SEC. 2. LIMITATION ON PAYMENTS FOR STATES COVERING 
CHILDREN IN FAMILIES WITH INCOME BE-
TWEEN 200 AND 300 PERCENT OF THE POV-
ERTY LINE; OPTION OF PREMIUM ASSIST-
ANCE FOR CHILDREN OF HIGHER INCOME 
FAMILIES. 
(a) IN GENERAL.—Section 2105(c) of the Social Se-
curity Act (42 U.S.C. 1397ee(c)) is amended by adding 
at the end the following new paragraph: 
‘‘(8) LIMITATION ON PAYMENTS FOR STATES 
COVERING
CHILDREN
OF
HIGHER
INCOME
FAMI-
LIES.— 
‘‘(A) IN GENERAL.—No payment shall be 
made under this section for child health assist-
ance provided for a child of a higher income 
family (as defined in subparagraph (B)) under 
the State child health plan unless— 
‘‘(i) the family demonstrates that 
health insurance coverage for the child 
is— 
‘‘(I) unattainable, in accordance 
with subparagraph (C); or 
‘‘(II) unaffordable, in accordance 
with subparagraph (D); and 
‘‘(ii) the plan permits the family to be 
provided child health assistance through 
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the form of premium assistance described 
in subparagraph (E) rather than through 
Medicaid or otherwise. 
‘‘(B) HIGHER INCOME FAMILY.—For pur-
poses of this paragraph, the term ‘higher in-
come family’ means a family the income of 
which exceeds 200 percent, but does not exceed 
300 percent, of the poverty line. 
‘‘(C) UNATTAINABILITY.—For purposes of 
this paragraph, health insurance coverage shall 
be treated as unattainable with respect to the 
child of a higher income family if the family can 
demonstrate an inability to obtain health insur-
ance coverage for the child (as determined in 
accordance with standards established by the 
Secretary). 
‘‘(D) UNAFFORDABILITY.— 
‘‘(i) IN
GENERAL.—For purposes of 
this paragraph, health insurance coverage 
shall be treated as unaffordable with re-
spect to the child of a higher income family 
if the premium for such coverage exceeds 
the percentage (as determined by the Sec-
retary under clause (ii)) of the adjusted 
gross income of the family. In applying the 
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previous sentence to family coverage, there 
shall only be taken into account the por-
tion of such premium that is actuarially at-
tributable to children (as computed for 
purposes of subparagraph (E)(iii)). 
‘‘(ii) PERCENTAGE
DETERMINED.— 
The Secretary shall determine a percentage 
under this clause based on factors such as 
family size, the average premium for 
health insurance coverage in the private 
sector for children, and such other factors 
as the Secretary deems appropriate. 
‘‘(E) PREMIUM ASSISTANCE OPTION.— 
‘‘(i) IN GENERAL.—The premium as-
sistance option under this subparagraph 
shall be in the form of payment of pre-
mium for a policy that provides health in-
surance benefits to the child of a higher in-
come family involved. Except as otherwise 
specifically provided, the State child health 
plan shall establish standards for such ben-
efits and premium contributions. 
‘‘(ii) TREATMENT.—Payment of pre-
mium assistance under this subparagraph 
shall be treated as child health assistance 
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for purposes of obtaining Federal financial 
participation under section 2105. 
‘‘(iii) APPLICATION TO FAMILY COV-
ERAGE.—In the case of premium assist-
ance under this subparagraph applied to 
coverage of one or more children under 
family coverage that covers a parent of 
such a child or other individuals who are 
not children, the amount of the premium 
payment under the option under this sub-
paragraph shall be adjusted to take into 
account only the portion of the health in-
surance benefits that are actuarially attrib-
utable to such children. 
‘‘(F) EXCEPTION
FOR
CURRENTLY
COV-
ERED
INDIVIDUALS.—Subparagraph (A) shall 
not apply until October 1, 2011, to children 
who are enrolled under this part as targeted 
low-income children as of October 1, 2008.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to State child health plans for 
payment for items and services furnished on or after Octo-
ber 1, 2008. 
Æ 
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