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SECTION 1. SHORT TITLE.

This Act may be cited as the ''Children Health Insurance Act of
1996''.

SEC. 2. HEALTH INSURANCE AVAILABILITY FOR CHILDREN.

(a) In General.--The Internal Revenue Code of 1986 (as amended by
the Health Insurance Portability and Accountability Act of 1996) is
amended by adding at the end the following:

''Subtitle L--Health Insurance Availability for Children

''CHAPTER 101--HEALTH INSURANCE AVAILABILITY FOR CHILDREN

''Sec. 9901. Excise tax on failure to
meet requirement of access to
coverage.
''Sec. 9902. Requirement of access to
coverage.
''Sec. 9903. Definitions.

''SEC. 9901. EXCISE TAX ON FAILURE TO MEET REQUIREMENT OF ACCESS TO
COVERAGE.

''(a) Imposition of Tax.--There is hereby imposed a tax on the
failure of--
''(1) a group health plan to meet the coverage requirements
of section 9902(a); and
''(2) an insurer that offers health insurance coverage
(other than to a group health plan subject to paragraph (1)) to
meet the requirements of section 9902(b).
''(b) Amount of Tax.--
''(1) Group health plan.--
''(A) In general.--The amount of tax imposed by
subsection (a)(1) on any failure with respect to a
participant or beneficiary of a group health plan shall
be 25 percent of each premium received by the group
health plan for the plan year in which such failure
occurs.
''(B) Self-insured plans.--In the case that the
group health plan is self-insured, the cost to the plan
of the coverage of participants and beneficiaries shall
be treated as the premium received for the purposes of
subparagraph (A).
''(2) Insurer offering individual health insurance
coverage.--The amount of tax imposed by subsection (a)(2) on
any failure of an insurer with respect to an individual
described in paragraph (1) or (2) of section 9902(b) shall be
25 percent of the total amount of the premiums paid to the
insurer for such coverage for the plan year in which such
failure occurs.
''(c) Limitations on Amount of Tax.--
''(1) Tax not to apply where failure not discovered
exercising reasonable diligence.--No tax shall be imposed by
subsection (a) on any failure during any period for which it is
established to the satisfaction of the Secretary that none of
the persons referred to in subsection (e) knew, or exercising
reasonable diligence would have known, that such failure
existed.
''(2) Tax not to apply to failures corrected within 30
days.--No tax shall be imposed by subsection (a) on any failure
if--
''(A) such failure was due to reasonable cause and
not to willful neglect, and
''(B) such failure is corrected during the 30-day
period beginning on the 1st date any of the persons
referred to in subsection (e) knew, or exercising
reasonable diligence would have known, that such
failure existed.
''(3) Waiver.--In the case of a failure which is due to
reasonable cause and not to willful neglect, the Secretary may
waive part or all of the tax imposed by subsection (a) to the
extent that the payment of such tax would be excessive relative
to the failure involved.
''(d) Tax Not To Apply to Certain Plans.--This section shall not
apply to--
''(1) any governmental plan (within the meaning of section
414(d)), or
''(2) any church plan (within the meaning of section
414(e)).
''(e) Liability for Tax.--The following shall be responsible for
the tax imposed by subsection (a):
''(1) In the case of the tax imposed by subsection (a)(1)
on a group health plan, the plan.
''(2) In the case of the tax imposed by subsection (a)(2)
on an insurer offering health insurance coverage, the insurer.

''SEC. 9902. REQUIREMENT OF ACCESS TO COVERAGE.

''(a) Group Health Plans.--
''(1) In general.--Each group health plan that provides
coverage to any participant (or beneficiary) must offer
qualifying coverage for each qualifying young dependent of an
individual who is a participant or beneficiary under the plan.
''(2) Timing of offer.--The offer under paragraph (1) shall
be made at the time a person first becomes a qualifying young
dependent and at least annually thereafter.
''(b) Health Insurance Coverage.--Each insurer that offers health
insurance coverage in the individual market must offer qualifying
coverage for each individual who is under 21 years of age, residing in
the United States, and a citizen or national of the United States (or
alien permanently residing in the United States under color of law).
''(c) Qualifying Coverage.--For purposes of this section--
''(1) In general.--The term 'qualifying coverage' means
coverage of health care benefits that provides for at least the
following benefits, without any limitation based on a pre-
existing condition with respect to such benefits and without
any waiting period for coverage with respect to such benefits:
''(A) Medicare benefits.--Benefits provided under
parts A and B of title XVIII of the Social Security
Act, or benefits determined to be actuarially
equivalent to (or greater than) such benefits; except
that in no case shall the coinsurance attributable to
benefits under part B of such title exceed (with
respect to provision of an item or service) the lesser
of $10 or 10 percent of the recognized payment amount
with respect to such item or service (determined
without regard to cost-sharing).
''(B) Well child care benefits.--
''(i) In general.--Payment for the
following items and services, without the
application of deductibles, coinsurance, and
copayments:
''(I) Newborn and well-baby care,
including normal newborn care and
pediatrician services for high-risk
deliveries.
''(II) Well-child care, including
routine office visits, routine
immunizations (including the vaccine
itself), routine laboratory tests, and
preventive dental care.
''(ii) Periodicity schedule.--The
Secretary, in consultation with the American
Academy of Pediatrics, shall establish a
schedule of periodicity for services described
in clause (i) which reflects the general,
appropriate frequency with which such services
should be provided to health children.
''(2) Managed care permitted.--Nothing in this section
shall be construed as limiting the providers through whom the
benefits described in paragraph (1) may be provided so long as
there is reasonable access to such benefits.
''(d) Qualifying Young Dependent.--For purposes of this section,
the term 'qualifying young dependent' means an individual who is under
21 years of age, residing in the United States, is a citizen or
national of the United States (or alien permanently residing in the
United States under color of law), and a dependent (as defined in
section 152) of the individual.

''SEC. 9903. DEFINITIONS.

''In this chapter--
''(1) Group health plan.--The term 'group health plan' has
the meaning given such term in section 5000(b)(1), but does not
include such a plan that has medical benefits that only consist
of coverage described in paragraph (2)(B).
''(2) Health insurance coverage.--
''(A) In general.--Except as provided in
subparagraph (B), the term 'health insurance coverage'
means benefits consisting of medical care (provided
directly, through insurance or reimbursement, or
otherwise) under any hospital or medical service policy
or certificate, hospital or medical service plan
contract, or health maintenance organization group
contract offered by an insurer or a health maintenance
organization.
''(B) Exception.--Such term does not include
coverage under any separate policy, certificate, or
contract only for one or more of any of the following:
''(i) Coverage for accident, credit-only,
vision, disability income, long-term care,
nursing home care, community-based care dental,
on-site medical clinics, or employee assistance
programs, or any combination thereof.
''(ii) Medicare supplemental health
insurance (within the meaning of section
1882(g)(1) of the Social Security Act (42
U.S.C. 1395ss(g)(1))) and similar supplemental
coverage provided under a group health plan.
''(iii) Coverage issued as a supplement to
liability insurance.
''(iv) Liability insurance, including
general liability insurance and automobile
liability insurance.
''(v) Workers' compensation or similar
insurance.
''(vi) Automobile medical-payment
insurance.
''(vii) Coverage for a specified disease or
illness.
''(viii) Hospital or fixed indemnity
insurance.
''(ix) Short-term limited duration
insurance.
''(x) Such other coverage, comparable to
that described in previous clauses, as may be
specified in regulations prescribed under this
title.
''(3) Health maintenance organization.--The term 'health
maintenance organization' means--
''(A) a federally qualified health maintenance
organization (as defined in section 1301(a) of the
Public Health Service Act (42 U.S.C. 300e(a))),
''(B) an organization recognized under State law as
a health maintenance organization, or
''(C) a similar organization regulated under State
law for solvency in the same manner and to the same
extent as such a health maintenance organization,
if it is subject to State law which regulates insurance (within
the meaning of section 514(b)(2) of the Employee Retirement
Income Security Act of 1974).
''(4) Insurer.--The term 'insurer' means an insurance
company, insurance service, or insurance organization
(including a health maintenance organization) which is licensed
to engage in the business of insurance in a State and which is
subject to State law which regulates insurance (within the
meaning of section 514(b)(2)(A) of the Employee Retirement
Income Security Act of 1974).
''(5) Individual market.--The term 'individual market'
means the market for health insurance coverage offered to
individuals and not to employers or in connection with a group
health plan and does not include the market for such coverage
issued only by an insurer that makes such coverage available
only on the basis of affiliation with an association.
''(6) Incorporation of certain definitions.--The terms
'beneficiary' and 'participant' have the meanings given such
terms in section 3 of the Employee Retirement Income Security
Act of 1974.''.
(b) Clerical Amendment.--The table of contents for the Internal
Revenue Code of 1986 is amended by adding after the item relating to
subtitle K the following new item:

''Subtitle L. Health Insurance
Availability for Children.''
(c) Effective Date.--The requirement of section 9902 of the
Internal Revenue Code of 1986 (as added by subsection (a) of this
section) shall take effect on January 1, 1998, and shall apply to
coverage offered on or after such date regardless of whether the plan
year began before such date.

SEC. 3. REFUNDABLE TAX CREDIT FOR PURCHASE OF HEALTH COVERAGE FOR
CHILDREN.

(a) General Rule.--Subpart C of part IV of subchapter A of chapter
1 of the Internal Revenue Code of 1986 is amended by redesignating
section 35 as section 36 and by inserting after section 34 the
following new section:

''SEC. 35. PURCHASE OF HEALTH COVERAGE FOR CHILDREN.

''(a) General Rule.--In the case of an individual, there shall be
allowed as a credit against the tax imposed by this subtitle for the
taxable year an amount equal to 80 percent of the qualified health
premiums paid in the taxable year by the taxpayer.
''(b) Application of Credit Against Tax Liability.--
''(1) In general.--The credit allowable under subsection
(a) shall be applied against tax liability at the rate of $0.50
of credit for each $1 of tax liability.
''(2) Tax liability.--For the purposes of paragraph (1),
the term 'tax liability' means the excess (if any) of--
''(A) the sum of--
''(i) the tax imposed by this chapter for
the taxable year (reduced by the credits
allowable against such tax other than the
credits allowable under this subpart), and
''(ii) the taxpayer's social security taxes
for such taxable year, over
''(B) the credit allowed for the taxable year under
section 32.
''(3) Social security taxes.--For purposes of paragraph
(2)--
''(A) In general.--The term 'social security taxes'
means, with respect to any taxpayer for any taxable
year--
''(i) the amount of the taxes imposed by
sections 3101 and 3201(a) on amounts received
by the taxpayer during the calendar year in
which the taxable year begins,
''(ii) one-half of the amount of the taxes
imposed by section 1401 on the self-employment
income of the taxpayer for the taxable year,
and
''(iii) one-half of the amount of the taxes
imposed by section 3211(a)(1) on amounts
received by the taxpayer during the calendar
year in which the taxable year begins.
''(B) Coordination with special refund of social
security taxes.--The term 'social security taxes' shall
not include any taxes to the extent the taxpayer is
entitled to a special refund of such taxes under
section 6413(c).
''(C) Special rule.--Any amounts paid pursuant to
an agreement under section 3121(l) (relating to
agreements entered into by American employers with
respect to foreign affiliates) which are equivalent to
the taxes referred to in subparagraph (A)(i) shall be
treated as taxes referred to in such subparagraph.
''(c) Definitions.--For the purposes of this section--
''(1) Qualified health premium.--The term 'qualified health
premium' means the amount paid for health coverage of a
qualifying young dependent.
''(2) Health coverage.--The term 'health coverage' means
health insurance coverage (as defined by section 9902(b)) that
includes qualifying coverage (as defined by section 9902(c)).
''(3) Qualifying young dependent.--The term 'qualifying
young dependent' has the meaning given such term by section
9902(d).''.
(b) Clerical Amendment.--The table of sections for subpart C of
part IV of subchapter A of chapter 1 is amended by striking the item
relating to section 35 and inserting the following new items:

''Sec. 35. Purchase of health coverage
for children.
''Sec. 36. Overpayments of tax.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1997.
Output:
Children Health Insurance Act of 1996 - Amends the Internal Revenue Code, as amended by the Health Insurance Portability and Accountability Act of 1996, to: (1) require group health plans and health insurers to provide access to coverage for a participant's or beneficiary's qualifying children; and (2) impose a noncompliance excise tax.
Amends the Code to provide a tax credit for an individual who purchases child health care coverage.