientific findings
on the efficacy of and need for vitamins and minerals, in-
cluding the adequacy of vitamin and mineral intake in low
income populations, as shown by existing research and
surveys, and the potential value of nutritional supplements
in filling nutrient gaps that may exist in the population
as a whole or in vulnerable subgroups in the U.S. popu-
lation; the impact of nutritional improvements (including
vitamin or mineral supplementation) on health status and
health care costs for women of childbearing age, pregnant
or lactating women, and the elderly; the cost of vitamin
106
and mineral supplements commercially available; the pur-
chasing habits of low income populations with regard to
vitamins and minerals; the impact on the food purchases
of low income households; and the economic impact on ag-
ricultural commodities. The Secretary shall report the re-
sults of the study to the Committee on Agriculture of the
U.S. House of Representatives not later than December
15, 1996.’’.
SEC. 1065. INVESTIGATIONS.
Section 12(a) of the Food Stamp Act of 1977 (7
U.S.C. 2021(a)) is amended by adding at the end the fol-
lowing:
‘‘Regulations issued pursuant to this Act shall provide cri-
teria for the finding of violations and the suspension or
disqualification of a retail food store or wholesale food con-
cern on the basis of evidence which may include, but is
not limited to, facts established through on-site investiga-
tions, inconsistent redemption data or evidence obtained
through transaction reports under electronic benefit trans-
fer systems.’’.
SEC. 1066. FOOD STAMP ELIGIBILITY.
Section 6(f) of the Food Stamp Act of 1977 (7
U.S.C. 2015(f)) is amended by striking the third sentence
and inserting the following:
107
‘‘The State agency shall, at its option, consider either all
income and financial resources of the individual rendered
ineligible to participate in the food stamp program under
this subsection, or such income, less a pro rata share, and
the financial resources of the ineligible individual, to deter-
mine the eligibility and the value of the allotment of the
household of which such individual is a member.’’.
SEC. 1067. REPORT BY THE SECRETARY.
The Secretary of Agriculture may report to the Com-
mittee on Agriculture of the House of Representatives, not
later than January 1, 2000, on the effect of the food
stamp reforms in the Welfare and Medicaid Reform Act
of 1996 and the ability of State and local governments
to deal with people in poverty. The report must answer
the question: ‘‘Did people become more personally respon-
sible and were work opportunities provided such that pov-
erty in America is better managed?’’.
SEC. 1068. DEFICIT REDUCTION.
It is the sense of the Committee on Agriculture of
the House of Representatives that reductions in outlays
resulting from this title shall not be taken into account
for purposes of section 552 of the Balanced Budget and
Emergency Deficit Control Act of 1985.
108
Subtitle B—Commodity
Distribution Programs
SEC. 1071. EMERGENCY FOOD ASSISTANCE PROGRAM.
(a) DEFINITIONS.—Section 201A of the Emergency
Food Assistance Act of 1983 (Public Law 98–8; 7 U.S.C.
612c note) is amended to read as follows:
‘‘SEC. 201A. DEFINITIONS.
‘‘In this Act:
‘‘(1) ADDITIONAL
COMMODITIES.—The term
‘additional commodities’ means commodities made
available under section 214 in addition to the com-
modities made available under sections 202 and
203D.
‘‘(2) AVERAGE MONTHLY NUMBER OF UNEM-
PLOYED
PERSONS.—The term ‘average monthly
number of unemployed persons’ means the average
monthly 
number 
of 
unemployed
persons in each State in the most recent fiscal year
for which information concerning the number of un-
employed persons is available, as determined by the
Bureau of Labor Statistics of the Department of
Labor.
‘‘(3) ELIGIBLE RECIPIENT AGENCY.—The term
‘eligible recipient agency’ means a public or non-
profit organization—
109
‘‘(A) that administers—
‘‘(i) an emergency feeding organiza-
tion;
‘‘(ii) a charitable institution (including
a hospital and a retirement home, but ex-
cluding a penal institution) to the extent
that the institution serves needy persons;
‘‘(iii) a summer camp for children, or
a child nutrition program providing food
service;
‘‘(iv) a nutrition project operating
under the Older Americans Act of 1965
(42 U.S.C. 3001 et seq.), including a
project that operates a congregate nutri-
tion site and a project that provides home-
delivered meals; or
‘‘(v) a disaster relief program;
‘‘(B) that has been designated by the ap-
propriate State agency, or by the Secretary;
and
‘‘(C) that has been approved by the Sec-
retary for participation in the program estab-
lished under this Act.
‘‘(4) EMERGENCY
FEEDING
ORGANIZATION.—
The term ‘emergency feeding organization’ means a
110
public or nonprofit organization that administers ac-
tivities and projects (including the activities and
projects of a charitable institution, a food bank, a
food pantry, a hunger relief center, a soup kitchen,
or a similar public or private nonprofit eligible recip-
ient agency) providing nutrition assistance to relieve
situations of emergency and distress through the
provision of food to needy persons, including low-in-
come and unemployed persons.
‘‘(5) FOOD
BANK.—The term ‘food bank’
means a public or charitable institution that main-
tains an established operation involving the provision
of food or edible commodities, or the products of
food or edible commodities, to food pantries, soup
kitchens, hunger relief centers, or other food or feed-
ing centers that, as an integral part of their normal
activities, provide meals or food to feed needy per-
sons on a regular basis.
‘‘(6) FOOD PANTRY.—The term ‘food pantry’
means a public or private nonprofit organization
that distributes food to low-income and unemployed
households, including food from sources other than
the Department of Agriculture, to relieve situations
of emergency and distress.
111
‘‘(7) POVERTY LINE.—The term ‘poverty line’
has the same meaning given the term in section
673(2) of the Community Services Block Grant Act
(42 U.S.C. 9902(2)).
‘‘(8) SOUP KITCHEN.—The term ‘soup kitchen’
means a public or charitable institution that, as an
integral part of the normal activities of the institu-
tion, maintains an established feeding operation to
provide food to needy homeless persons on a regular
basis.
‘‘(9) TOTAL VALUE OF ADDITIONAL COMMOD-
ITIES.—The term ‘total value of additional commod-
ities’ means the actual cost of all additional com-
modities made available under section 214 that are
paid by the Secretary (including the distribution and
processing costs incurred by the Secretary).
‘‘(10) VALUE
OF
ADDITIONAL
COMMODITIES
ALLOCATED TO EACH STATE.—The term ‘value of
additional commodities allocated to each State’
means the actual cost of additional commodities
made available under section 214 and allocated to
each State that are paid by the Secretary (including
the distribution and processing costs incurred by the
Secretary).’’.
112
(b) STATE PLAN.—Section 202A of the Act (7 U.S.C.
612c note) is amended to read as follows:
‘‘SEC. 202A. STATE PLAN.
‘‘(a) IN GENERAL.—To receive commodities under
this Act, a State shall submit a plan of operation and ad-
ministration every 4 years to the Secretary for approval.
The plan may be amended at any time, with the approval
of the Secretary.
‘‘(b) REQUIREMENTS.—Each plan shall—
‘‘(1) designate the State agency responsible for
distributing the commodities received under this Act;
‘‘(2) set forth a plan of operation and adminis-
tration to expeditiously distribute commodities under
this Act;
‘‘(3) set forth the standards of eligibility for re-
cipient agencies; and
‘‘(4) set forth the standards of eligibility for in-
dividual or household recipients of commodities,
which shall require—
‘‘(A) individuals or households to be com-
prised of needy persons; and
‘‘(B) individual or household members to
be residing in the geographic location served by
the distributing agency at the time of applying
for assistance.
113
‘‘(c) STATE ADVISORY BOARD.—The Secretary shall
encourage each State receiving commodities under this Act
to establish a State advisory board consisting of represent-
atives of all interested entities, both public and private,
in the distribution of commodities received under this Act
in the State.’’.
(c) AUTHORIZATION OF APPROPRIATIONS FOR AD-
MINISTRATIVE FUNDS.—Section 204(a)(1) of the Act (7
U.S.C. 612c note) is amended—
(1) in the first sentence by striking ‘‘for State
and local’’ and all that follows through ‘‘under this
title’’ and inserting ‘‘to pay for the direct and indi-
rect administrative costs of the State related to the
processing, transporting, and distributing to eligible
recipient agencies of commodities provided by the
Secretary under this Act and commodities secured
from other sources’’; and
(2) by striking the fourth sentence.
(d) DELIVERY OF COMMODITIES.—Section 214 of the
Act (7 U.S.C. 612c note) is amended—
(1) by striking subsections (a) through (e) and
(j);
(2) by redesignating subsections (f) through (i)
as subsections (a) through (d), respectively;
114
(3) in subsection (b), as redesignated by para-
graph (2)—
(A) in the first sentence, by striking ‘‘sub-
section (f) or subsection (j) if applicable,’’ and
inserting ‘‘subsection (a)’’; and
(B) in the second sentence, by striking
‘‘subsection (f)’’ and inserting ‘‘subsection (a)’’;
(4) by striking subsection (c), as redesignated
by paragraph (2), and inserting the following:
‘‘(c) ADMINISTRATION.—
‘‘(1) IN GENERAL.—Commodities made avail-
able for each fiscal year under this section shall be
delivered at reasonable intervals to States based on
the grants calculated under subsection (a), or reallo-
cated under subsection (b), before December 31 of
the following fiscal year.
‘‘(2) ENTITLEMENT.—Each State shall be enti-
tled to receive the value of additional commodities
determined under subsection (a).’’; and
(5) in subsection (d), as redesignated by para-
graph (2), by striking ‘‘or reduce’’ and all that fol-
lows through ‘‘each fiscal year’’.
(e) TECHNICAL AMENDMENTS.—The Act (7 U.S.C.
612c note) is amended—
115
(1) in the first sentence of section 203B(a), by
striking ‘‘203 and 203A of this Act’’ and inserting
‘‘203A’’;
(2) in section 204(a), by striking ‘‘title’’ each
place it appears and inserting ‘‘Act’’;
(3) in the first sentence of section 210(e), by
striking ‘‘(except as otherwise provided for in section
214(j))’’; and
(4) by striking section 212.
(f) REPORT ON EFAP.—Section 1571 of the Food
Security Act of 1985 (Public Law 99–198; 7 U.S.C. 612c
note) is repealed.
(g) AVAILABILITY
OF COMMODITIES UNDER
THE
FOOD STAMP PROGRAM.—The Food Stamp Act of 1977
(7 U.S.C. 2011 et seq.), as amended by sections 1062 and
1063, is amended by adding at the end the following:
‘‘SEC. 28. AVAILABILITY OF COMMODITIES FOR THE EMER-
GENCY FOOD ASSISTANCE PROGRAM.
‘‘(a) PURCHASE OF COMMODITIES.—From amounts
appropriated under this Act, for each of fiscal years 1997
through 2002, the Secretary shall purchase $300,000,000
of a variety of nutritious and useful commodities of the
types that the Secretary has the authority to acquire
through the Commodity Credit Corporation or under sec-
tion 32 of the Act entitled ‘An Act to amend the Agricul-
116
tural Adjustment Act, and for other purposes’, approved
August 24, 1935 (7 U.S.C. 612c), and distribute the com-
modities to States for distribution in accordance with sec-
tion 214 of the Emergency Food Assistance Act of 1983
(Public Law 98–8; 7 U.S.C. 612c note).
‘‘(b) BASIS FOR COMMODITY PURCHASES.—In pur-
chasing commodities under subsection (a), the Secretary
shall, to the extent practicable and appropriate, make pur-
chases based on—
‘‘(1) agricultural market conditions;
‘‘(2) preferences and needs of States and dis-
tributing agencies; and
‘‘(3) preferences of recipients.’’.
(h) EFFECTIVE DATE.—The amendments made by
subsection (d) shall become effective on October 1, 1996.
SEC. 1072. FOOD BANK DEMONSTRATION PROJECT.
Section 3 of the Charitable Assistance and Food
Bank Act of 1987 (Public Law 100–232; 7 U.S.C. 612c
note) is repealed.
SEC. 1073. HUNGER PREVENTION PROGRAMS.
The Hunger Prevention Act of 1988 (Public Law
100–435; 7 U.S.C. 612c note) is amended—
(1) by striking section 110;
(2) by striking subtitle C of title II; and
(3) by striking section 502.
117
SEC. 1074. REPORT ON ENTITLEMENT COMMODITY PROC-
ESSING.
Section 1773 of the Food, Agriculture, Conservation,
and Trade Act of 1990 (Public Law 101–624; 7 U.S.C.
612c note) is amended by striking subsection (f).
Subtitle C—Electronic Benefit
Transfer Systems
SEC. 1091. PROVISIONS TO ENCOURAGE ELECTRONIC BEN-
EFIT TRANSFER SYSTEMS.
Section 904 of the Electronic Fund Transfer Act (15
U.S.C. 1693b) is amended—
(1) by striking ‘‘(d) In the event’’ and inserting
‘‘(d) 
APPLICABILITY
TO
SERVICE
PROVIDERS
OTHER
THAN
CERTAIN
FINANCIAL
INSTITU-
TIONS.—
‘‘(1) IN GENERAL.—In the event’’; and
(2) by adding at the end the following new
paragraph:
‘‘(2) STATE AND LOCAL GOVERNMENT ELEC-
TRONIC BENEFIT TRANSFER PROGRAMS.—
‘‘(A) EXEMPTION
GENERALLY.—The dis-
closures, protections, responsibilities, and rem-
edies established under this title, and any regu-
lation prescribed or order issued by the Board
in accordance with this title, shall not apply to
any electronic benefit transfer program estab-
118
lished under State or local law or administered
by a State or local government.
‘‘(B) EXCEPTION
FOR
DIRECT
DEPOSIT
INTO
RECIPIENT’S
ACCOUNT.—Subparagraph
(A) shall not apply with respect to any elec-
tronic funds transfer under an electronic benefit
transfer program for deposits directly into a
consumer account held by the recipient of the
benefit.
‘‘(C) RULE OF CONSTRUCTION.—No provi-
sion of this paragraph may be construed as—
‘‘(i) affecting or altering the protec-
tions otherwise applicable with respect to
benefits established by Federal, State, or
local law; or
‘‘(ii) otherwise superseding the appli-
cation of any State or local law.
‘‘(D) ELECTRONIC
BENEFIT
TRANSFER
PROGRAM
DEFINED.—For purposes of this
paragraph, the term ‘electronic benefit transfer
program’—
‘‘(i) means a program under which a
government agency distributes needs-tested
benefits by establishing accounts to be
accessed by recipients electronically, such
119
as through automated teller machines, or
point-of-sale terminals; and
‘‘(ii) does not include employment-re-
lated payments, including salaries and pen-
sion, retirement, or unemployment benefits
established by Federal, State, or local gov-
ernments.’’.
TITLE II—COMMITTEE ON
COMMERCE
TABLE OF CONTENTS OF TITLE
Subtitle A—Restructuring Medicaid
Sec. 2001. Short title of subtitle.
Sec. 2002. Finding; goals for medicaid restructuring.
Sec. 2003. Restructuring the medicaid program.
‘‘Sec. 1500. Purpose; State plans.
‘‘PART A—ELIGIBILITY AND BENEFITS
‘‘Sec. 1501. Guaranteed eligibility and benefits.
‘‘Sec. 1502. Other provisions relating to eligibility and benefits.
‘‘Sec. 1503. Limitations on premiums and cost-sharing.
‘‘Sec. 1504. Description of process for developing capitation payment
rates.
‘‘Sec. 1505. Preventing spousal impoverishment.
‘‘Sec. 1506. Preventing family impoverishment.
‘‘Sec. 1507. State flexibility.
‘‘Sec. 1508. Private rights of action.
‘‘PART B—PAYMENTS TO STATES
‘‘Sec. 1511. Allotment of funds among States.
‘‘Sec. 1512. Payments to States.
‘‘Sec. 1513. Limitation on use of funds; disallowance.
‘‘PART C—ESTABLISHMENT AND AMENDMENT OF STATE PLANS
‘‘Sec. 1521. Description of strategic objectives and performance goals.
‘‘Sec. 1522. Annual reports.
‘‘Sec. 1523. Periodic, independent evaluations.
‘‘Sec. 1524. Description of process for State plan development.
‘‘Sec. 1525. Consultation in State plan development.
‘‘Sec. 1526. Submittal and approval of State plans.
‘‘Sec. 1527. Submittal and approval of plan amendments.
‘‘Sec. 1528. Process for State withdrawal from program.
120
‘‘Sec. 1529. Sanctions for noncompliance.
‘‘Sec. 1530. Secretarial authority.
‘‘PART D—PROGRAM INTEGRITY AND QUALITY
‘‘Sec. 1551. Use of audits to achieve fiscal integrity.
‘‘Sec. 1552. Fraud prevention program.
‘‘Sec. 1553. Information concerning sanctions taken by State licensing au-
thorities against health care practitioners and providers.
‘‘Sec. 1554. State fraud control units.
‘‘Sec. 1555. Recoveries from third parties and others.
‘‘Sec. 1556. Assignment of rights of payment.
‘‘Sec. 1557. Quality assurance requirements for nursing facilities.
‘‘Sec. 1558. Other provisions promoting program integrity.
‘‘PART E—GENERAL PROVISIONS
‘‘Sec. 1571. Definitions.
‘‘Sec. 1572. Treatment of territories.
‘‘Sec. 1573. Description of treatment of Indian Health Service facilities.
‘‘Sec. 1574. Application of certain general provisions.
‘‘Sec. 1575. Optional master drug rebate agreements.
Sec. 2004. State election; termination of current program; and transition.
Sec. 2005. Integration demonstration project.
Subtitle B—Other Provisions
PART 1—INVOLVEMENT OF COMMERCE COMMITTEE IN FEDERAL
GOVERNMENT POSITION REDUCTIONS
Sec. 2101. Involvement of Commerce Committee in Federal government posi-
tion reductions.
PART 2—RESTRICTING PUBLIC BENEFITS FOR ALIENS
SUBPART A—ELIGIBILITY FOR FEDERAL BENEFITS
Sec. 2211. Aliens who are not qualified aliens ineligible for Federal public bene-
fits.
Sec. 2212. Limited eligibility of qualified aliens for medical assistance.
Sec. 2213. Five-year limited eligibility of qualified aliens for Federal means-
tested public benefit.
Sec. 2214. Notification.
SUBPART B—GENERAL PROVISIONS
Sec. 2221. Definitions.
Sec. 2222. Verification of eligibility for Federal public benefits.
PART 3—ENERGY ASSISTANCE
Sec. 2131. Energy assistance.
121
Subtitle A—Restructuring
Medicaid
SEC. 2001. SHORT TITLE OF SUBTITLE.
This subtitle may be cited as the ‘‘Medicaid Restruc-
turing Act of 1996’’.
SEC. 2002. FINDING; GOALS FOR MEDICAID RESTRUCTUR-
ING.
(a) FINDING.—The Congress finds that the National
Governors’ Association on February 6, 1996, adopted
unanimously and on a bipartisan basis goals to guide the
restructuring of the medicaid program.
(b) GOALS FOR RESTRUCTURING.—The following are
the 4 primary goals so adopted:
(1) The basic health care needs of the nation’s
most vulnerable populations must be guaranteed.
(2) The growth in health care expenditures
must be brought under control.
(3) States must have maximum flexibility in the
design and implementation of cost-effective systems
of care.
(4) States must be protected from unantici-
pated program costs resulting from economic fluc-
tuations in the business cycle, changing demo-
graphics, and natural disasters.
122
SEC. 2003. RESTRUCTURING THE MEDICAID PROGRAM.
The Social Security Act is amended by inserting after
title XIV the following new title:
‘‘TITLE XV—PROGRAM OF MEDICAL ASSIST-
ANCE FOR LOW-INCOME INDIVIDUALS AND
FAMILIES
‘‘TABLE OF CONTENTS OF TITLE
‘‘Sec. 1500. Purpose; State plans.
‘‘PART A—ELIGIBILITY AND BENEFITS
‘‘Sec. 1501. Guaranteed eligibility and benefits.
‘‘Sec. 1502. Other provisions relating to eligibility and benefits.
‘‘Sec. 1503. Limitations on premiums and cost-sharing.
‘‘Sec. 1504. Description of process for developing capitation payment rates.
‘‘Sec. 1505. Preventing spousal impoverishment.
‘‘Sec. 1506. Preventing family impoverishment.
‘‘Sec. 1507. State flexibility.
‘‘Sec. 1508. Private rights of action.
‘‘PART B—PAYMENTS TO STATES
‘‘Sec. 1511. Allotment of funds among States.
‘‘Sec. 1512. Payments to States.
‘‘Sec. 1513. Limitation on use of funds; disallowance.
‘‘PART C—ESTABLISHMENT AND AMENDMENT OF STATE PLANS
‘‘Sec. 1521. Description of strategic objectives and performance goals.
‘‘Sec. 1522. Annual reports.
‘‘Sec. 1523. Periodic, independent evaluations.
‘‘Sec. 1524. Description of process for State plan development.
‘‘Sec. 1525. Consultation in State plan development.
‘‘Sec. 1526. Submittal and approval of State plans.
‘‘Sec. 1527. Submittal and approval of plan amendments.
‘‘Sec. 1528. Process for State withdrawal from program.
‘‘Sec. 1529. Sanctions for noncompliance.
‘‘Sec. 1530. Secretarial authority.
‘‘PART D—PROGRAM INTEGRITY AND QUALITY
‘‘Sec. 1551. Use of audits to achieve fiscal integrity.
‘‘Sec. 1552. Fraud prevention program.
‘‘Sec. 1553. Information concerning sanctions taken by State licensing authori-
ties against health care practitioners and providers.
‘‘Sec. 1554. State fraud control units.
‘‘Sec. 1555. Recoveries from third parties and others.
‘‘Sec. 1556. Assignment of rights of payment.
‘‘Sec. 1557. Quality assurance requirements for nursing facilities.
123
‘‘Sec. 1558. Other provisions promoting program integrity.
‘‘PART E—GENERAL PROVISIONS
‘‘Sec. 1571. Definitions.
‘‘Sec. 1572. Treatment of territories.
‘‘Sec. 1573. Description of treatment of Indian Health Service facilities.
‘‘Sec. 1574. Application of certain general provisions.
‘‘Sec. 1575. Optional master drug rebate agreements.
‘‘SEC. 1500. PURPOSE; STATE PLANS.
‘‘(a) PURPOSE.—The purpose of this title is to pro-
vide funds to States to enable them to provide medical
assistance to low-income individuals and families in a
more effective, efficient, and responsive manner.
‘‘(b) STATE PLAN REQUIRED.—A State is not eligible
for payment under section 1512 unless the State has sub-
mitted to the Secretary under part C a plan (in this title
referred to as a ‘State plan’) that—
‘‘(1) sets forth how the State intends to use the
funds provided under this title to provide medical as-
sistance to needy individuals and families consistent
with the provisions of this title, and
‘‘(2) is approved under such part.
‘‘(c) CONTINUED APPROVAL.—An approved State
plan shall continue in effect unless and until—
‘‘(1) the State amends the plan under section
1527,
‘‘(2) the State terminates participation under
this title under section 1528, or
124
‘‘(3) the Secretary finds substantial noncompli-
ance of the plan with the requirements of this title
under section 1529.
‘‘(d) STATE ENTITLEMENT.—This title constitutes
budget authority in advance of appropriations Acts and
represents the obligation of the Federal Government to
provide for the payment to States of amounts provided
under part B.
‘‘(e) EFFECTIVE DATE.—No State is eligible for pay-
ments under section 1512 for any calendar quarter begin-
ning before October 1, 1996.
‘‘PART A—ELIGIBILITY AND BENEFITS
‘‘SEC. 1501. GUARANTEED ELIGIBILITY AND BENEFITS.
‘‘(a) GUARANTEED COVERAGE AND BENEFITS FOR
CERTAIN POPULATIONS.—
‘‘(1) IN GENERAL.—Each State plan shall pro-
vide for making medical assistance available for ben-
efits in the guaranteed benefit package (as defined
in paragraph (2)) to individuals within each of the
following categories:
‘‘(A) POOR PREGNANT WOMEN.—Pregnant
women with family income below 133 percent of
the poverty line.
125
‘‘(B) 
CHILDREN
UNDER
6.—Children
under 6 years of age whose family income does
not exceed 133 percent of the poverty line.
‘‘(C) CHILDREN 6 TO 19.—Children born
after September 30, 1983, who are over 5 years
of age, but under 19 years of age, whose family
income does not exceed 100 percent of the pov-
erty line.
‘‘(D) DISABLED INDIVIDUALS.—As elected
by the State under paragraph (3), either—
‘‘(i) disabled individuals (as defined
by the State) who meet the income and re-
source standards established under the
plan, or
‘‘(ii) individuals who are under 65
years of age, who are disabled (as deter-
mined under section 1614(a)(3)), and who,
using the methodology provided for deter-
mining eligibility for payment of supple-
mental security income benefits under title
XVI, meet the income and resource stand-
ards for payment of such benefits.
‘‘(E) POOR ELDERLY INDIVIDUALS.—Sub-
ject to paragraph (4), elderly individuals who,
using the methodology provided for determining
126
eligibility for payment of supplemental security
income benefits under title XVI, meet the in-
come and resource standards for payment of
such benefits.
‘‘(F) CHILDREN RECEIVING FOSTER CARE
OR
ADOPTION
ASSISTANCE.—Subject to para-
graph (5), children who meet the requirements
for receipt of foster care maintenance payments
or adoption assistance under title IV.
‘‘(G) CERTAIN
LOW-INCOME
FAMILIES.—
Subject to paragraph (6), individuals and mem-
bers of families who meet current AFDC in-
come and resource standards (as defined in
paragraph (6)(C)) in the State, determined
using the methodology for determining eligi-
bility for aid under the State plan under part
A or part E of title IV (as in effect as of May
1, 1996).
‘‘(2) GUARANTEED
BENEFITS
PACKAGE.—In
this title, the term ‘guaranteed benefit package’
means benefits (in an amount, duration, and scope
specified under the State plan) for at least the fol-
lowing categories of services:
‘‘(A) Inpatient and outpatient hospital
services.
127
‘‘(B) Physicians’ surgical and medical serv-
ices.
‘‘(C) Laboratory and x-ray services.
‘‘(D) Nursing facility services.
‘‘(E) Home health care.
‘‘(F) Federally-qualified health center serv-
ices and rural health clinic services.
‘‘(G) Immunizations for children (in ac-
cordance with a schedule for immunizations es-
tablished by the Health Department of the
State in consultation with the State agency re-
sponsible for the administration of the plan).
‘‘(H) Prepregnancy family planning serv-
ices and supplies (as specified by the State).
‘‘(I) Prenatal care.
‘‘(J) Physician assistance services, pedi-
atric and family nurse practitioner services and
nurse midwife services.
‘‘(K) EPSDT services (as defined in sec-
tion 1571(e)) for individuals who are under the
age of 21.
A State may establish criteria, including utilization
review, and cost effectiveness of alternative covered
services, for purposes of specifying the amount, du-
128
ration, and scope of benefits provided under the
State plan.
‘‘(3) STATE ELECTION OF DISABLED INDIVID-
UALS TO BE GUARANTEED COVERAGE.—
‘‘(A) IN
GENERAL.—Each State shall
specify in its State plan, before the beginning of
each Federal fiscal year, whether to guarantee
coverage of disabled individuals under the plan
under the option described in paragraph
(1)(D)(i) or under the option described in para-
graph (1)(D)(ii). An election under this para-
graph shall continue in effect for the subse-
quent fiscal year unless the election is changed
before the beginning of the fiscal year.
‘‘(B) CONSEQUENCES OF ELECTION.—
‘‘(i) STATE FLEXIBLE DEFINITION OP-
TION.—If a State elects the option de-
scribed in paragraph (1)(D)(i) for a fiscal
year—
‘‘(I) the State plan must provide
under section 1502(c) for a set aside
of funds for disabled individuals for
the fiscal year, and
‘‘(II) disabled individuals are not
taken into account in determining a
129
State supplemental umbrella allotment
under section 1511(g).
‘‘(ii) SSI DEFINITION OPTION.—If a
State elects the option described in para-
graph (1)(D)(ii) for a fiscal year—
‘‘(I) section 1502(c) shall not
apply for the fiscal year, and
‘‘(II) the State is eligible for an
increase under section 1511(g) in its
outlay allotment for the fiscal year
based on an increase in the number of
guaranteed and optional disabled indi-
viduals covered under the plan.
‘‘(4) CONTINUATION OF SPECIAL ELIGIBILITY
STANDARDS FOR SECTION 209(b) STATES.—
‘‘(A) IN
GENERAL.—A section 209(b)
State (as defined in subparagraph (B)) may
elect to treat any reference in paragraph (1)(E)
to ‘elderly individuals who meet the income and
resource standards for the payment of supple-
mental security income benefits under title
XVI’ as a reference to ‘elderly individuals who
meet the standards described in the first sen-
tence of section 1902(f) (as in effect on the day
before the date of the enactment of this title)’.
130
‘‘(B) SECTION 209(b) STATE DEFINED.—
In subparagraph (A), the term ‘section 209(b)
State’ means a State to which section 1902(f)
applied as of the day before the date of the en-
actment of this title.
‘‘(5) OPTION FOR APPLICATION OF CURRENT
REQUIREMENTS FOR CERTAIN CHILDREN.—A State
may elect to apply paragraph (1)(F) by treating any
reference to ‘requirements for receipt of foster care
maintenance payments or adoption assistance under
title IV’ as a reference to ‘requirements for receipt
of foster care maintenance payments or adoption as-
sistance as in effect under its State plan under part
E of title IV as of the date of the enactment of this
title’.
‘‘(6) SPECIAL RULES FOR LOW-INCOME FAMI-
LIES.—
‘‘(A) OPTIONAL USE OF LOWER NATIONAL
AVERAGE STANDARDS.—In the case of a State
in which the current AFDC income and re-
source standards are above the national average
of the current AFDC income and resource
standards for the 50 States and the District of
Columbia, as determined and published by the
Secretary, in applying paragraph (1)(G), the
131
State may elect to substitute such national av-
erage income and resource standards for the
current AFDC income and resource standards
in that State.
‘‘(B) OPTIONAL
ELIGIBILITY
BASED
ON
LINK TO OTHER ASSISTANCE.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), in the case of a State which maintains
a link between eligibility for aid or assist-
ance under one or more parts of title IV
and eligibility for medical assistance under
this title, in applying paragraph (1)(G),
the State may elect to treat any reference
in such paragraph to ‘individuals and
members of families who meet current
AFDC income and resource standards in
the State’ as a reference to ‘members of
families who are receiving assistance under
a State plan under part A or E of title
IV’.
‘‘(ii) LIMITATION
ON
ELECTION.—A
State may only make the election described
in clause (i) if, and so long as, the State
demonstrates to the satisfaction of the Sec-
retary that the such election does not re-
132
sult in Federal expenditures under this
title (taking into account any supplemental
amounts provided pursuant to section
1511(g)) that are greater than the Federal
expenditures that would have been made
under this title if the State had not made
such election.
‘‘(C) CURRENT
AFDC
INCOME
AND
RE-
SOURCE
STANDARDS
DEFINED.—In this sub-
section, the term ‘current AFDC income and
resource standards’ means, with respect to a
State, the income and resource standards for
the payment of assistance under the State plan
under part A or E of title IV (as in effect as
of May 1, 1996).
‘‘(D) MEDICAL ASSISTANCE REQUIRED TO
BE PROVIDED FOR 1 YEAR FOR FAMILIES BE-
COMING INELIGIBLE FOR FAMILY ASSISTANCE
DUE TO INCREASED EARNINGS FROM EMPLOY-
MENT OR COLLECTION OF CHILD SUPPORT.—A
State plan shall provide that if any family be-
comes ineligible to receive assistance under the
State program funded under part A of title IV
as a result of increased earnings from employ-
ment or as a result of the collection or in-
133
creased collection of child or spousal support, or
a combination thereof, having received such as-
sistance in at least 3 of the 6 months imme-
diately preceding the month in which such ineli-
gibility begins, the family shall be eligible for
medical assistance under the State plan during
the immediately succeeding 12-month period for
so long as family income is less than the pov-
erty line, and that the family will be appro-
priately notified of such eligibility.
‘‘(7) METHODOLOGY.—Family income shall be
determined for purposes of subparagraphs (A)
through (C) of paragraph (1) in the same manner
(and using the same methodology) as income was
determined under the State medicaid plan under sec-
tion 1902(l) (as in effect as of May 1, 1996).
‘‘(b) GUARANTEED COVERAGE OF MEDICARE PRE-
MIUMS
AND COST-SHARING
FOR CERTAIN MEDICARE
BENEFICIARIES.—
‘‘(1) GUARANTEED
ELIGIBILITY.—Each State
plan shall provide—
‘‘(A) for making medical assistance avail-
able for required medicare cost-sharing (as de-
fined in paragraph (2)) for qualified medicare
beneficiaries described in paragraph (3);
134
‘‘(B) for making medical assistance avail-
able for payment of medicare premiums under
section 1818A for qualified disabled and work-
ing individuals described in paragraph (4); and
‘‘(C) for making medical assistance avail-
able for payment of medicare premiums under
section 1839 for individuals who would be quali-
fied medicare beneficiaries described in para-
graph (3) but for the fact that their income ex-
ceeds 100 percent, but is less than 120 percent,
of the poverty line for a family of the size in-
volved.
‘‘(2) REQUIRED MEDICARE COST-SHARING DE-
FINED.—
‘‘(A) IN GENERAL.—In this subsection, the
term ‘required medicare cost-sharing’ means,
with respect to an individual, costs incurred for
medicare cost-sharing described in paragraphs
(1) through (4) of section 1571(c) (and, at the
option of a State, section 1571(c)(5)) without
regard to whether the costs incurred were for
items and services for which medical assistance
is otherwise available under the plan.
‘‘(B) LIMITATION
ON
OBLIGATION
FOR
CERTAIN
COST-SHARING
ASSISTANCE.—In the
135
case of medical assistance furnished under this
title for medicare cost-sharing described in
paragraph (2), (3), or (4) of section 1571(c) re-
lating to the furnishing of a service or item to
a medicare beneficiary, nothing in this title
shall be construed as preventing a State plan—
‘‘(i) from limiting the assistance to
the amount (if any) by which (I) the
amount that is otherwise payable under
the plan for the item or service for eligible
individuals who are not such medicare
beneficiaries (or, if payments for such
items or services are made on a capitated
basis, an amount reasonably related or de-
rived 
from 
such 
capitated 
payment
amount), exceeds (II) the amount of pay-
ment (if any) made under title XVIII with
respect to the service or item, and
‘‘(ii) if the amount described in sub-
clause (II) of clause (i) exceeds the amount
described in subclause (I) of such clause,
from treating the amount paid under title
XVIII as payment in full and not requiring
or providing for any additional medical as-
sistance under this subsection.
136
‘‘(3) QUALIFIED MEDICARE BENEFICIARY DE-
FINED.—In this subsection, the term ‘qualified med-
icare beneficiary’ means an individual—
‘‘(A) who is entitled to hospital insurance
benefits under part A of title XVIII (including
an individual entitled to such benefits pursuant
to an enrollment under section 1818, but not
including an individual entitled to such benefits
only pursuant to an enrollment under section
1818A),
‘‘(B) whose income (as determined under
section 1612 for purposes of the supplemental
security income program, except as provided in
paragraph (5)) does not exceed 100 percent of
the poverty line applicable to a family of the
size involved, and
‘‘(C) whose resources (as determined under
section 1613 for purposes of the supplemental
security income program) do not exceed twice
the maximum amount of resources that an indi-
vidual may have and obtain benefits under that
program.
‘‘(4) QUALIFIED DISABLED AND WORKING INDI-
VIDUAL
DEFINED.—In this subsection, the term
137
‘qualified disabled and working individual’ means an
individual—
‘‘(A) who is entitled to enroll for hospital
insurance benefits under part A of title XVIII
under section 1818A;
‘‘(B) whose income (as determined under
section 1612 for purposes of the supplemental
security income program) does not exceed 200
percent of the poverty line applicable to a fam-
ily of the size involved;
‘‘(C) whose resources (as determined under
section 1613 for purposes of the supplemental
security income program) do not exceed twice
the maximum amount of resources that an indi-
vidual or a couple (in the case of an individual
with a spouse) may have and obtain benefits for
supplemental security income benefits under
title XVI; and
‘‘(D) who is not otherwise eligible for med-
ical assistance under this title.
‘‘(5) INCOME DETERMINATIONS.—
‘‘(A) IN GENERAL.—In determining under
this subsection the income of an individual who
is entitled to monthly insurance benefits under
title II for a transition month (as defined in
138
subparagraph (B)) in a year, such income shall
not include any amounts attributable to an in-
crease in the level of monthly insurance benefits
payable under such title which have occurred
pursuant to section 215(i) for benefits payable
for months beginning with December of the
previous year.
‘‘(B) TRANSITION MONTH DEFINED.—For
purposes of subparagraph (A), the term ‘transi-
tion month’ means each month in a year
through the month following the month in
which the annual revision of the poverty line is
published.
‘‘SEC. 1502. OTHER PROVISIONS RELATING TO ELIGIBILITY
AND BENEFITS.
‘‘(a) OPTIONAL ELIGIBILITY GROUPS FOR WHICH
UMBRELLA SUPPLEMENTAL FUNDING IS AVAILABLE.—
In addition to the guaranteed coverage categories de-
scribed in section 1501(a)(1), the following are population
groups with respect to which supplemental allotments may
be made under section 1511(g), but only if (for the indi-
vidual involved) medical assistance is made available under
the State plan for the guaranteed benefit package (as de-
fined in section 1501(a)(2)):
139
‘‘(1) CERTAIN DISABLED INDIVIDUALS.—Indi-
viduals (not described in section 1501(a)(1)(D)(ii))
who are disabled (as determined under section
1614(a)(3)), covered under the State plan, and meet
the eligibility standards for coverage under the State
medicaid plan under title XIX (as in effect as of
May 1, 1996).
‘‘(2) CERTAIN ELDERLY INDIVIDUALS.—Elderly
individuals (not described in section 1501(a)(1)(E))
who are covered under the State plan and who meet
the eligibility standards for coverage under the State
medicaid plan under title XIX (as in effect as of
May 1, 1996) other than solely on the basis of being
an individual described in section 1902(a)(10)(E).
Eligibility under paragraphs (1) and (2) shall be deter-
mined using the methodologies that are not more restric-
tive than the methodologies used under the State medicaid
plan as in effect as of May 1, 1996.
‘‘(b) OTHER PROVISIONS RELATING TO GENERAL
ELIGIBILITY AND BENEFITS.—
‘‘(1) GENERAL DESCRIPTION.—Each State plan
shall include a description (consistent with this title)
of the following:
‘‘(A) ELIGIBILITY
GUIDELINES
FOR
THE
NON-GUARANTEED, 
NON-UMBRELLA
POPU-
140
LATION.—The general eligibility guidelines of
the plan for eligible low-income individuals who
are not covered under subsection (a) or (b) of
section 1501 or under subsection (a) of this
section.
‘‘(B) 
SCOPE
OF
ASSISTANCE.—The
amount, duration, and scope of health care
services and items covered under the plan, in-
cluding differences among different eligible pop-
ulation groups.
‘‘(C) DELIVERY
METHOD.—The State’s
approach to delivery of medical assistance, in-
cluding a general description of—
‘‘(i) the use (or intended use) of
vouchers, fee-for-service, or managed care
arrangements (such as capitated health
care plans, case management, and case co-
ordination); and
‘‘(ii) utilization control systems.
‘‘(D) FEE-FOR-SERVICE
BENEFITS.—To
the extent that medical assistance is furnished
on a fee-for-service basis—
‘‘(i) how the State determines the
qualifications of health care providers eligi-
ble to provide such assistance; and
141
‘‘(ii) how the State determines rates
of reimbursement for providing such as-
sistance.
‘‘(E) COST-SHARING.—Beneficiary cost-
sharing (if any), including variations in such
cost-sharing by population group or type of
service and financial responsibilities of parents
of recipients who are children and the spouses
of recipients.
‘‘(F) UTILIZATION
INCENTIVES.—Incen-
tives or requirements (if any) to encourage the
appropriate utilization of services.
‘‘(G) 
SUPPORT
FOR
CERTAIN
HOS-
PITALS.—
‘‘(i) IN
GENERAL.—With respect to
hospitals described in clause (ii) located in
the State, a description of the extent to
which provisions are made for expenditures
for items and services furnished by such
hospitals and covered under the State plan.
‘‘(ii) HOSPITALS DESCRIBED.—A hos-
pital described in this clause is a short-
term acute care general hospital or a chil-
dren’s hospital, the low-income utilization
rate of which exceeds the lesser of—
142
‘‘(I) 1 standard deviation above
the mean low-income utilization rate
for hospitals receiving payments under
a State plan in the State in which
such hospital is located, or
‘‘(II) 11⁄4
standard deviations
above the mean low-income utilization
rate for hospitals receiving such pay-
ments in the 50 States and the Dis-
trict of Columbia.
‘‘(iii) 
LOW-INCOME
UTILIZATION
RATE.—For purposes of clause (ii), the
term ‘low-income utilization rate’ means,
for a hospital, a fraction (expressed as a
percentage), the numerator of which is the
hospital’s number of patient days attrib-
utable to patients who (for such days) were
eligible for medical assistance under a
State plan or were uninsured in a period,
and the denominator of which is the total
number of the hospital’s patient days in
that period.
‘‘(iv) PATIENT
DAYS.—For purposes
of clause (iii), the term ‘patient day’ in-
cludes each day in which—
143
‘‘(I) an individual, including a
newborn, is an inpatient in the hos-
pital, whether or not the individual is
in a specialized ward and whether or
not the individual remains in the hos-
pital for lack of suitable placement
elsewhere; or
‘‘(II) an individual makes one or
more outpatient visits to the hospital.
‘‘(2) CONDITIONS FOR GUARANTEES AND RELA-
TION OF GUARANTEES TO FINANCING.—The guaran-
tees of States required under subsections (a) and (b)
of section 1501 and subsection (d) of this section
are subject to the limitations on payment to the
States provided under section 1511 (including the
provisions of subsection (g), relating to supplemental
umbrella allotments). In submitting a plan under
this title, a State voluntarily agrees to accept pay-
ment amounts provided under such section as full
payment from the Federal Government in return for
providing for the benefits (including the guaranteed
benefit package) under this title.
‘‘(3) SECONDARY PAYMENT.—Nothing in this
section shall be construed as preventing a State
from denying benefits to an individual to the extent
144
such benefits are available to the individual under
the medicare program under title XVIII or under
another public or private health care insurance pro-
gram.
‘‘(4) RESIDENCY REQUIREMENT.—In the case
of an individual who—
‘‘(A) is described in section 1501(a)(1),
‘‘(B) changed residence from another State
to the State, and
‘‘(C) has resided in the State for less than
180 days,
the State may limit the benefits provided to such in-
dividual in the guaranteed benefits package under
paragraph (2) of section 1501(a) to the amount, du-
ration, and scope of benefits available under the
State plan of the individual’s previous State of resi-
dence.
‘‘(c) SET-ASIDE OF FUNDS FOR THE LOW-INCOME
DISABLED.—
‘‘(1) IN GENERAL.—In the case of a State that
has 
elected 
the 
option 
described 
in 
section
1501(a)(1)(D)(i) for a fiscal year, the State plan
shall provide that the percentage of funds expended
under the plan for medical assistance for eligible
low-income individuals who are not elderly individ-
145
uals and who are eligible for such assistance on the
basis of a disability, including being blind, for the
fiscal year is not less than the minimum low-income-
disabled percentage specified in paragraph (2) of the
total funds expended under the plan for medical as-
sistance for the fiscal year.
‘‘(2) MINIMUM
LOW-INCOME-DISABLED
PER-
CENTAGE.—The minimum low-income-disabled per-
centage specified in this paragraph for a State is
equal to 90 percent of the percentage of the expendi-
tures under title XIX for medical assistance in the
State during Federal fiscal year 1995 which was at-
tributable to expenditures for medical assistance for
benefits furnished to individuals whose coverage (at
such time) was on a basis directly related to disabil-
ity status, including being blind.
‘‘(3) COMPUTATIONS.—States shall calculate
the minimum percentage under paragraph (2) in a
reasonable manner consistent with reports submitted
to the Secretary for the fiscal years involved and
medical assistance attributable to the exception pro-
vided under section 1903(v)(2) shall not be consid-
ered to be expenditures for medical assistance.
‘‘(d) TRANSITIONAL PAYMENT
FOR FEDERALLY-
QUALIFIED HEALTH CENTER SERVICES
AND RURAL
146
HEALTH CLINIC SERVICES.—Each State plan shall pro-
vide that, for Federally-qualified health center services
and rural health clinic services (as defined in section
1571(f)) furnished under the plan during the first 8 cal-
endar quarters in which the plan is in effect and for which
payment is made under the plan, payment shall be made
for such services at a rate based on 100 percent of costs
which are reasonable and related to the cost of furnishing
such services or based on such other tests of reasonable-
ness, as the Secretary prescribes in regulations under sec-
tion 1833(a)(3), or, in the case of services to which those
regulations do not apply, on the same methodology used
under section 1833(a)(3).
‘‘(e) PREEXISTING CONDITION EXCLUSIONS.—Not-
withstanding any other provision of this title—
‘‘(1) a State plan may not deny or exclude cov-
erage of any item or service for an eligible individual
for benefits under the State plan for such item or
service on the basis of a preexisting condition; and
‘‘(2) if a State contracts or makes other ar-
rangements (through the eligible individual or
through another entity) with a capitated health care
organization, insurer, or other entity, for the provi-
sion of items or services to eligible individuals under
the State plan and the State permits such organiza-
147
tion, insurer, or other entity to exclude coverage of
a covered item or service on the basis of a preexist-
ing condition, the State shall provide, through its
State plan, for such coverage (through direct pay-
ment or otherwise) for any such covered item or
service denied or excluded on the basis of a preexist-
ing condition.
‘‘(f) 
SOLVENCY
STANDARDS
FOR
CAPITATED
HEALTH CARE ORGANIZATIONS.—
‘‘(1) IN GENERAL.—A State may not contract
with a capitated health care organization, as defined
in section 1504(c)(1), for the provision of medical
assistance under a State plan under which the orga-
nization is—
‘‘(A) at full financial risk, as defined by
the State, unless the organization meets sol-
vency standards established by the State for
private health maintenance organizations or is
described in paragraph (4) and meets other sol-
vency standards established by the State, or
‘‘(B) is not at such risk, unless the organi-
zation meets solvency standards that are estab-
lished under the State plan.
‘‘(2) TREATMENT OF PUBLIC ENTITIES.—Para-
graph (1) shall not apply to an organization that is
148
a public entity or if the solvency of such organiza-
tion is guaranteed by the State.
‘‘(3) TRANSITION.—In the case of a capitated
health care organization that as of the date of the
enactment of this title has entered into a contract
with a State for the provision of medical assistance
under title XIX under which the organization as-
sumes full financial risk and is receiving capitation
payments, paragraph (1) shall not apply to such or-
ganization until 3 years after the date of the enact-
ment of this title.
‘‘(4) ORGANIZATION DESCRIBED.—An organiza-
tion described in this paragraph is a capitated health
organization which is (or is controlled by) one or
more Federally-qualified health centers or rural
health clinics. For purposes of this paragraph, the
term ‘control’ means the possession, whether direct
or indirect, of the power to direct or cause the direc-
tion of the management and policies of a capitated
health organization through membership, board rep-
resentation, or an ownership interest equal to or
greater than 50.1 percent.
‘‘(g) FOR SERVICES PROVIDED
AT FEDERALLY-
QUALIFIED HEALTH CENTERS
AND RURAL HEALTH
CLINICS.—
149
‘‘(1) IN GENERAL.—Subject to paragraph (2), a
State plan shall provide that the amount of funds
expended under the plan for medical assistance for
services provided at rural health clinics (as defined
in section 1861(aa)(2)) and Federally-qualified
health centers (as defined in section 1861(aa)(4)),
for eligible low-income individuals for a fiscal year is
not less than 85 percent of the average annual ex-
penditures under title XIX for medical assistance in
the State during Federal fiscal year 1995 which
were attributable to expenditures for medical assist-
ance for rural health clinic services and Federally-
qualified health center services (as defined in section
1905(l)).
‘‘(2) ALTERNATIVE MINIMUM SET-ASIDES.—
‘‘(A) IN GENERAL.—Beginning with fiscal
year 2001, a State may provide in its State
plan (through an amendment to the plan) for a
lower percentage of expenditures than the mini-
mum percentages specified in paragraph (1) if
the State determines to the satisfaction of the
Secretary that—
‘‘(i) the health care needs of the low-
income populations described in such para-
graph who are eligible for medical assist-
150
ance under the plan during the previous
fiscal year can be reasonably met without
the expenditure of the percentage other-
wise required to be expended;
‘‘(ii) the performance goals estab-
lished under section 1521 relating to such
population can reasonably be met with the
expenditure of such lower percentage of
funds; and
‘‘(iii) the health care needs of eligible
low-income individuals residing in medi-
cally underserved rural areas can reason-
ably be met without the level of expendi-
ture for such services otherwise required
and the performance goals established
under section 1521 relating to such indi-
viduals can reasonably be met with such
lower level of expenditures.
‘‘(B) PERIOD OF APPLICATION.—The de-
termination under subparagraph (A) shall be
made for such period as a State may request,
but may not be made for a period of more than
3 consecutive Federal fiscal years (beginning
with the first fiscal year for which the lower
percentage is sought). A new determination
152
is nominal if it does not exceed 6 percent of the
amount otherwise payable, or, if greater, 50 cents.
‘‘(2) OTHER
POPULATIONS.—With respect to
individuals not described in paragraph (1), the State
may not impose any cost-sharing with respect to
items and services unless such cost sharing is pursu-
ant to a public cost-sharing schedule and such cost-
sharing is not in excess of the average, nominal cost-
sharing imposed in the State for health plans offered
by health maintenance organizations (and similar or-
ganizations) for the same or similar items and serv-
ices, as determined by the State insurance commis-
sioner.
‘‘(c) CERTAIN COST-SHARING PERMITTED.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), a
State may—
‘‘(A) impose additional cost-sharing to dis-
courage the inappropriate use of emergency
medical services delivered through a hospital
emergency room, a medical transportation pro-
vider, or otherwise;
‘‘(B) impose additional cost-sharing dif-
ferentially in order to encourage the use of pri-
mary and preventive care and discourage un-
necessary or less economical care; and
153
‘‘(C) from imposing additional cost-sharing
based on the failure to participate in employ-
ment training programs, drug or alcohol abuse
treatment, counseling programs, or other pro-
grams promoting personal responsibility.
‘‘(2) LIMITATION.—The additional cost-sharing
imposed under paragraph (1) may not result—
‘‘(A) in the case of an individual described
in subsection (b)(1), in aggregate cost-sharing
that exceeds the maximum amount of cost-shar-
ing that may be imposed under subsection
(b)(2) (determined without regard to this sub-
section); or
‘‘(B) in the case of an individual described
in subsection (b)(2), in aggregate cost-sharing
that exceeds twice the maximum amount of
cost-sharing that may be imposed under such
subsection (determined without regard to this
subsection).
‘‘(d) PROHIBITION ON BALANCE BILLING.—An indi-
vidual eligible for benefits for items and services under the
State plan who is furnished such an items or service by
a provider under the plan may not be billed by the provider
for such item or service, other than such amount of cost-
sharing as is permitted with this section.
154
‘‘(e) COST-SHARING DEFINED.—In this section, the
term ‘cost-sharing’ includes copayments, deductibles, coin-
surance, and other charges for the provision of health care
services.
‘‘SEC. 1504. DESCRIPTION OF PROCESS FOR DEVELOPING
CAPITATION PAYMENT RATES.
‘‘(a) IN GENERAL.—If a State contracts (or intends
to contract) with a capitated health care organization (as
defined in subsection (c)(1)) under which the State makes
a capitation payment (as defined in subsection (c)(2)) to
the organization for providing or arranging for the provi-
sion of medical assistance under the State plan for a group
of services, including at least inpatient hospital services
and physicians’ services, the plan shall include a descrip-
tion of the following:
‘‘(1) USE OF ACTUARIAL SCIENCE.—The extent
and manner in which the State uses actuarial
science—
‘‘(A) to analyze and project health care ex-
penditures and utilization for individuals en-
rolled (or to be enrolled) in such an organiza-
tion under the State plan, and
‘‘(B) to develop capitation payment rates,
including a brief description of the general
methodologies used by actuaries.
155
‘‘(2) QUALIFICATIONS
OF
ORGANIZATIONS.—
The general qualifications, including any accredita-
tion, State licensure or certification, or provider net-
work standards, required by the State for participa-
tion of capitated health care organizations under the
State plan.
‘‘(3) DISSEMINATION
PROCESS.—The process
used by the State under subsection (b) and other-
wise to disseminate, before entering into contracts
with capitated health care organizations, actuarial
information to such organizations on the historical
fee-for-service costs (or, if not available, other recent
financial data associated with providing covered
services) and utilization associated with individuals
described in paragraph (1)(A).
‘‘(b) PUBLIC NOTICE AND COMMENT.—Under the
State plan the State shall provide a process for providing,
before the beginning of each contract year—
‘‘(1) public notice of—
‘‘(A) the amounts of the capitation pay-
ments (if any) made under the plan for the con-
tract year preceding the public notice, and
‘‘(B)(i) the information described under
subsection (a)(1) with respect to capitation pay-
ments for the contract year involved, or (ii)
156
amounts of the capitation payments the State
expects to make for the contract year involved,
unless such information is designated as proprietary
and not subject to public disclosure under State law,
and
‘‘(2) an opportunity for receiving public com-
ment on the amounts and information for which no-
tice is provided under paragraph (1).
‘‘(c) DEFINITIONS.—In this title:
‘‘(1) CAPITATED
HEALTH
CARE
ORGANIZA-
TION.—The term ‘capitated health care organiza-
tion’ means a health maintenance organization or
any other entity (including a health insuring organi-
zation, managed care organization, prepaid health
plan, integrated service network, or similar entity)
which under State law is permitted to accept capita-
tion payments for providing (or arranging for the
provision of) a group of items and services including
at least inpatient hospital services and physicians’
services.
‘‘(2) CAPITATION PAYMENT.—The term ‘capita-
tion payment’ means, with respect to payment, pay-
ment on a prepaid capitation basis or any other risk
basis to an entity for the entity’s provision (or ar-
ranging for the provision) of a group of items and
157
services, including at least inpatient hospital services
and physicians’ services.
‘‘SEC. 1505. PREVENTING SPOUSAL IMPOVERISHMENT.
‘‘(a) SPECIAL TREATMENT FOR INSTITUTIONALIZED
SPOUSES.—
‘‘(1) SUPERSEDES OTHER PROVISIONS.—In de-
termining the eligibility for medical assistance of an
institutionalized spouse (as defined in subsection
(h)(1)), the provisions of this section supersede any
other provision of this title which is inconsistent
with them.
‘‘(2) DOES NOT AFFECT CERTAIN DETERMINA-
TIONS.—Except as this section specifically provides,
this section does not apply to—
‘‘(A) the determination of what constitutes
income or resources, or
‘‘(B) the methodology and standards for
determining and evaluating income and re-
sources.
‘‘(3) NO
APPLICATION
IN
COMMONWEALTHS
AND TERRITORIES.—This section shall only apply to
a State that is one of the 50 States or the District
of Columbia.
‘‘(b) RULES FOR TREATMENT OF INCOME.—
158
‘‘(1) SEPARATE TREATMENT OF INCOME.—Dur-
ing any month in which an institutionalized spouse
is in the institution, except as provided in paragraph
(2), no income of the community spouse shall be
deemed available to the institutionalized spouse.
‘‘(2) ATTRIBUTION OF INCOME.—In determin-
ing the income of an institutionalized spouse or com-
munity spouse for purposes of the post-eligibility in-
come determination described in subsection (d), ex-
cept as otherwise provided in this section and re-
gardless of any State laws relating to community
property or the division of marital property, the fol-
lowing rules apply:
‘‘(A) NON-TRUST PROPERTY.—Subject to
subparagraphs (C) and (D), in the case of in-
come not from a trust, unless the instrument
providing the income otherwise specifically pro-
vides—
‘‘(i) if payment of income is made
solely in the name of the institutionalized
spouse or the community spouse, the in-
come shall be considered available only to
that respective spouse,
‘‘(ii) if payment of income is made in
the names of the institutionalized spouse
159
and the community spouse, 1⁄2 of the in-
come shall be considered available to each
of them, and
‘‘(iii) if payment of income is made in
the names of the institutionalized spouse
or the community spouse, or both, and to
another person or persons, the income
shall be considered available to each spouse
in proportion to the spouse’s interest (or,
if payment is made with respect to both
spouses and no such interest is specified,
1⁄2 of the joint interest shall be considered
available to each spouse).
‘‘(B) TRUST PROPERTY.—In the case of a
trust—
‘‘(i) except as provided in clause (ii),
income shall be attributed in accordance
with the provisions of this title; and
‘‘(ii) income shall be considered avail-
able to each spouse as provided in the
trust, or, in the absence of a specific provi-
sion in the trust—
‘‘(I) if payment of income is
made solely to the institutionalized
spouse or the community spouse, the
160
income shall be considered available
only to that respective spouse,
‘‘(II) if payment of income is
made to both the institutionalized
spouse and the community spouse, 1⁄2
of the income shall be considered
available to each of them, and
‘‘(III) if payment of income is
made to the institutionalized spouse
or the community spouse, or both,
and to another person or persons, the
income shall be considered available to
each spouse in proportion to the
spouse’s interest (or, if payment is
made with respect to both spouses
and no such interest is specified, 1⁄2 of
the joint interest shall be considered
available to each spouse).
‘‘(C) PROPERTY WITH NO INSTRUMENT.—
In the case of income not from a trust in which
there is no instrument establishing ownership,
subject to subparagraph (D), 1⁄2 of the income
shall be considered to be available to the insti-
tutionalized spouse and 1⁄2 to the community
spouse.
161
‘‘(D) REBUTTING OWNERSHIP.—The rules
of subparagraphs (A) and (C) are superseded to
the extent that an institutionalized spouse can
establish, by a preponderance of the evidence,
that the ownership interests in income are other
than as provided under such subparagraphs.
‘‘(c) RULES FOR TREATMENT OF RESOURCES.—
‘‘(1) COMPUTATION
OF
SPOUSAL
SHARE
AT
TIME OF INSTITUTIONALIZATION.—
‘‘(A) TOTAL
JOINT
RESOURCES.—There
shall be computed (as of the beginning of the
first continuous period of institutionalization of
the institutionalized spouse)—
‘‘(i) the total value of the resources to
the extent either the institutionalized
spouse or the community spouse has an
ownership interest, and
‘‘(ii) a spousal share which is equal to
1⁄2 of such total value.
‘‘(B) ASSESSMENT.—At the request of an
institutionalized spouse or community spouse,
at the beginning of the first continuous period
of institutionalization of the institutionalized
spouse and upon the receipt of relevant docu-
mentation of resources, the State shall promptly
162
assess and document the total value described
in subparagraph (A)(i) and shall provide a copy
of such assessment and documentation to each
spouse and shall retain a copy of the assess-
ment for use under this section. If the request
is not part of an application for medical assist-
ance under this title, the State may, at its op-
tion as a condition of providing the assessment,
require payment of a fee not exceeding the rea-
sonable expenses of providing and documenting
the assessment. At the time of providing the
copy of the assessment, the State shall include
a notice indicating that the spouse will have a
right to a fair hearing under subsection (e)(2).
‘‘(2) ATTRIBUTION OF RESOURCES AT TIME OF
INITIAL
ELIGIBILITY
DETERMINATION.—In deter-
mining the resources of an institutionalized spouse
at the time of application for medical assistance
under this title, regardless of any State laws relating
to community property or the division of marital
property—
‘‘(A) except as provided in subparagraph
(B), all the resources held by either the institu-
tionalized spouse, community spouse, or both,
163
shall be considered to be available to the insti-
tutionalized spouse, and
‘‘(B) resources shall be considered to be
available to an institutionalized spouse, but only
to the extent that the amount of such resources
exceeds the amount computed under subsection
(f)(2)(A) (as of the time of application for med-
ical assistance).
‘‘(3) ASSIGNMENT OF SUPPORT RIGHTS.—The
institutionalized spouse shall not be ineligible by rea-
son of resources determined under paragraph (2) to
be available for the cost of care where—
‘‘(A) the institutionalized spouse has as-
signed to the State any rights to support from
the community spouse,
‘‘(B) the institutionalized spouse lacks the
ability to execute an assignment due to physical
or mental impairment but the State has the
right to bring a support proceeding against a
community spouse without such assignment, or
‘‘(C) the State determines that denial of
eligibility would work an undue hardship.
‘‘(4) SEPARATE
TREATMENT
OF
RESOURCES
AFTER ELIGIBILITY FOR MEDICAL ASSISTANCE ES-
TABLISHED.—During the continuous period in which
164
an institutionalized spouse is in an institution and
after the month in which an institutionalized spouse
is determined to be eligible for medical assistance
under this title, no resources of the community
spouse shall be deemed available to the institutional-
ized spouse.
‘‘(5) RESOURCES
DEFINED.—In this section,
the term ‘resources’ does not include—
‘‘(A) resources excluded under subsection
(a) or (d) of section 1613, and
‘‘(B) resources that would be excluded
under section 1613(a)(2)(A) but for the limita-
tion on total value described in such section.
‘‘(d) 
PROTECTING
INCOME
FOR
COMMUNITY
SPOUSE.—
‘‘(1) ALLOWANCES TO BE OFFSET FROM IN-
COME
OF
INSTITUTIONALIZED
SPOUSE.—After an
institutionalized spouse is determined or redeter-
mined to be eligible for medical assistance, in deter-
mining the amount of the spouse’s income that is to
be applied monthly to payment for the costs of care
in the institution, there shall be deducted from the
spouse’s monthly income the following amounts in
the following order:
165
‘‘(A) A personal needs allowance (described
in paragraph (2)(A)), in an amount not less
than the amount specified in paragraph (2)(C).
‘‘(B) A community spouse monthly income
allowance (as defined in paragraph (3)), but
only to the extent income of the institutional-
ized spouse is made available to (or for the ben-
efit of) the community spouse.
‘‘(C) A family allowance, for each family
member, equal to at least 1⁄3 of the amount by
which the amount described in paragraph
(4)(A)(i) exceeds the amount of the monthly in-
come of that family member.
‘‘(D) Amounts for incurred expenses for
medical or remedial care for the institutional-
ized spouse as provided under paragraph (6).
In subparagraph (C), the term ‘family member’ only
includes minor or dependent children, dependent
parents, or dependent siblings of the institutional-
ized or community spouse who are residing with the
community spouse.
‘‘(2) PERSONAL NEEDS ALLOWANCE.—
‘‘(A) IN GENERAL.—The State plan must
provide that, in the case of an institutionalized
individual or couple described in subparagraph
166
(B), in determining the amount of the individ-
ual’s or couple’s income to be applied monthly
to payment for the cost of care in an institu-
tion, there shall be deducted from the monthly
income (in addition to other allowances other-
wise provided under the plan) a monthly per-
sonal needs allowance—
‘‘(i) which is reasonable in amount for
clothing and other personal needs of the
individual (or couple) while in an institu-
tion, and
‘‘(ii) which is not less (and may be
greater) than the minimum monthly per-
sonal needs allowance described in sub-
paragraph (C).
‘‘(B) INSTITUTIONALIZED INDIVIDUAL OR
COUPLE
DEFINED.—In this paragraph, the
term ‘institutionalized individual or couple’
means an individual or married couple—
‘‘(i) who is an inpatient (or who are
inpatients) in a medical institution or
nursing facility for which payments are
made under this title throughout a month,
and
167
‘‘(ii) who is or are determined to be
eligible for medical assistance under the
State plan.
‘‘(C) MINIMUM
ALLOWANCE.—The mini-
mum monthly personal needs allowance de-
scribed in this subparagraph is $40 for an insti-
tutionalized individual and $80 for an institu-
tionalized couple (if both are aged, blind, or dis-
abled, and their incomes are considered avail-
able to each other in determining eligibility).
‘‘(3) COMMUNITY
SPOUSE
MONTHLY
INCOME
ALLOWANCE DEFINED.—
‘‘(A) IN GENERAL.—In this section (except
as provided in subparagraph (B)), the commu-
nity spouse monthly income allowance for a
community spouse is an amount by which—
‘‘(i) except as provided in subsection
(e), the minimum monthly maintenance
needs allowance (established under and in
accordance with paragraph (4)) for the
spouse, exceeds
‘‘(ii) the amount of monthly income
otherwise available to the community
spouse (determined without regard to such
an allowance).
168
‘‘(B) COURT
ORDERED
SUPPORT.—If a
court has entered an order against an institu-
tionalized spouse for monthly income for the
support of the community spouse, the commu-
nity spouse monthly income allowance for the
spouse shall be not less than the amount of the
monthly income so ordered.
‘‘(4) ESTABLISHMENT OF MINIMUM MONTHLY
MAINTENANCE NEEDS ALLOWANCE.—
‘‘(A) IN GENERAL.—Each State shall es-
tablish a minimum monthly maintenance needs
allowance for each community spouse which,
subject to subparagraph (B), is equal to or ex-
ceeds—
‘‘(i) 150 percent of 1⁄12 of the poverty
line applicable to a family unit of 2 mem-
bers, plus
‘‘(ii) an excess shelter allowance (as
defined in paragraph (4)).
A revision of the poverty line referred to in
clause (i) shall apply to medical assistance fur-
nished during and after the second calendar
quarter that begins after the date of publication
of the revision.
169
‘‘(B) CAP ON MINIMUM MONTHLY MAINTE-
NANCE
NEEDS
ALLOWANCE.—The minimum
monthly maintenance needs allowance estab-
lished under subparagraph (A) may not exceed
$1,500 (subject to adjustment under sub-
sections (e) and (g)).
‘‘(5) 
EXCESS
SHELTER
ALLOWANCE
DE-
FINED.—In paragraph (4)(A)(ii), the term ‘excess
shelter allowance’ means, for a community spouse,
the amount by which the sum of—
‘‘(A) the spouse’s expenses for rent or
mortgage payment (including principal and in-
terest), taxes and insurance and, in the case of
a condominium or cooperative, required mainte-
nance charge, for the community spouse’s prin-
cipal residence, and
‘‘(B) the standard utility allowance (used
by the State under section 5(e) of the Food
Stamp Act of 1977) or, if the State does not
use such an allowance, the spouse’s actual util-
ity expenses,
exceeds 30 percent of the amount described in para-
graph (4)(A)(i), except that, in the case of a con-
dominium or cooperative, for which a maintenance
charge is included under subparagraph (A), any al-
170
lowance under subparagraph (B) shall be reduced to
the extent the maintenance charge includes utility
expenses.
‘‘(6) TREATMENT OF INCURRED EXPENSES.—
With respect to the post-eligibility treatment of in-
come under this section, there shall be disregarded
reparation payments made by the Federal Republic
of Germany and, there shall be taken into account
amounts for incurred expenses for medical or reme-
dial care that are not subject to payment by a third
party, including—
‘‘(A) medicare and other health insurance
premiums, deductibles, or coinsurance, and
‘‘(B) necessary medical or remedial care
recognized under State law but not covered
under the State plan under this title, subject
to reasonable limits the State may establish on
the amount of these expenses.
‘‘(e) NOTICE AND FAIR HEARING.—
‘‘(1) NOTICE.—Upon—
‘‘(A) a determination of eligibility for med-
ical assistance of an institutionalized spouse, or
‘‘(B) a request by either the institutional-
ized spouse, or the community spouse, or a rep-
resentative acting on behalf of either spouse,
171
each State shall notify both spouses (in the case de-
scribed in subparagraph (A)) or the spouse making
the request (in the case described in subparagraph
(B)) of the amount of the community spouse month-
ly 
income 
allowance 
(described 
in 
subsection
(d)(1)(B)), of the amount of any family allowances
(described in subsection (d)(1)(C)), of the method
for computing the amount of the community spouse
resources allowance permitted under subsection (f),
and of the spouse’s right to a fair hearing under the
State plan respecting ownership or availability of in-
come or resources, and the determination of the
community spouse monthly income or resource al-
lowance.
‘‘(2) FAIR HEARING.—
‘‘(A) IN GENERAL.—If either the institu-
tionalized spouse or the community spouse is
dissatisfied with a determination of—
‘‘(i) the community spouse monthly
income allowance;
‘‘(ii) the amount of monthly income
otherwise available to the community
spouse 
(as 
applied 
under 
subsection
(d)(3)(A)(ii));
172
‘‘(iii) the computation of the spousal
share of resources under subsection (c)(1);
‘‘(iv) the attribution of resources
under subsection (c)(2); or
‘‘(v) the determination of the commu-
nity spouse resource allowance (as defined
in subsection (f)(2));
such spouse is entitled to a fair hearing under
the State plan with respect to such determina-
tion if an application for benefits under this
title has been made on behalf of the institu-
tionalized spouse. Any such hearing respecting
the determination of the community spouse re-
source allowance shall be held within 30 days of
the date of the request for the hearing.
‘‘(B) REVISION
OF
MINIMUM
MONTHLY
MAINTENANCE
NEEDS
ALLOWANCE.—If either
such spouse establishes that the community
spouse needs income, above the level otherwise
provided by the minimum monthly maintenance
needs 
allowance, 
due 
to 
exceptional 
cir-
cumstances resulting in significant financial du-
ress, there shall be substituted, for the mini-
mum monthly maintenance needs allowance in
173
subsection (d)(3)(A)(i), an amount adequate to
provide such additional income as is necessary.
‘‘(C) REVISION
OF
COMMUNITY
SPOUSE
RESOURCE ALLOWANCE.—If either such spouse
establishes that the community spouse resource
allowance (in relation to the amount of income
generated by such an allowance) is inadequate
to raise the community spouse’s income to the
minimum monthly maintenance needs allow-
ance, there shall be substituted, for the commu-
nity spouse resource allowance under subsection
(f)(2), an amount adequate to provide such a
minimum monthly maintenance needs allow-
ance.
‘‘(f) PERMITTING TRANSFER
OF RESOURCES
TO
COMMUNITY SPOUSE.—
‘‘(1) IN GENERAL.—An institutionalized spouse
may, without regard to any other provision of the
State plan to the contrary, transfer an amount equal
to the community spouse resource allowance (as de-
fined in paragraph (2)), but only to the extent the
resources of the institutionalized spouse are trans-
ferred to, or for the sole benefit of, the community
spouse. The transfer under the preceding sentence
shall be made as soon as practicable after the date
174
of the initial determination of eligibility, taking into
account such time as may be necessary to obtain a
court order under paragraph (3).
‘‘(2) COMMUNITY
SPOUSE
RESOURCE
ALLOW-
ANCE DEFINED.—In paragraph (1), the ‘community
spouse resource allowance’ for a community spouse
is an amount (if any) by which—
‘‘(A) the greatest of—
‘‘(i) $12,000 (subject to adjustment
under subsection (g)), or, if greater (but
not to exceed the amount specified in
clause (ii)(II)) an amount specified under
the State plan,
‘‘(ii) the lesser of (I) the spousal
share computed under subsection (c)(1), or
(II) $60,000 (subject to adjustment under
subsection (g)),
‘‘(iii) the amount established under
subsection (e)(2), or
‘‘(iv) the amount transferred under a
court order under paragraph (3);
exceeds
‘‘(B) the amount of the resources other-
wise available to the community spouse (deter-
mined without regard to such an allowance).
175
‘‘(3) TRANSFERS UNDER COURT ORDERS.—If a
court has entered an order against an institutional-
ized spouse for the support of the community
spouse, any provisions under the plan relating to
transfers or disposals of assets for less than fair
market value shall not apply to amounts of resources
transferred pursuant to such order for the support
of the spouse or a family member (as defined in sub-
section (d)(1)).
‘‘(g) INDEXING DOLLAR AMOUNTS.—For services
furnished during a calendar year after 1989, the dollar
amounts specified in subsections (d)(3)(C), (f)(2)(A)(i),
and (f)(2)(A)(ii)(II) shall be increased by the same per-
centage as the percentage increase in the consumer price
index for all urban consumers (all items; U.S. city aver-
age) between September 1988 and the September before
the calendar year involved.
‘‘(h) DEFINITIONS.—In this section:
‘‘(1) INSTITUTIONALIZED
SPOUSE.—The term
‘institutionalized spouse’ means an individual—
‘‘(A)(i) who is in a medical institution or
nursing facility, or
‘‘(ii) at the option of the State (I) who
would be eligible under the State plan under
this title if such individual was in a medical in-
176
stitution, (II) with respect to whom there has
been a determination that but for the provision
of home or community-based services such indi-
vidual would require the level of care provided
in a hospital, nursing facility or intermediate
care facility for the mentally retarded the cost
of which could be reimbursed under the plan,
and (III) who will receive home or community-
based services pursuant the plan; and
‘‘(B) who is married to a spouse who is not
in a medical institution or nursing facility;
but does not include any such individual who is not
likely to meet the requirements of subparagraph (A)
for at least 30 consecutive days.
‘‘(2) COMMUNITY SPOUSE.—The term ‘commu-
nity spouse’ means the spouse of an institutionalized
spouse.
‘‘SEC. 1506. PREVENTING FAMILY IMPOVERISHMENT.
‘‘(a) RESPONSIBILITIES FOR LONG-TERM AND INSTI-
TUTIONAL CARE GENERALLY.—A State plan may not—
‘‘(1) require an adult child or any other individ-
ual (other than the applicant or recipient of services
or the spouse of such an applicant or recipient) to
contribute to the cost of covered nursing facility
177
services, other long-term care services, and hospital
and other institutional services under the plan; and
‘‘(2) take into account with respect to such
services the financial responsibility of any individual
for any applicant or recipient of assistance under the
plan unless such applicant or recipient is such indi-
vidual’s spouse or such individual’s child who is
under age 21 or (with respect to States eligible to
participate in the State program established under
title XVI), is blind or permanently and totally dis-
abled, or is blind or disabled as defined in section
1614 (with respect to States which are not eligible
to participate in such program).
‘‘(b) LIMITATIONS ON LIENS.—
‘‘(1) IN GENERAL.—No lien may be imposed
against the property of any individual prior to the
individual’s death on account of medical assistance
paid or to be paid on the individual’s behalf under
a State plan, except—
‘‘(A) pursuant to the judgment of a court
on account of benefits incorrectly paid on behalf
of such individual; or
‘‘(B) in the case of the real property of an
individual—
178
‘‘(i) who is an inpatient in a nursing
facility, intermediate care facility for the
mentally retarded, or other medical institu-
tion, if such individual is required, as a
condition of receiving services in such insti-
tution under the plan, to spend for costs of
medical care all but a minimal amount of
the individual’s income required for per-
sonal needs, and
‘‘(ii) with respect to whom the State
determines, after notice and opportunity
for a hearing (in accordance with proce-
dures established by the State), that the
individual cannot reasonably be expected to
be discharged from the medical institution
and to return home,
except as provided in paragraph (2).
‘‘(2) EXCEPTION.—No lien may be imposed
under paragraph (1)(B) on such individual’s home
if—
‘‘(A) the spouse of such individual,
‘‘(B) such individual’s child who is under
age 21, or (with respect to States eligible to
participate in the State program established
under title XVI) is blind or permanently and to-
179
tally disabled, or (with respect to States which
are not eligible to participate in such program)
is blind or disabled as defined in section 1614,
or
‘‘(C) a sibling of such individual (who has
an equity interest in such home and who was
residing in such individual’s home for a period
of at least one year immediately before the date
of the individual’s admission to the medical in-
stitution),
is lawfully residing in such home.
‘‘(3) DISSOLUTION UPON RETURN HOME.—Any
lien imposed with respect to an individual pursuant
to paragraph (1)(B) shall dissolve upon that individ-
ual’s discharge from the medical institution and re-
turn home.
‘‘SEC. 1507. STATE FLEXIBILITY.
‘‘(a) STATE FLEXIBILITY IN BENEFITS, GEOGRAPHI-
CAL COVERAGE AREA, AND SELECTION OF PROVIDERS.—
The State under its State plan may—
‘‘(1) specify those items and services for which
medical assistance is provided (consistent with guar-
antees under subsections (a) and (b) of section
1501), the providers which may provide such items
and services, and the amount and frequency of pro-
180
viding such items and services (consistent with the
requirements of section 1502(d));
‘‘(2) specify the extent to which the same medi-
cal assistance will be provided in all geographical
areas or political subdivisions of the State, so long
as medical assistance is made available in all such
areas or subdivisions;
‘‘(3) specify the extent to which the medical as-
sistance made available to any individual eligible for
medical assistance is comparable in amount, dura-
tion, or scope to the medical assistance made avail-
able to any other such individual; and
‘‘(4) specify the extent to which an individual
eligible for medical assistance with respect to an
item or service may choose to obtain such assistance
from any institution, agency, or person qualified to
provide the item or service.
‘‘(b) STATE FLEXIBILITY WITH RESPECT TO MAN-
AGED CARE.—Nothing in this title shall be construed—
‘‘(1) to limit a State’s ability to contract with,
on a capitated basis or otherwise, health care plans
or individual health care providers for the provision
or arrangement of medical assistance,
‘‘(2) to limit a State’s ability to contract with
health care plans or other entities for case manage-
181
ment services or for coordination of medical assist-
ance, or
‘‘(3) to restrict a State from establishing capi-
tation rates on the basis of competition among
health care plans or negotiations between the State
and one or more health care plans.
‘‘SEC. 1508. PRIVATE RIGHTS OF ACTION.
‘‘(a) LIMITATION
ON FEDERAL CAUSES
OF AC-
TION.—Except as provided in this section, no person or
entity may bring an action against a State in Federal
court based on its failure to comply with any requirement
of this title.
‘‘(b) STATE CAUSES OF ACTION.—
‘‘(1) ADMINISTRATIVE
AND
JUDICIAL
PROCE-
DURES.—A State plan shall provide for—
‘‘(A) an administrative procedure whereby
an individual alleging a denial of eligibility for
benefits or a denial of benefits under the State
plan may receive a hearing regarding such de-
nial, and
‘‘(B) judicial review, through a private
right of action in a State court by an individual
or class of individuals, regarding such a denial,
but a State may require exhaustion of adminis-
182
trative remedies before such an action may be
taken.
The administrative procedure under subparagraph
(A) shall include impartial decision makers and a
fair process and timely decisions.
‘‘(2) WRIT OF CERTIORARI.—An individual or
class may file a petition for certiorari before the Su-
preme Court of the United States in a case of a de-
nial of benefits under the State plan to review a de-
termination of the highest court of a State regarding
such denial.
‘‘(3) CONSTRUCTION.—Nothing in this sub-
section shall be construed as requiring a State to
provide a private right of action in State court by
a provider, health plan, or a class of providers or
health plans.
‘‘(c) SECRETARIAL RELIEF.—
‘‘(1) IN GENERAL.—The Secretary may bring
an action in Federal court against a State and on
behalf of an individual or class of individuals in
order to assure that a State provides benefits to in-
dividuals and classes of individuals as guaranteed
under subsection (a) or (b) of section 1501 under its
State plan.
183
‘‘(2) NO PRIVATE RIGHT.—No action may be
brought in any court against the Secretary based on
the Secretary’s bringing, or failure to bring, an ac-
tion under paragraph (1).
‘‘(3) CONSTRUCTION.—Nothing in this title
shall be construed as authorizing the Secretary to
bring an action on behalf of a provider, health plan,
or a class of providers or health plans.
‘‘PART B—PAYMENTS TO STATES
‘‘SEC. 1511. ALLOTMENT OF FUNDS AMONG STATES.
‘‘(a) ALLOTMENTS.—
‘‘(1) COMPUTATION.—The Secretary shall pro-
vide for the computation of State obligation and out-
lay allotments in accordance with this section for
each fiscal year beginning with fiscal year 1997.
Nothing in this part shall be construed as authoriz-
ing payment under this part to any State for fiscal
year 1996.
‘‘(2) LIMITATION ON OBLIGATIONS.—
‘‘(A) IN
GENERAL.—Subject to the suc-
ceeding provisions of this paragraph, the Sec-
retary shall not enter into obligations with any
State under this title for a fiscal year in excess
of the sum of the following allotments for the
State for the fiscal year:
184
‘‘(i) 
BASE
OBLIGATION
ALLOT-
MENT.—The amount of the base obligation
allotment for that State for the fiscal year
under paragraph (4).
‘‘(ii) 
SUPPLEMENTAL
ALLOTMENT
FOR
CERTAIN
ALIENS.—The amount of
any supplemental allotment for that State
for the fiscal year under subsection (f).
‘‘(iii) SUPPLEMENTAL
PER
BENE-
FICIARY
UMBRELLA
ALLOTMENT.—The
amount of any supplemental per bene-
ficiary umbrella allotment for that State
for the fiscal year under subsection (g).
‘‘(iv) 
SUPPLEMENTAL
ALLOTMENT
FOR
INDIAN
HEALTH
SERVICES.—The
amount of any supplemental allotment for
that State for the fiscal year under sub-
section (h).
The sum of the base obligation allotments for all
States in any fiscal year (excluding amounts carried
over under subparagraph (B) and excluding changes
in allotments effected under paragraph (4)(D)) shall
not exceed the aggregate limit on new base obliga-
tion authority specified in paragraph (3) for that fis-
cal year.
185
‘‘(B) ADJUSTMENTS.—
‘‘(i) CARRYOVER OF BASE ALLOTMENT
PERMITTED.—Subject to clauses (ii), if the
amount of obligations entered into under
this part with a State for quarters in a fis-
cal year is less than the amount of the ob-
ligation allotment under this section to the
State for the fiscal year, the amount of the
difference (less any amount computed
under clause (iii)) shall be added to the
amount of the State obligation allotment
otherwise provided under this section for
the succeeding fiscal year.
‘‘(ii) NO CARRYOVER PERMITTED FOR
STATES
RECEIVING
SUPPLEMENTAL
UM-
BRELLA
ALLOTMENTS.—Clause (i) shall
not apply, insofar as it permits a carryover
for a State from a particular year to the
next year, if in the particular year the
State receives a supplemental umbrella al-
lotment under subsection (g).
‘‘(iii) NO CARRYOVER OF ALIEN AND
INDIAN
SUPPLEMENTAL
ALLOTMENTS.—
The amount of any carryover under clause
(i) from a fiscal year shall be reduced by
186
the amount (if any) by which the amount
of the outlays for expenditures described in
subsection (f) or (h) for the fiscal year is
less than the amount of any supplemental
allotment provided under the respective
subsection for the State and fiscal year in-
volved.
‘‘(C) REDUCTION FOR NEW OBLIGATIONS
UNDER TITLE XIX IN FISCAL YEAR 1997.—The
amount of the base obligation allotment other-
wise provided under this section for fiscal year
1997 for a State shall be reduced by the
amount of the obligations entered into with re-
spect to the State under section 1903(a) during
such fiscal year.
‘‘(D) NO EFFECT ON PRIOR YEAR OBLIGA-
TIONS.—Subparagraph (A) shall not apply to or
affect obligations for a fiscal year prior to fiscal
year 1997.
‘‘(E) OBLIGATION.—For purposes of this
section, the Secretary’s establishment of an es-
timate under section 1512(b) of the amount a
State is entitled to receive for a quarter (taking
into account any adjustments described in such
subsection) beginning during or after fiscal year
187
1997 shall be treated as the obligation of such
amount for the State as of the first day of the
quarter.
‘‘(F) RELATION
TO
GUARANTEES.—The
Federal Government’s obligations for payments
under this title are limited as provided under
subparagraph (A) and are only subject to ad-
justment based on any guarantee provided
under section 1501 as provided under sub-
section (g).
‘‘(3) AGGREGATE LIMIT ON NEW BASE OBLIGA-
TION AUTHORITY.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, subject to subparagraph (C), the
‘aggregate limit on new base obligation author-
ity’, for a fiscal year, is the base pool amount
under subsection (b) for the fiscal year, divided
by the payout adjustment factor (described in
subparagraph (B)) for the fiscal year.
‘‘(B) PAYOUT ADJUSTMENT FACTOR.—For
purposes of this subsection, the ‘payout adjust-
ment factor’—
‘‘(i) for fiscal year 1997 is 0.950,
‘‘(ii) for fiscal year 1998 is 0.986, and
188
‘‘(iii) for a subsequent fiscal year is
0.998.
‘‘(C) TRANSITIONAL
ADJUSTMENT
FOR
PRE-FISCAL YEAR 1997-OBLIGATION OUTLAYS.—
In order to account for pre-fiscal year 1997-ob-
ligation 
outlays 
described 
in 
paragraph
(4)(C)(iv), in determining the aggregate limit
on new obligation authority under subpara-
graph (A) for fiscal year 1997, the pool amount
for such fiscal year is equal to—
‘‘(i) the pool amount for such year,
reduced by
‘‘(ii) $12,000,000,000.
‘‘(4) BASE OBLIGATION ALLOTMENTS.—
‘‘(A) GENERAL RULE FOR 50 STATES AND
THE DISTRICT OF COLUMBIA.—Except as pro-
vided in this paragraph, the ‘base obligation al-
lotment’ for any of the 50 States or the District
of Columbia for a fiscal year (beginning with
fiscal year 1997) is an amount that bears the
same ratio to the base outlay allotment under
subsection (c)(2) for such State or District (not
taking into account any adjustment due to an
election under subsection (c)(4)) for the fiscal
year as the ratio of—
189
‘‘(i) the aggregate limit on new base
obligation authority (less the total of the
obligation allotments under subparagraph
(B)) for the fiscal year, to
‘‘(ii) the base pool amount (less the
sum of the base outlay allotments for the
territories) for such fiscal year.
‘‘(B) TERRITORIES.—The base obligation
allotment for each of the Commonwealths and
territories for a fiscal year is the base outlay al-
lotment for such Commonwealth or Territory
(as determined under subsection (c)(5)) for the
fiscal year divided by the payout adjustment
factor for the fiscal year (as defined in para-
graph (3)(B)).
‘‘(C) TRANSITIONAL
RULE
FOR
FISCAL
YEAR 1997.—
‘‘(i) IN
GENERAL.—The obligation
amount for fiscal year 1997 for any State
(including the District of Columbia, a
Commonwealth, or Territory) is deter-
mined 
according 
to 
the 
formula:
A=(B¥C)/D, where—
‘‘(I) ‘A’ is the base obligation
amount for such State,
190
‘‘(II) ‘B’ is the base outlay allot-
ment of such State for fiscal year
1997, as determined under subsection
(c),
‘‘(III) ‘C’ is the amount of the
pre-enactment-obligation outlays (as
established for such State under
clause (ii)), and
‘‘(IV) ‘D’ is the payout adjust-
ment factor for such fiscal year (as
defined in paragraph (3)(B)).
‘‘(ii) PRE-FISCAL YEAR 1997-OBLIGA-
TION OUTLAY AMOUNTS.—Not later than
November 1, 1996, the Secretary shall es-
timate (based on the best data available)
and publish in the Federal Register the
amount of the pre-fiscal year 1997-obliga-
tion outlays (as defined in clause (iv)) for
each State (including the District of Co-
lumbia, Commonwealths, and Territories).
The total of such amounts shall equal the
dollar amount specified in paragraph
(3)(C)(ii).
‘‘(iii) AGREEMENT.—The submission
of a State plan by a State under this title
191
is deemed to constitute the State’s accept-
ance of the obligation allotment limitations
under this subsection, including the for-
mula for computing the amount of the
base obligation allotment and any supple-
mental obligation allotments.
‘‘(iv) PRE-FISCAL YEAR 1997-OBLIGA-
TION
OUTLAYS
DEFINED.—In this sub-
section, the term ‘pre-fiscal year 1997-obli-
gation outlays’ means, for a State, the out-
lays of the Federal Government that result
from obligations that have been incurred
under title XIX with respect to the State
before October 1, 1996, but for which pay-
ments to States have not been made as of
such date.
‘‘(D) ADJUSTMENT TO REFLECT ADOPTION
OF
ALTERNATIVE
GROWTH
FORMULA.—Any
State that has elected an alternative growth
formula under subsection (c)(4) which increases
or decreases the dollar amount of an outlay al-
lotment for a fiscal year is deemed to have in-
creased or decreased, respectively, its obligation
amount for such fiscal year by the amount of
such increase or decrease.
192
‘‘(E) TRANSITIONAL CORRECTION FOR FIS-
CAL YEAR 1997.—
‘‘(i) IN GENERAL.—The base obliga-
tion amount for fiscal year 1998 for any
State described in clause (ii) shall be in-
creased by the amount by which the
amount described in clause (ii)(I) exceeds
the amount described in clause (ii)(II), di-
vided by the payout adjustment factor
specified in paragraph (3)(B) for fiscal
year 1997. The increase under this clause
shall be paid to a State in the first quarter
of fiscal year 1998.
‘‘(ii) STATES
DESCRIBED.—A State
described in this clause is a State for
which—
‘‘(I) the amount of the pre-fiscal
year 1997-obligation outlays (as es-
tablished for such State under sub-
paragraph (C)(ii)), exceeded
‘‘(II) the outlays of the Federal
Government during fiscal year 1997
that are attributable to obligations
that were incurred under title XIX
with respect to the State before Octo-
193
ber 1, 1996, but for which payments
to States had not been made as of
such date.
‘‘(5) SEQUENCE
OF
OBLIGATIONS.—For pur-
poses of carrying out this title, payments under sec-
tion 1512 to a State eligible for a supplemental out-
lay allotment that are attributable to—
‘‘(A) expenditures for medical assistance
described in the second sentence of subsection
(f)(1) or the second sentence of subsection
(h)(1) shall first be counted toward the supple-
mental outlay allotment provided under sub-
section (f) or (h), respectively, rather than to-
ward the base outlay allotment otherwise pro-
vided under this section; or
‘‘(B) subsection (g) (relating to the um-
brella fund) shall first be counted toward the
allotment provided other than under such sub-
section, and then to such subsection.
‘‘(b) BASE POOL OF AVAILABLE FUNDS.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the ‘base pool amount’ under this subsection
for—
‘‘(A) fiscal year 1996 is $96,601,037,894,
‘‘(B) fiscal year 1997 is $103,447,755,053,
194
‘‘(C) fiscal year 1998 is $108,430,173,129,
‘‘(D) 
fiscal 
year 
1999 
is
$113,652,562,483,
‘‘(E) fiscal year 2000 is $119,126,480,999,
‘‘(F) fiscal year 2001 is $124,864,043,230,
‘‘(G) fiscal year 2002 is $130,877,947,213,
and
‘‘(H) each subsequent fiscal year is the
pool amount under this paragraph for the pre-
vious fiscal year increased by the lesser of 4.82
percent or the annual percentage increase in
the gross domestic product for the 12-month
period ending in June before the beginning of
that subsequent fiscal year.
‘‘(2) NATIONAL
GROWTH
PERCENTAGE.—For
purposes of this section for a fiscal year (beginning
with fiscal year 1997), the ‘national growth percent-
age’ is the percentage by which—
‘‘(A) the base pool amount under para-
graph (1) for the fiscal year, exceeds
‘‘(B) such base pool amount for the pre-
vious fiscal year.
‘‘(c) STATE BASE OUTLAY ALLOTMENTS.—
‘‘(1) FISCAL YEAR 1996.—For each of the 50
States and the District of Columbia, the amount of
195
the State base outlay allotment under this sub-
section for fiscal year 1996 is, subject to paragraph
(4), determined in accordance with the following
table:
‘‘State or District:
Outlay allotment (in dollars):
Alabama .........................................
1,517,652,207
Alaska ............................................
204,933,213
Arizona ..........................................
1,385,781,297
Arkansas ........................................
1,011,457,933
California .......................................
8,946,838,461
Colorado .........................................
757,492,679
Connecticut ....................................
1,463,011,635
Delaware ........................................
212,327,763
District of Columbia ......................
501,412,091
Florida ...........................................
3,715,624,180
Georgia ..........................................
2,426,320,602
Hawaii ...........................................
323,124,375
Idaho ..............................................
278,329,686
Illinois ............................................
3,467,274,342
Indiana ..........................................
1,952,467,267
Iowa ...............................................
835,235,895
Kansas ...........................................
713,700,869
Kentucky .......................................
1,577,828,832
Louisiana .......................................
2,622,000,000
Maine .............................................
694,220,790
Maryland .......................................
1,369,699,847
Massachusetts ................................
2,870,346,862
Michigan ........................................
3,465,182,886
Minnesota ......................................
1,793,776,356
Mississippi .....................................
1,261,781,330
Missouri .........................................
1,849,248,945
Montana .........................................
312,212,472
Nebraska .......................................
463,900,417
Nevada ...........................................
257,896,453
New Hampshire .............................
560,000,000
New Jersey ....................................
2,854,621,241
New Mexico ...................................
634,756,945
New York .......................................
12,901,793,038
North Carolina ..............................
2,587,883,809
North Dakota ................................
241,168,563
Ohio ...............................................
4,034,049,690
Oklahoma .......................................
911,198,775
Oregon ...........................................
1,088,670,440
Pennsylvania ..................................
4,454,423,400
Rhode Island .................................
545,686,262
South Carolina ...............................
1,621,021,815
South Dakota ................................
262,804,959
Tennessee ......................................
2,519,934,251
Texas .............................................
6,351,909,343
Utah ...............................................
484,274,254
Vermont .........................................
248,158,729
196
‘‘State or District:
Outlay allotment (in dollars):
Virginia ..........................................
1,144,962,509
Washington ....................................
1,763,460,996
West Virginia .................................
1,156,813,157
Wisconsin .......................................
1,709,500,642
Wyoming ........................................
132,915,390.
‘‘(2) FOR SUBSEQUENT FISCAL YEARS.—
‘‘(A) IN
GENERAL.—Subject to the suc-
ceeding provisions of this subsection, the
amount of the State base outlay allotment
under this subsection for one of the 50 States
and the District of Columbia for a fiscal year
(beginning with fiscal year 1997) is equal to the
product of—
‘‘(i) the needs-based amount deter-
mined under subparagraph (B) for such
State or District for the fiscal year, and
‘‘(ii) the adjustment factor described
in subparagraph (C) for the fiscal year.
‘‘(B) NEEDS-BASED AMOUNT.—The needs-
based amount under this subparagraph for a
State or the District of Columbia for a fiscal
year is equal to the product of—
‘‘(i) the State’s or District’s aggregate
expenditure need for the fiscal year (as de-
termined under subsection (d)), and
‘‘(ii) the State’s or District’s old Fed-
eral medical assistance percentage (as de-
197
fined in section 1512(d)) for the fiscal year
(or, in the case of fiscal year 1997, the
Federal medical assistance percentage de-
termined under section 1905(b) for fiscal
year 1996).
‘‘(C) ADJUSTMENT FACTOR.—The adjust-
ment factor under this subparagraph for a fis-
cal year is such proportion so that, when it is
applied under subparagraph (A)(ii) for the fis-
cal year (taking into account the floors and ceil-
ings under paragraph (3)), the total of the base
outlay allotments under this subsection for all
the 50 States and the District of Columbia for
the fiscal year (not taking into account any in-
crease in a base outlay allotment for a fiscal
year attributable to the election of an alter-
native growth formula under paragraph (4)) is
equal to the amount by which (i) the base pool
amount for the fiscal year (as determined under
subsection (b)), exceeds (ii) the sum of the base
outlay allotments provided under paragraph (5)
for the Commonwealths and Territories for the
fiscal year.
‘‘(3) FLOORS AND CEILINGS.—
198
‘‘(A) FLOORS.—Subject to the ceiling es-
tablished under subparagraph (B), in no case
shall the amount of the State base outlay allot-
ment under paragraph (2) for a fiscal year be
less than the greatest of the following:
‘‘(i) IN
GENERAL.—Beginning with
fiscal year 1998, 0.24 percent of the pool
amount for the fiscal year.
‘‘(ii) FLOOR
BASED
ON
PREVIOUS
YEAR’S OUTLAY ALLOTMENT.—Subject to
clause (iii)—
‘‘(I) for fiscal year 1997, 103.5
percent of the amount of the State
base outlay allotment under this sub-
section for fiscal year 1996,
‘‘(II) for fiscal year 1998, 103
percent of the amount of the State
base outlay allotment under this sub-
section for fiscal year 1997,
‘‘(III) for fiscal year 1999, 102.5
percent of the amount of the State
base outlay allotment under this sub-
section for fiscal year 1998,
‘‘(IV) 
for 
fiscal 
year 
2000,
102.25 percent of the amount of the