SEC. 2. PREMIUM ASSISTANCE FOR COBRA CONTINUATION
COVERAGE.
(a) ESTABLISHMENT.—
(1) IN GENERAL.—Not later than 60 days after
the date of enactment of this Act, the Secretary of
the Treasury, in consultation with the Secretary of
Labor, shall establish a program under which pre-
mium assistance for COBRA continuation coverage
shall be provided for qualified individuals under this
section.
(2) QUALIFIED INDIVIDUALS.—For purposes of
this section, a qualified individual is an individual
who—
(A) establishes that the individual—
(i) on or after July 1, 2001, became
entitled to elect COBRA continuation cov-
erage; and
(ii) has elected such coverage; and
(B) enrolls in the premium assistance pro-
gram under this section by not later than the
end of such 1-year period.
(b) LIMITATION OF PERIOD OF PREMIUM ASSIST-
ANCE.—Premium assistance provided under this sub-
section shall end with respect to an individual on the ear-
lier of—
(1) the date the individual is no longer covered
under COBRA continuation coverage; or
(2) 12 months after the date the individual is
first enrolled in the premium assistance program es-
tablished under this section.
(c) PAYMENT, AND CREDITING OF ASSISTANCE.—
(1) AMOUNT OF ASSISTANCE.—Premium assist-
ance provided under this section shall be equal to
100 percent of the amount of the premium required
for the COBRA continuation coverage.
(2) PROVISION OF ASSISTANCE.—Premium as-
sistance provided under this section shall be pro-
vided through the establishment of direct payment
arrangements with the administrator of the group
health plan (or other entity) that provides or admin-
isters the COBRA continuation coverage. It shall be
a fiduciary duty of such administrator (or other en-
tity) to enter into such arrangements under this sec-
tion.
(3) PREMIUMS PAYABLE BY QUALIFIED INDI-
VIDUAL
REDUCED
BY
AMOUNT
OF
ASSISTANCE.—
Premium assistance provided under this section shall
be credited by such administrator (or other entity)
against the premium otherwise owed by the indi-
vidual involved for such coverage.
(d) CHANGE IN COBRA NOTICE.—
(1) GENERAL NOTICE.—
(A) IN GENERAL.—In the case of notices
provided under section 4980B(f)(6) of the In-
ternal Revenue Code of 1986 with respect to in-
dividuals who, on or after July 1, 2001, become
entitled to elect COBRA continuation coverage,
such notices shall include an additional notifica-
tion to the recipient of the availability of pre-
mium assistance for such coverage under this
section.
(B) ALTERNATIVE NOTICE.—In the case of
COBRA continuation coverage to which the no-
tice provision under section 4980B(f)(6) of the
Internal Revenue Code of 1986 does not apply,
the Secretary of the Treasury shall, in coordi-
nation with administrators of the group health
plans (or other entities) that provide or admin-
ister the COBRA continuation coverage in-
volved, assure provision of such notice.
(C) FORM.—The requirement of the addi-
tional notification under this paragraph may be
met by amendment of existing notice forms or
by inclusion of a separate document with the
notice otherwise required.
(2) SPECIFIC REQUIREMENTS.—Each additional
notification under paragraph (1) shall include—
(A) the forms necessary for establishing
eligibility under subsection (a)(2)(A) and enroll-
ment under subsection (a)(2)(B) in connection
with the coverage with respect to each covered
employee or other qualified beneficiary;
(B) the name, address, and telephone num-
ber necessary to contact the plan administrator
and any other person maintaining relevant in-
formation in connection with the premium as-
sistance; and
(C) the following statement displayed in a
prominent manner:
‘‘You may be eligible to receive assistance with pay-
ment of 100 percent of your COBRA continuation cov-
erage premiums for a duration of not to exceed 12
months.’’.
(3) NOTICE RELATING TO RETROACTIVE COV-
ERAGE.—In the case of such notices previously
transmitted before the date of the enactment of this
Act in the case of an individual described in para-
graph (1) who has elected (or is still eligible to elect)
COBRA continuation coverage as of the date of the
enactment of this Act, the administrator of the
group health plan (or other entity) involved or the
Secretary of the Treasury (in the case described in
the paragraph (1)(B)) shall provide (within 60 days
after the date of the enactment of this Act) for the
additional notification required to be provided under
paragraph (1).
(4) MODEL NOTICES.—The Secretary shall pre-
scribe models for the additional notification required
under this subsection.
(f) OBLIGATION OF FUNDS.—This section constitutes
budget authority in advance of appropriations Acts and
represents the obligation of the Federal Government to
provide for the payment of premium assistance under this
section.
(g) PROMPT ISSUANCE
OF GUIDANCE.—The Sec-
retary of the Treasury, in consultation with the Secretary
of Labor, shall issue guidance under this section not later
than 30 days after the date of the enactment of this Act.
(h) DEFINITIONS.—In this section:
(1) ADMINISTRATOR.—The term ‘‘adminis-
trator’’ has the meaning given such term in section
3(16) of the Employee Retirement Income Security
Act of 1974.
(2) COBRA CONTINUATION
COVERAGE.—The
term ‘‘COBRA continuation coverage’’ means con-
tinuation coverage provided pursuant to title XXII
of the Public Health Service Act, section 4980B of
the Internal Revenue Code of 1986 (other than sub-
section (f)(1) of such section insofar as it relates to
pediatric vaccines), part 6 of subtitle B of title I of
the Employee Retirement Income Security Act of
1974 (other than under section 609), section 8905a
of title 5, United States Code, or under a State pro-
gram that provides continuation coverage com-
parable to such continuation coverage.
(3) GROUP HEALTH PLAN.—The term ‘‘group
health plan’’ has the meaning given such term in
section 9832(a) of the Internal Revenue Code of
1986.
(4) STATE.—The term ‘‘State’’ includes the
District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, Guam, American Samoa,
and the Commonwealth of the Northern Mariana Is-
lands.
SEC. 3. TEMPORARY MEDICAID COVERAGE FOR CERTAIN
UNINSURED EMPLOYEES.
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, with respect to any month, as a condition for
the receipt of Federal financial participation under title
XIX of the Social Security Act, a State shall provide,
under its medicaid program under such title, medical as-
sistance in the case of an individual—
(1) who has become totally or partially sepa-
rated from employment on or after July 1, 2001;
(2) who is not eligible for COBRA continuation
coverage; and
(3) who is uninsured;
and to the individual’s spouse and dependents (as defined
for purposes of the Internal Revenue Code of 1986) if they
also are uninsured.
(b) LIMITATION OF PERIOD OF COVERAGE.—Assist-
ance under this section shall end with respect to an indi-
vidual on the earlier of—
(1) the date the individual is no longer unin-
sured; or
(2) 12 months after the date the individual is
first determined to be eligible for medical assistance
under this section.
(c) SPECIAL RULES.—In the case of medical assist-
ance provided under this section—
(1) the Federal medical assistance percentage
under section 1905(b) of the Social Security Act
shall be the enhanced FMAP (as defined in section
2105(b) of such Act);
(2) a State may elect to apply alternative in-
come, asset, and resource limitations and the provi-
sions of section 1916(g) of such Act, except that in
no case shall a State cover individuals with higher
family income without covering individuals with a
lower family income;
(3) such medical assistance shall not be pro-
vided for periods before the date the individual be-
comes uninsured;
(4) individuals eligible for medical assistance
under this section shall be deemed to be described
in the list of individuals described in the matter pre-
ceding paragraph (1) of section 1905(a) of such Act;
(5) a State may elect to provide such medical
assistance without regard to any limitation under
sections 401(a), 402(b), 403, and 421 of the Per-
sonal Responsibility and Work Opportunity Rec-
onciliation Act of 1996 (8 U.S.C. 1611(a), 1612(b),
1613, and 1631) and no debt shall accrue under an
affidavit of support against any sponsor of an indi-
vidual who is an alien who is provided such assist-
ance, and the cost of such assistance shall not be
considered as an unreimbursed cost; and
(6) the Secretary of Health and Human Serv-
ices shall not count, for purposes of section 1108(f)
of the Social Security Act, such amount of payments
under this section as bears a reasonable relationship
to the average national proportion of payments made
under this section for the 50 States and the District
of Columbia to the payments otherwise made under
title XIX for such States and District.
(d) DEFINITIONS.—For purposes of this subtitle:
(1) 
UNINSURED.—The 
term 
‘‘uninsured’’
means, with respect to an individual, that the indi-
vidual is not covered under—
(A) a group health plan (as defined in sec-
tion 2791(a) of the Public Health Service Act),
(B) health insurance coverage (as defined
in section 2791(b)(1) of the Public Health
Service Act), or
(C) a program under title XVIII, XIX, or
XXI of the Social Security Act, other than
under such title XIX pursuant to this section.
For purposes of this paragraph, such coverage under
subparagraph (A) or (B) shall not include coverage
consisting solely of coverage of excepted benefits (as
defined in section 2791(c) of the Public Health Serv-
ice Act).
(2) COBRA CONTINUATION
COVERAGE.—The
term ‘‘COBRA continuation coverage’’ means cov-
erage under a group health plan provided by an em-
ployer pursuant to title XXII of the Public Health
Service Act, section 4980B of the Internal Revenue
Code of 1986, part 6 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974,
or section 8905a of title 5, United States Code.
(3) STATE.—The term ‘‘State’’ has the mean-
ing given such term for purposes of title XIX of the
Social Security Act.
(e) EFFECTIVE DATE.—This section shall take effect
upon its enactment, whether or not regulations imple-
menting this section are issued.
SEC. 4. TEMPORARY COVERAGE FOR UNSUBSIDIZED POR-
TION OF COBRA CONTINUATION PREMIUMS.
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, with respect to COBRA continuation coverage
provided for any month, as a condition of receipt of Fed-
eral financial participation under title XIX of the Social
Security Act, a State shall provide payment of the unsub-
sidized portion of the premium for COBRA continuation
coverage in the case of any individual—
(1) who has become totally or partially sepa-
rated from employment on or after July 1, 2001;
and
(2) who is eligible for, and has elected coverage
under, COBRA continuation coverage;
and to the individual’s spouse and dependents (as defined
for purposes of the Internal Revenue Code of 1986) if they
also are eligible for such coverage and are otherwise unin-
sured.
(b) LIMITATION OF PERIOD OF COVERAGE.—Pre-
mium assistance under this section shall end with respect
to an individual on the earlier of—
(1) the date the individual is no longer covered
under COBRA continuation coverage; or
(2) 12 months after the date the individual is
first determined to be eligible for premium assist-
ance under this section.
(c) FINANCIAL PAYMENT TO STATES.—A State pro-
viding premium assistance under this section shall be enti-
tled to payment under section 1903(a) of the Social Secu-
rity Act with respect to such assistance (and administra-
tive expenses relating to such assistance) in the same man-
ner as such State is entitled to payment with respect to
medical assistance (and such administrative expenses)
under such section, except that, for purposes of this sub-
section, any reference to the Federal medical assistance
percentage shall be deemed a reference to the enhanced
FMAP (as defined in section 2105(b) of such Act). The
provisions of subsections (c)(5) and (c)(6) of section 3
shall apply with respect to this section in the same manner
as it applies under such section.
(d) UNSUBSIDIZED
PORTION
OF
PREMIUM
FOR
COBRA CONTINUATION COVERAGE.—For purposes of
this section, the term ‘unsubsidized portion of premium
for COBRA continuation coverage’ means that portion of
the premium for COBRA continuation coverage for which
there is no financial assistance available under section 2.
(e) EFFECTIVE DATE.—This section shall take effect
upon its enactment, whether or not regulations imple-
menting this section are issued.
SEC. 5. AMENDMENT TO THE FOOD STAMP ACT OF 1977.
(a) AMENDMENT.—Section 5(d) of the Food Stamp
Act of 1977 (7 U.S.C. 2014(d)) is amended—
(1) by striking ‘‘and (15)’’ and inserting
‘‘(15)’’, and
(2) by inserting before the period at the end the
following: ‘‘, and (16) compensation under the
State’s unemployment compensation law (including
amounts payable pursuant to an agreement under a
Federal unemployment compensation law)’’.
(b) APPLICATION OF AMENDMENT.—The amendment
made by subsection (a) shall not apply with respect to cer-