‘‘(3) QUALIFIED ALTERNATIVE COVERAGE DE-
FINED.—In this section, the term ‘qualified alter-
native coverage’ means health insurance coverage 
that— 
‘‘(A) meets the coverage requirements of 
section 2103 (other than cost-sharing require-
ments of such section); and 
‘‘(B) is offered by a qualified insurer, and 
not directly by the State. 
‘‘(4) QUALIFIED
INSURER
DEFINED.—In this 
section, the term ‘qualified insurer’ means, with re-
spect to a State, an entity that is licensed to offer 
health insurance coverage in the State. 
‘‘(5) 
APPLICABLE
TARGETED
LOW-INCOME 
CHILDREN DEFINED.—In this title, the term ‘appli-
cable targeted low-income children’ means targeted 
low-income children with family income that does 
not exceed 200 percent of the poverty line applicable 
to family of the size involved.’’. 
(b) FEDERAL
FINANCIAL
PARTICIPATION
FOR 
QUALIFIED ALTERNATIVE COVERAGE.—Section 2105 of 
such Act (42 U.S.C. 1397d) is amended— 
(1) in subsection (a)(1)(C), by inserting before 
the semicolon at the end the following: ‘‘and, subject 
to paragraph (8)(C), in the form of payment of the 
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premiums for coverage for qualified alternative cov-
erage’’; and 
(2) by adding at the end of subsection (c) the 
following new paragraph: 
‘‘(8) PURCHASE OF QUALIFIED ALTERNATIVE 
COVERAGE.— 
‘‘(A) IN
GENERAL.—Payment may be 
made to a State under subsection (a)(1)(C), 
subject to the provisions of this paragraph, for 
the purchase of qualified alternative coverage 
for applicable targeted low-income children. 
‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 
With respect to coverage described in subpara-
graph (A), no limitation on beneficiary cost- 
sharing otherwise applicable under this title or 
title XIX shall apply. 
‘‘(C) LIMITATION ON FFP.—The amount of 
the payment under paragraph (1)(C) for cov-
erage described in subparagraph (A) during a 
fiscal year in the aggregate for all such cov-
erage in the State may not exceed the product 
of— 
‘‘(i) the national per capita expendi-
ture under this title (taking into account 
both Federal and State expenditures) for 
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the previous fiscal year (as determined by 
the Secretary using the best available 
data); 
‘‘(ii) the enhanced FMAP for the 
State and fiscal year involved; and 
‘‘(iii) the number of targeted low-in-
come children for whom such coverage is 
provided. 
‘‘(D) VOLUNTARY ENROLLMENT.—A State 
child health plan— 
‘‘(i) may not require a targeted low- 
income child to enroll in coverage described 
in subparagraph (A) in order to obtain 
child health assistance under this title; 
‘‘(ii) before providing such child 
health assistance for such coverage of a 
child, shall make available (which may be 
through an Internet website or other 
means) to the parent or guardian of the 
child information on the coverage available 
under this title, including benefits and 
cost-sharing; and 
‘‘(iii) shall— 
‘‘(I) provide at least one oppor-
tunity per fiscal year for beneficiaries 
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to switch coverage under this title 
from coverage described in subpara-
graph (A) to the coverage that is oth-
erwise made available under this title; 
and 
‘‘(II) 
permit 
beneficiaries 
to 
switch such coverage under such other 
circumstances, such as the change in 
employment, birth of a child, or 
change in households, as the Sec-
retary specifies. 
‘‘(E) INFORMATION
ON
COVERAGE
OP-
TIONS.—A State child health plan shall— 
‘‘(i) describe how the State will notify 
potential beneficiaries of coverage de-
scribed in subparagraph (A); 
‘‘(ii) provide such notification in writ-
ing at least during the initial application 
for enrollment under this title and during 
redeterminations of eligibility if the indi-
vidual was enrolled before October 1, 2010; 
and 
‘‘(iii) post a description of these cov-
erage options on any official website that 
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may be established by the State in connec-
tion with the plan. 
‘‘(F) RULE OF CONSTRUCTION.—Nothing 
in this section is to be construed to prohibit a 
State from— 
‘‘(i) establishing limits on beneficiary 
cost-sharing under such alternative cov-
erage; 
‘‘(ii) paying all or part of a bene-
ficiary’s cost-sharing requirements under 
such coverage; 
‘‘(iii) paying less than the full cost of 
a child’s share of the premium under such 
coverage, insofar as the premium for such 
coverage exceeds the limitation established 
by the State under subparagraph (C); 
‘‘(iv) using State funds to pay for 
benefits above the Federal upper limit es-
tablished under subparagraph (C); or 
‘‘(v) providing any guidance or infor-
mation it deems appropriate in order to 
help beneficiaries make an informed deci-
sion regarding the option to enroll in cov-
erage described in subparagraph (A).’’. 
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SEC. 3. EASING ADMINISTRATIVE BARRIERS TO STATE CO-
OPERATION 
WITH 
EMPLOYER-SPONSORED 
INSURANCE COVERAGE. 
(a) REQUIRING SOME COVERAGE FOR EMPLOYER- 
SPONSORED INSURANCE.— 
(1) IN GENERAL.—Section 2102(a) of the So-
cial Security Act (42 U.S.C. 1397b(a)), as amended 
by section 2(a), is amended— 
(A) in paragraph (7), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (8), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(9) effective for plan years beginning on or 
after October 1, 2010, how the plan will provide for 
child health assistance with respect to targeted low- 
income children covered under a group health 
plan.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply beginning with fiscal 
year 2011. 
(b) FEDERAL FINANCIAL PARTICIPATION FOR EM-
PLOYER-SPONSORED INSURANCE.—Section 2105 of such 
Act (42 U.S.C. 1397d) is amended— 
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(1) in subsection (a)(1)(C), as amended by sec-
tion 3(b), by inserting before the semicolon at the 
end the following: ‘‘and, subject to paragraph 
(3)(C), in the form of payment of the premiums for 
coverage under a group health plan that includes 
coverage of targeted low-income children and bene-
fits supplemental to such coverage’’; and 
(2) paragraph (3) of subsection (c) is amended 
to read as follows: 
‘‘(3) PURCHASE OF EMPLOYER-SPONSORED IN-
SURANCE.— 
‘‘(A) IN
GENERAL.—Payment may be 
made to a State under subsection (a)(1)(C), 
subject to the provisions of this paragraph, for 
the purchase of family coverage under a group 
health plan that includes coverage of targeted 
low-income children unless such coverage would 
otherwise substitute for coverage that would be 
provided to such children but for the purchase 
of family coverage. 
‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 
With respect to coverage described in subpara-
graph (A)— 
‘‘(i) notwithstanding section 2102, no 
minimum benefits requirement (other than 
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those otherwise applicable with respect to 
services referred to in section 2102(a)(7)) 
under this title shall apply; and 
‘‘(ii) no limitation on beneficiary cost- 
sharing otherwise applicable under this 
title or title XIX shall apply. 
‘‘(C) REQUIRED
PROVISION
OF
SUPPLE-
MENTAL BENEFITS.—If the coverage described 
in subparagraph (A) does not provide coverage 
for 
the 
services 
referred 
to 
in 
section 
2102(a)(7), the State child health plan shall 
provide coverage of such services as supple-
mental benefits. 
‘‘(D) LIMITATION ON FFP.—The amount 
of the payment under paragraph (1)(C) for cov-
erage described in subparagraph (A) (and sup-
plemental benefits under subparagraph (C) for 
individuals so covered) during a fiscal year may 
not exceed the product of— 
‘‘(i) the national per capita expendi-
ture under this title (taking into account 
both Federal and State expenditures) for 
the previous fiscal year (as determined by 
the Secretary using the best available 
data); 
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‘‘(ii) the enhanced FMAP for the 
State and fiscal year involved; and 
‘‘(iii) the number of targeted low-in-
come children for whom such coverage is 
provided. 
‘‘(E) VOLUNTARY ENROLLMENT.—A State 
child health plan— 
‘‘(i) may not require a targeted low- 
income child to enroll in coverage described 
in subparagraph (A) in order to obtain 
child health assistance under this title; 
‘‘(ii) before providing such child 
health assistance for such coverage of a 
child, shall make available (which may be 
through an Internet website or other 
means) to the parent or guardian of the 
child information on the coverage available 
under this title, including benefits and 
cost-sharing; and 
‘‘(iii) shall— 
‘‘(I) provide at least one oppor-
tunity per fiscal year for beneficiaries 
to switch coverage under this title 
from coverage described in subpara-
graph (A) to the coverage that is oth-
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erwise made available under this title; 
and 
‘‘(II) 
permit 
beneficiaries 
to 
switch such coverage under such other 
circumstances, such as the change in 
employment, birth of a child, or 
change in households, as the Sec-
retary specifies. 
‘‘(F) INFORMATION
ON
COVERAGE
OP-
TIONS.—A State child health plan shall— 
‘‘(i) describe how the State will notify 
potential beneficiaries of coverage de-
scribed in subparagraph (A); 
‘‘(ii) provide such notification in writ-
ing at least during the initial application 
for enrollment under this title and during 
redeterminations of eligibility if the indi-
vidual was enrolled before October 1, 2010; 
and 
‘‘(iii) post a description of these cov-
erage options on any official website that 
may be established by the State in connec-
tion with the plan. 
‘‘(G) SEMIANNUAL VERIFICATION OF COV-
ERAGE.—If coverage described in subparagraph 
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(A) is provided under a group health plan with 
respect to a targeted low-income child, the 
State child health plan shall provide for the col-
lection, at least once every six months, of proof 
from the plan that the child is enrolled in such 
coverage. 
‘‘(H) RULE OF CONSTRUCTION.—Nothing 
in this section is to be construed to prohibit a 
State from— 
‘‘(i) offering wrap around benefits in 
order for a group health plan to meet any 
State-established minimum benefit require-
ments; 
‘‘(ii) establishing a cost-effectiveness 
test to qualify for coverage under such a 
plan; 
‘‘(iii) establishing limits on beneficiary 
cost-sharing under such a plan; 
‘‘(iv) paying all or part of a bene-
ficiary’s cost-sharing requirements under 
such a plan; 
‘‘(v) paying less than the full cost of 
the employee’s share of the premium under 
such a plan, including prorating the cost of 
the premium to pay for only what the 
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State determines is the portion of the pre-
mium that covers targeted low-income chil-
dren; 
‘‘(vi) using State funds to pay for 
benefits above the Federal upper limit es-
tablished under subparagraph (C); 
‘‘(vii) allowing beneficiaries enrolled in 
group health plans from changing plans to 
another coverage option available under 
this title at any time; or 
‘‘(viii) providing any guidance or in-
formation it deems appropriate in order to 
help beneficiaries make an informed deci-
sion regarding the option to enroll in cov-
erage described in subparagraph (A). 
‘‘(I) GROUP HEALTH PLAN DEFINED.—In 
this paragraph, the term ‘group health plan’ 
has the meaning given such term in section 
2791(a)(1) of the Public Health Service Act (42 
U.S.C. 300gg–91(a)(1)).’’. 
SEC. 4. EMPLOYEE NOTIFICATION OF PREMIUM ASSIST-
ANCE OPPORTUNITIES. 
(a) AMENDMENT TO INTERNAL REVENUE CODE OF 
1986.—Section 9801(f) of the Internal Revenue Code of 
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1986 (relating to special enrollment periods) is amended 
by adding at the end the following new paragraph: 
‘‘(3) OUTREACH
TO
EMPLOYEES
REGARDING 
AVAILABILITY OF SCHIP COVERAGE.— 
‘‘(A) IN
GENERAL.—Each employer that 
maintains a group health plan in a State that 
provides child health assistance under a State 
child health plan under title XXI of the Social 
Security Act, in the form of premium assistance 
for the purchase of coverage under a group 
health plan, shall provide to each employee a 
written notice informing the employee of poten-
tial opportunities then currently available in the 
State in which the employee resides for pre-
mium assistance under such plans for health 
coverage of the employee’s dependents. For pur-
poses of compliance with this clause, the em-
ployer may use any State-specific model notice 
developed 
in 
accordance 
with 
section 
701(f)(3)(B) of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 
1181(f)(3)(B)). 
‘‘(B) OPTION
TO
PROVIDE
CONCURRENT 
WITH PROVISION OF PLAN MATERIALS TO EM-
PLOYEE.—An employer may provide the model 
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notice applicable to the State in which an em-
ployee resides concurrent with the furnishing of 
materials notifying the employee of health plan 
eligibility, concurrent with materials provided to 
the employee in connection with an open season 
or election process conducted under the plan, or 
concurrent with the furnishing of the summary 
plan description as provided in section 104(b) 
of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1024).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) AMENDMENTS TO EMPLOYEE RETIREMENT 
INCOME SECURITY ACT.— 
(A) IN GENERAL.—Section 701(f) of the 
Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1181(f)) is amended by adding 
at the end the following new paragraph: 
‘‘(3) OUTREACH
TO
EMPLOYEES
REGARDING 
AVAILABILITY OF SCHIP COVERAGE.— 
‘‘(A) IN
GENERAL.—Each employer that 
maintains a group health plan in a State that 
provides child health assistance under a State 
child health plan under title XXI of such Act, 
in the form of premium assistance for the pur-
chase of coverage under a group health plan, 
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shall provide to each employee a written notice 
informing the employee of potential opportuni-
ties then currently available in the State in 
which the employee resides for premium assist-
ance under such plans for health coverage of 
the employee or the employee’s dependents. 
‘‘(B) MODEL NOTICE.—Not later than 1 
year after the date of enactment of this para-
graph, the Secretary and the Secretary of 
Health and Human Services, in consultation 
with Directors of State SCHIP agencies under 
title XXI of such Act, shall jointly develop na-
tional and State-specific model notices for pur-
poses of subparagraph (A). The Secretary shall 
provide employers with such model notices so as 
to enable employers to timely comply with the 
requirements of subparagraph (A). Such model 
notices shall include information regarding how 
an employee may contact the State in which the 
employee resides for additional information re-
garding potential opportunities for such pre-
mium assistance, including how to apply for 
such assistance. 
‘‘(C) OPTION
TO
PROVIDE
CONCURRENT 
WITH PROVISION OF PLAN MATERIALS TO EM-
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PLOYEE.—An employer may provide the model 
notice applicable to the State in which an em-
ployee resides concurrent with the furnishing of 
materials notifying the employee of health plan 
eligibility, concurrent with materials provided to 
the employee in connection with an open season 
or election process conducted under the plan, or 
concurrent with the furnishing of the summary 
plan description as provided in section 104(b).’’. 
(B) CONFORMING
AMENDMENT.—Section 
102(b) of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1022(b)) is 
amended— 
(i) by striking ‘‘and the remedies’’ 
and inserting ‘‘, the remedies’’; and 
(ii) by inserting before the period the 
following: ‘‘, and if the employer so elects 
for purposes of complying with section 
701(f)(3)(B)(i), the model notice applicable 
to the State in which the participants and 
beneficiaries reside’’. 
(C) EFFECTIVE DATES.—The Secretary of 
Labor and the Secretary of Health and Human 
Services shall develop the initial model notices 
under section 701(f)(3)(B) of the Employee Re-
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tirement Income Security Act of 1974, and the 
Secretary of Labor shall provide such notices to 
employers, not later than the date that is 1 
year after the date of enactment of this Act, 
and each employer shall provide the initial an-
nual notices to such employer’s employees be-
ginning with the first plan year that begins 
after the date on which such initial model no-
tices are first issued. 
(2) AMENDMENTS TO PUBLIC HEALTH SERVICE 
ACT.—Section 2701(f) of the Public Health Service 
Act (42 U.S.C. 300gg(f)) is amended by adding at 
the end the following new paragraph: 
‘‘(3) OUTREACH
TO
EMPLOYEES
REGARDING 
AVAILABILITY OF SCHIP COVERAGE.— 
‘‘(A) IN
GENERAL.—Each employer that 
maintains a group health plan in a State that 
provides child health assistance under a State 
child health plan under title XXI of such Act, 
in the form of premium assistance for the pur-
chase of coverage under a group health plan, 
shall provide to each employee a written notice 
informing the employee of potential opportuni-
ties then currently available in the State in 
which the employee resides for premium assist-
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