(4) RULE OF CONSTRUCTION.—Nothing in this 
section shall be construed to authorize the Secretary 
to impose any requirements on individual insurance, 
except with respect to eligible individuals purchasing 
individual insurance using advance payment of a tax 
credit provided under section 36A of the Internal 
Revenue Code of 1986. 
SEC. 413. USE OF PREMIUM SUBSIDIES TO UNIFY FAMILY 
COVERAGE WITH MEMBERS ENROLLED IN 
MEDICAID AND SCHIP. 
Notwithstanding any other provision of law, the Sec-
retary shall establish procedures under which, in the case 
of a family with 1 or more members enrolled in with a 
managed care entity under the State medicaid program 
under title XIX of the Social Security Act or the State 
children’s health insurance program under title XXI of 
such Act (42 U.S.C. 1396 et seq., 1397aa et seq.) and 
1 or more members who are an eligible individual under 
this title, the family shall have the option to enroll all fam-
ily members with the managed care entity under either 
or both such State programs. The procedures established 
by the Secretary shall provide that premiums charged to 
eligible individuals for enrollment with such an entity shall 
be based on the capitated payments established for adults 
or children, excluding adults and children who are known 
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to be pregnant, blind, disabled, or (in the case of adults) 
elderly, under the applicable State program (except that, 
in the case of an eligible individual known to be pregnant, 
premiums shall reflect capitated payments established 
under such State program for individuals known to be 
pregnant) plus reasonable administrative costs. 
SEC. 414. COVERAGE THROUGH EMPLOYER-SPONSORED 
HEALTH INSURANCE. 
(a) IN GENERAL.—Eligible individuals may use cred-
its allowed under the Internal Revenue Code of 1986 and 
supplemental assistance to enroll in coverage offered by 
eligible employers. 
(b) ELIGIBLE EMPLOYERS.—For purposes of this 
section, the term ‘‘eligible employers’’ includes the fol-
lowing: 
(1) The current employer of the eligible indi-
vidual or a member of such individual’s family. 
(2) A former employer required to offer cov-
erage of the eligible individual under a COBRA con-
tinuation provision (as defined in section 9832(d)(1) 
of the Internal Revenue Code) or a State law requir-
ing continuation coverage. 
(3) A former employer voluntarily offering cov-
erage of the eligible individual. 
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(c) APPLICATION OF DISREGARD OF PREEXISTING 
CONDITIONS EXCLUSIONS.—Notwithstanding any other 
provision of law, in the case of an individual who experi-
ences a qualifying event (as defined in section 603 of the 
Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1163)) and who, not later than 6 months after 
such event, is determined to be an eligible individual under 
this title, the same rules with respect to preexisting condi-
tions as apply to a nonelecting TAA-eligible individual 
under section 605(b) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1165(b)) shall apply with 
respect to such individual, regardless of which type of 
qualified coverage the individual purchases. 
(d) EXTENSION OF COBRA ELECTION PERIOD.— 
Notwithstanding any other provision of law, in the case 
of an individual who experiences a qualifying event (as de-
fined in section 603 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1163)) and who, not later 
than 6 months after such event, is determined to be an 
eligible individual under this title, the same rules with re-
spect to the temporary extension of a COBRA election pe-
riod as apply to a nonelecting TAA-eligible individual 
under section 605(b) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1165(b)) shall apply with 
respect to such individual. 
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(e) CURRENT EMPLOYER COVERAGE.—If an eligible 
individual uses the credits allowed under the Internal Rev-
enue Code of 1986 and supplemental assistance to pur-
chase coverage from an employer described in subsection 
(b), such credits and assistance shall apply as a percent-
age, not of the total premium amount for the eligible indi-
vidual, but of the employee’s or former employee’s share 
of premium payments. 
SEC. 415. PARTICIPATION BY SMALL EMPLOYERS. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of this title, the Secretary shall establish procedures 
under which, during annual open enrollment periods, a 
small employer shall have the option of purchasing group 
coverage for employees and dependents of employees, in-
cluding individuals who are not otherwise eligible individ-
uals under this title, through a purchasing pool established 
under section 403(a). 
(b) CONDITIONS OF PARTICIPATION.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the same requirements that 
apply with respect to participating insurers covering 
eligible low-income individuals under section 403 
shall apply with respect to coverage offered by such 
insurers through a small employer. 
(2) RISK ADJUSTMENT.— 
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(A) INCREASED PAYMENTS.—If employees 
of a small employer who are not otherwise eligi-
ble individuals under this title enroll in a pri-
vate group health insurance plan under this 
title and have a collective risk level that exceeds 
the statewide average (as determined pursuant 
to risk adjustment mechanisms developed by 
the 
Secretary 
consistent 
with 
section 
409(b)(1)), the Secretary (through a pool oper-
ator) shall provide participating insurers with 
such small employer enrollment bonus payments 
as are necessary to compensate the insurers for 
such increased risk. The premium charged to 
enrollees under this section shall be the same 
premium that is the basis of premium charges 
to enrollees who are eligible low-income individ-
uals. 
(B) REDUCED PAYMENTS.—A pool oper-
ator shall reduce payments to any plan with a 
risk level that falls below the statewide average 
(as so determined). 
(3) ADMINISTRATIVE
GUIDELINES.—The Sec-
retary shall develop guidelines for pool operators to 
use in serving small employers, which shall be mod-
eled after existing, successful, longstanding small 
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