H. R. 3963—59 
‘‘(i) the amount of expenditures under the State 
child health plan, including administrative expendi-
tures, that the State would have made to provide com-
parable coverage of the targeted low-income child 
involved or the family involved (as applicable); or 
‘‘(ii) the aggregate amount of expenditures that 
the State would have made under the State child 
health plan, including administrative expenditures, for 
providing coverage under such plan for all such chil-
dren or families.’’. 
(B) NONAPPLICATION
TO
PREVIOUSLY
APPROVED
COV-
ERAGE.—The amendment made by subparagraph (A) shall 
not apply to coverage the purchase of which has been 
approved by the Secretary under section 2105(c)(3) of the 
Social Security Act prior to the date of enactment of this 
Act. 
(b) MEDICAID.—Title XIX is amended by inserting after section 
1906 the following new section: 
‘‘PREMIUM ASSISTANCE OPTION FOR CHILDREN 
‘‘SEC. 1906A. (a) IN GENERAL.—A State may elect to offer a 
premium assistance subsidy (as defined in subsection (c)) for quali-
fied employer-sponsored coverage (as defined in subsection (b)) to 
all individuals under age 19 who are entitled to medical assistance 
under this title (and to the parent of such an individual) who 
have access to such coverage if the State meets the requirements 
of this section. 
‘‘(b) QUALIFIED EMPLOYER-SPONSORED COVERAGE.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2)), in this para-
graph, the term ‘qualified employer-sponsored coverage’ means 
a group health plan or health insurance coverage offered 
through an employer— 
‘‘(A) that qualifies as creditable coverage as a group 
health plan under section 2701(c)(1) of the Public Health 
Service Act; 
‘‘(B) for which the employer contribution toward any 
premium for such coverage is at least 40 percent; and 
‘‘(C) that is offered to all individuals in a manner 
that would be considered a nondiscriminatory eligibility 
classification for purposes of paragraph (3)(A)(ii) of section 
105(h) of the Internal Revenue Code of 1986 (but deter-
mined without regard to clause (i) of subparagraph (B) 
of such paragraph). 
‘‘(2) EXCEPTION.—Such term does not include coverage con-
sisting of— 
‘‘(A) benefits provided under a health flexible spending 
arrangement (as defined in section 106(c)(2) of the Internal 
Revenue Code of 1986); or 
‘‘(B) a high deductible health plan (as defined in section 
223(c)(2) of such Code), without regard to whether the 
plan is purchased in conjunction with a health savings 
account (as defined under section 223(d) of such Code). 
‘‘(3) TREATMENT AS THIRD PARTY LIABILITY.—The State shall 
treat the coverage provided under qualified employer-sponsored 
coverage as a third party liability under section 1902(a)(25). 
‘‘(c) PREMIUM ASSISTANCE SUBSIDY.—In this section, the term 
‘premium assistance subsidy’ means the amount of the employee
H. R. 3963—60 
contribution for enrollment in the qualified employer-sponsored cov-
erage by the individual under age 19 or by the individual’s family. 
Premium assistance subsidies under this section shall be considered, 
for purposes of section 1903(a), to be a payment for medical assist-
ance. 
‘‘(d) VOLUNTARY PARTICIPATION.— 
‘‘(1) EMPLOYERS.—Participation by an employer in a pre-
mium assistance subsidy offered by a State under this section 
shall be voluntary. An employer may notify a State that it 
elects to opt-out of being directly paid a premium assistance 
subsidy on behalf of an employee. 
‘‘(2) BENEFICIARIES.—No subsidy shall be provided to an 
individual under age 19 under this section unless the individual 
(or the individual’s parent) voluntarily elects to receive such 
a subsidy. A State may not require such an election as a 
condition of receipt of medical assistance. State may not require, 
as a condition of an individual under age 19 (or the individual’s 
parent) being or remaining eligible for medical assistance under 
this title, apply for enrollment in qualified employer-sponsored 
coverage under this section. 
‘‘(3) OPT-OUT PERMITTED FOR ANY MONTH.—A State shall 
establish a process for permitting the parent of an individual 
under age 19 receiving a premium assistance subsidy to 
disenroll the individual from the qualified employer-sponsored 
coverage. 
‘‘(e) REQUIREMENT TO PAY PREMIUMS AND COST-SHARING AND 
PROVIDE SUPPLEMENTAL COVERAGE.—In the case of the participa-
tion of an individual under age 19 (or the individual’s parent) 
in a premium assistance subsidy under this section for qualified 
employer-sponsored coverage, the State shall provide for payment 
of all enrollee premiums for enrollment in such coverage and all 
deductibles, coinsurance, and other cost-sharing obligations for 
items and services otherwise covered under the State plan under 
this title (exceeding the amount otherwise permitted under section 
1916 or, if applicable, section 1916A). The fact that an individual 
under age 19 (or a parent) elects to enroll in qualified employer- 
sponsored coverage under this section shall not change the individ-
ual’s (or parent’s) eligibility for medical assistance under the State 
plan, except insofar as section 1902(a)(25) provides that payments 
for such assistance shall first be made under such coverage.’’. 
(c) GAO STUDY AND REPORT.—Not later than January 1, 2009, 
the Comptroller General of the United States shall study cost 
and coverage issues relating to any State premium assistance pro-
grams for which Federal matching payments are made under title 
XIX or XXI of the Social Security Act, including under waiver 
authority, and shall submit a report to the Committee on Finance 
of the Senate and the Committee on Energy and Commerce of 
the House of Representatives on the results of such study. 
SEC. 302. OUTREACH, EDUCATION, AND ENROLLMENT ASSISTANCE. 
(a) REQUIREMENT TO INCLUDE DESCRIPTION OF OUTREACH, EDU-
CATION, AND ENROLLMENT EFFORTS RELATED TO PREMIUM ASSIST-
ANCE SUBSIDIES IN STATE CHILD HEALTH PLAN.—Section 2102(c) 
(42 U.S.C. 1397bb(c)) is amended by adding at the end the following 
new paragraph: 
‘‘(3) PREMIUM ASSISTANCE SUBSIDIES.—In the case of a State 
that provides for premium assistance subsidies under the State
H. R. 3963—61 
child health plan in accordance with paragraph (2)(B), (3), 
or (10) of section 2105(c), or a waiver approved under section 
1115, outreach, education, and enrollment assistance for fami-
lies of children likely to be eligible for such subsidies, to inform 
such families of the availability of, and to assist them in 
enrolling their children in, such subsidies, and for employers 
likely to provide coverage that is eligible for such subsidies, 
including the specific, significant resources the State intends 
to apply to educate employers about the availability of premium 
assistance subsidies under the State child health plan.’’. 
(b) NONAPPLICATION OF 10 PERCENT LIMIT ON OUTREACH AND 
CERTAIN OTHER EXPENDITURES.—Section 2105(c)(2)(C) (42 U.S.C. 
1397ee(c)(2)(C)), as amended by section 301(c)(2), is amended by 
adding at the end the following new clause: 
‘‘(iv) EXPENDITURES FOR OUTREACH TO INCREASE 
THE ENROLLMENT OF CHILDREN UNDER THIS TITLE AND 
TITLE xix THROUGH PREMIUM ASSISTANCE SUBSIDIES.— 
Expenditures for outreach activities to families of chil-
dren likely to be eligible for premium assistance sub-
sidies in accordance with paragraph (2)(B), (3), or (10), 
or a waiver approved under section 1115, to inform 
such families of the availability of, and to assist them 
in enrolling their children in, such subsidies, and to 
employers likely to provide qualified employer-spon-
sored coverage (as defined in subparagraph (B) of such 
paragraph), but not to exceed an amount equal to 
1.25 percent of the maximum amount permitted to 
be expended under subparagraph (A) for items 
described in subsection (a)(1)(D).’’. 
Subtitle B—Coordinating Premium 
Assistance With Private Coverage 
SEC. 311. SPECIAL ENROLLMENT PERIOD UNDER GROUP HEALTH 
PLANS IN CASE OF TERMINATION OF MEDICAID OR CHIP 
COVERAGE OR ELIGIBILITY FOR ASSISTANCE IN PUR-
CHASE OF EMPLOYMENT-BASED COVERAGE; COORDINA-
TION OF COVERAGE. 
(a) AMENDMENTS TO INTERNAL REVENUE CODE OF 1986.—Sec-
tion 9801(f) of the Internal Revenue Code of 1986 (relating to 
special enrollment periods) is amended by adding at the end the 
following new paragraph: 
‘‘(3) SPECIAL
RULES
RELATING
TO
MEDICAID
AND
CHIP.— 
‘‘(A) IN GENERAL.—A group health plan shall permit 
an employee who is eligible, but not enrolled, for coverage 
under the terms of the plan (or a dependent of such an 
employee if the dependent is eligible, but not enrolled, 
for coverage under such terms) to enroll for coverage under 
the terms of the plan if either of the following conditions 
is met: 
‘‘(i) TERMINATION
OF
MEDICAID
OR
CHIP
COV-
ERAGE.—The employee or dependent is covered under 
a Medicaid plan under title XIX of the Social Security 
Act or under a State child health plan under title 
XXI of such Act and coverage of the employee or 
dependent under such a plan is terminated as a result
H. R. 3963—62 
of loss of eligibility for such coverage and the employee 
requests coverage under the group health plan not 
later than 60 days after the date of termination of 
such coverage. 
‘‘(ii) ELIGIBILITY
FOR
EMPLOYMENT
ASSISTANCE 
UNDER MEDICAID OR CHIP.—The employee or dependent 
becomes eligible for assistance, with respect to coverage 
under the group health plan under such Medicaid plan 
or State child health plan (including under any waiver 
or demonstration project conducted under or in relation 
to such a plan), if the employee requests coverage 
under the group health plan not later than 60 days 
after the date the employee or dependent is determined 
to be eligible for such assistance. 
‘‘(B) EMPLOYEE OUTREACH AND DISCLOSURE.— 
‘‘(i) OUTREACH TO EMPLOYEES REGARDING AVAIL-
ABILITY OF MEDICAID AND CHIP COVERAGE.— 
‘‘(I) IN GENERAL.—Each employer that main-
tains a group health plan in a State that provides 
medical assistance under a State Medicaid plan 
under title XIX of the Social Security Act, or child 
health assistance under a State child health plan 
under title XXI of such 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 premium 
assistance under such plans for health coverage 
of the employee or the employee’s dependents. For 
purposes of compliance with this clause, the 
employer may use any State-specific model notice 
developed 
in 
accordance 
with 
section 
701(f)(3)(B)(i)(II) of the Employee Retirement 
Income 
Security 
Act 
of 
1974 
(29 
U.S.C. 
1181(f)(3)(B)(i)(II)). 
‘‘(II) OPTION
TO
PROVIDE
CONCURRENT
WITH 
PROVISION OF PLAN MATERIALS TO EMPLOYEE.—An 
employer may provide the model notice applicable 
to the State in which an employee resides concur-
rent 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). 
‘‘(ii) DISCLOSURE ABOUT GROUP HEALTH PLAN BENE-
FITS
TO
STATES
FOR
MEDICAID
AND
CHIP
ELIGIBLE 
INDIVIDUALS.—In the case of a participant or bene-
ficiary of a group health plan who is covered under 
a Medicaid plan of a State under title XIX of the 
Social Security Act or under a State child health plan 
under title XXI of such Act, the plan administrator 
of the group health plan shall disclose to the State, 
upon request, information about the benefits available