[Congressional Record Volume 150, Number 126 (Thursday, October 7, 2004)]
[Senate]
[Pages S10733-S10738]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER:
  S. 2935. A bill to amend section 35 of the Internal Revenue Code of 
1986 to improve the health coverage tax credit, and for other purposes; 
to the Committee on Finance.
  Mr. ROCKEFELLER. On Monday, the Government Accountability Office 
(GAO) released a report on the Trade Adjustment Assistance health 
coverage tax credit, HCTC. The report confirms what many in Congress 
have been saying since the HCTC program began--the credit is not 
enough, the program has several barriers to enrollment, the premiums 
are prohibitively high for some workers because of medical 
underwriting, and the program is very expensive to administer.
  It is long past time for Congress to focus on the problems with the 
TAA health coverage tax credit. That is why I am introducing 
legislation today that will make much-needed improvements to the HCTC 
program. The TAA Health Coverage Improvement Act of 2004 offers 
solutions to many of the problems with the HCTC identified by GAO. This 
legislation will go a long way to make the TAA health care tax credit a 
realistic option for displaced workers and their families.
  When Congress passed the Trade Act of 2002, we made a promise to 
American workers that the potential loss of jobs will not equal the 
loss of health care coverage. Unfortunately, Congress has failed to 
make good on that promise. For the last two years, I have heard from 
steel retirees and widows in my State about how unaffordable the TAA 
health care tax credit is. And I have been very frustrated, just as I 
was when this bill passed, that we were not able to make the credit 
more affordable and accessible for people who need it the most--laid-
off workers and retirees who have very limited income.

[[Page S10734]]

  For a good number of supporters of the Trade Act of 2002, the health 
insurance tax credit was the single most important factor in overcoming 
their concerns about giving the President fast- track authority to move 
trade agreements through Congress. In my own judgment, the fast-track 
would not have passed Congress without the health care tax credit. The 
TAA health credit was the trade-off to balance the President's 
authority.
  Yet, the success many of us envisioned for the health care tax credit 
has not been realized through implementation. The number of people who 
have been able to access the health care tax credit over the last two 
years is extremely disappointing. As of July 2004, only 13,194 out of 
229,044 who are eligible for the credit are enrolled in the program. 
That is less than six percent, which means that over 94 percent of 
those eligible are not participating.
  I must say to my colleagues that Congress has had a hand in these 
disappointing enrollment figures. We have ignored every opportunity to 
improve the health coverage tax credit and enhance the lives of workers 
displaced by trade. Most recently, the members of this body voted 
against the Wyden-Coleman-Rockefeller-Baucus TAA amendment to the FSC/
ETI bill. Not only would this amendment have extended Trade Adjustment 
Assistance to service workers, it also would have addressed some of the 
problems GAO has identified with the health coverage credit.
  The TAA Health Coverage Improvement Act makes long overdue 
improvements to the TAA health care tax credit. First, this legislation 
addresses the issue of affordability. In addition to GAO, several 
consumer advocacy groups and research organizations--including the 
Commonwealth Fund, the Center on Budget and Policy Priorities, and 
Families USA--have cited affordability of the credit as the primary 
reason for low participation in the HCTC program. The bottom line is 
that a 65 percent subsidy is not enough. With a 65 percent credit, an 
eligible individual still has to pay an average of $1,714 out-of-pocket 
per year for single coverage. This figure is particularly astounding 
given the fact that the average worker, while actively employed and 
earning a paycheck, paid just $508 in 2003 for single employer-
sponsored health insurance coverage. The TAA Health Coverage 
Improvement Act makes the credit more affordable by increasing the 
subsidy amount to 95 percent.
  This legislation also addresses the issue of affordability by placing 
limits on the use of the individual market, as Congress intended under 
the original law. The Trade Act of 2002 specified that the health 
insurance credit could not be used for the purchase of health insurance 
coverage in the individual market except for HCTC-eligible workers who 
previously had a private, non- group coverage policy 30 days prior to 
separation from employment. However, States have been allowed by this 
Administration to create state-based coverage options in the individual 
market for any HCTC beneficiaries, including those who did not have 
individual market coverage one month prior to separation from 
employment.
  Because of the Administration's interpretation of the law, there are 
people who had employer-based coverage prior to separation from 
employment who are now being covered in the individual market. This was 
not the intent of the law. To make matters worse, this interpretation 
undermines the consumer protections set forth in the law because 
individual market plans are allowed to vary premiums based on age and 
medical status. In one State GAO reviewed for its report, because of 
medical underwriting, HCTC recipients in less-than-perfect health were 
charged almost six times the premiums charged to recipients rated in 
the healthiest category. The legislation I am introducing today 
addresses this problem by clarifying that states can only designate 
individual market coverage within guidelines of 30-day restriction and 
by requiring individual market plans to be community-rated.
  Second, this legislation guarantees that eligible workers will have 
access to comprehensive group health coverage. Group coverage is what 
people know. The vast majority of laid-off workers and PBGC retirees 
had employer-sponsored group coverage prior to losing their jobs or 
pension benefits. The TAA Health Coverage Improvement Act designates 
the Federal Employees Health Benefit Plan (FEHBP) as a qualified group 
option in every State, so that displaced workers nationwide will have 
access to the same type of affordable, comprehensive coverage they were 
used to when they were employed.
  Third, the TAA Health Coverage Act clarifies the three month 
continuous coverage requirement. Under the original TAA statute, 
displaced workers are required to maintain three months of continuous 
health insurance coverage in order to qualify for certain consumer 
protections. Those protections are guaranteed issue, no preexisting 
condition exclusion, comparable premiums, and comparable benefits. 
Congress intended this 3 month period to be counted as the 3 months 
prior to separation from employment. However, the Administration has 
interpreted the 3 month requirement as 3 months of health insurance 
coverage prior to enrollment in the new health plan, which usually is 
after separation from employment and after certification of TAA 
eligibility. Many laid-off workers and PBGC recipients cannot afford to 
maintain health coverage in the months between losing their jobs and 
TAA certification and, therefore, lose eligibility for the statutorily 
provided consumer protections. This legislation corrects this problem 
by clarifying that 3 months of continuous coverage means 3 months prior 
to separation from employment.

  Fourth, this bill allows spouses and dependents to receive the health 
coverage tax credit. Over the last 2 years, younger spouses and 
dependents of Medicare-eligible individuals have not been able to 
receive the subsidy because eligibility runs through the worker or 
retiree. This technicality is unfair to individuals who rely on health 
coverage through their spouses or parents. The TAA Health Coverage 
Improvement Act allows younger spouses and dependent children to retain 
eligibility for the health coverage tax credit in the event the 
qualified beneficiary becomes eligible for Medicare.
  Finally, this legislation streamlines the HCTC enrollment process and 
makes it easier for trade-displaced workers to access health insurance 
coverage. According to GAO, two of the factors contributing to low 
participation include a complicated and fragmented enrollment process 
and the inability of workers to pay 100 percent of the premium during 
the 3 to 6 months they are waiting to enroll in advance payment. This 
legislation includes a presumptive eligibility provision that allows 
displaced workers to enroll in a qualified health plan and receive the 
HCTC immediately upon application to the Department of Labor for 
certification. There is also a provision which directs the Treasury 
Secretary to pay 100 percent of the cost of premiums directly to the 
health plans during the months TAA-eligible workers are waiting for 
advance payment to begin.
  As a former Governor, I know how important Trade Adjustment 
Assistance is to individuals who have lost their jobs due to trade. In 
West Virginia, thousands of workers have lost their jobs as a result of 
trade policy. While adjusting to the loss of employment, these 
individuals still have to pay mortgages, put food on the table, and 
care for their families. Finding affordable health care adds a 
significant burden to their worries. The TAA health coverage tax credit 
is designed to help American workers retain health insurance coverage 
during this very difficult transition.
  Unfortunately, the HCTC program is not living up to its potential. 
The Government Accountability Office has given us a very specific 
diagnosis of the problems. Now, it is up to us to fix them. The TAA 
Health Coverage Improvement Act builds upon the Trade Act of 2002 and 
the lessons we have learned since in order to make the health coverage 
credit workable for eligible individuals and their families. I look 
forward to working with my colleagues to pass this important 
legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

[[Page S10735]]

                                S. 2935

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``TAA Health 
     Coverage Improvement Act of 2004''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Improvement of the affordability of the credit.
Sec. 3. 100 percent credit and payment for monthly premiums paid prior 
              to certification of eligibility for the credit.
Sec. 4. Eligibility for certain pension plan participants; presumptive 
              eligibility.
Sec. 5. Clarification of 3-month creditable coverage requirement.
Sec. 6. TAA pre-certification period rule for purposes of determining 
              whether there is a 63-day lapse in creditable coverage.
Sec. 7. Continued qualification of family members after certain events.
Sec. 8. Offering of Federal group coverage.
Sec. 9. Additional requirements for individual health insurance costs.
Sec. 10. Alignment of COBRA coverage with TAA period for TAA-eligible 
              individuals.
Sec. 11. Notice requirements.
Sec. 12. Annual report on enhanced TAA benefits.
Sec. 13. Extension of national emergency grants.
Sec. 14. Extension of funding for operation of State high risk health 
              insurance pools.

     SEC. 2. IMPROVEMENT OF THE AFFORDABILITY OF THE CREDIT.

       (a) Improvement of Affordability.--
       (1) In General.--Section 35(a) of the Internal Revenue Code 
     of 1986 (relating to credit for health insurance costs of 
     eligible individuals) is amended by striking ``65'' and 
     inserting ``95''.
       (2) Conforming amendment.--Section 7527(b) of such Code 
     (relating to advance payment of credit for health insurance 
     costs of eligible individuals) is amended by striking ``65'' 
     and inserting ``95''.
       (b) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 2004.

     SEC. 3. 100 PERCENT CREDIT AND PAYMENT FOR MONTHLY PREMIUMS 
                   PAID PRIOR TO CERTIFICATION OF ELIGIBILITY FOR 
                   THE CREDIT.

       (a) In General.--Subsection (a) of section 35 of the 
     Internal Revenue Code of 1986, as amended by section 2(a)(1), 
     is amended--
       (1) by striking the subsection heading and all that follows 
     through ``In case'' and inserting ``Amount of Credit.--
       ``(1) In general.--In case''; and
       (2) by adding at the end the following new paragraph:
       ``(2) 100 percent credit for months prior to issuance of 
     eligibility certificate.--The amount allowed as a credit 
     against the tax imposed by subtitle A shall be equal to 100 
     percent in the case of the taxpayer's first eligible coverage 
     months occurring prior to the issuance of a qualified health 
     insurance costs credit eligibility certificate.''.
       (b) Payment for Premiums Due Prior to Certification of 
     Eligibility for the Credit.--Section 7527 of the Internal 
     Revenue Code of 1986 (relating to advance payment of credit 
     for health insurance costs of eligible individuals) is 
     amended by adding at the end the following new subsection:
       ``(e) Payment for Premiums Due Prior To Issuance of 
     Certificate.--The program established under subsection (a) 
     shall provide--
       ``(1) that the Secretary shall make payments on behalf of a 
     certified individual of an amount equal to 100 percent of the 
     premiums for coverage of the taxpayer and qualifying family 
     members under qualified health insurance for eligible 
     coverage months (as defined in section 35(b)) occurring prior 
     to the issuance of a qualified health insurance costs credit 
     eligibility certificate; and
       ``(2) that any payments made under paragraph (1) shall not 
     be included in the gross income of the taxpayer on whose 
     behalf such payments were made.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to months beginning after the date of the 
     enactment of this Act in taxable years ending after such 
     date.

     SEC. 4. ELIGIBILITY FOR CERTAIN PENSION PLAN RECIPIENTS; 
                   PRESUMPTIVE ELIGIBILITY.

       (a) Eligibility for Certain Pension Plan Recipients.--
     Subsection (c) of section 35 of the Internal Revenue Code of 
     1986 is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (B), by striking ``and'' at the end;
       (B) in subparagraph (C), by striking the period and 
     inserting ``, and''; and
       (C) by adding at the end the following:
       ``(D) an eligible multiemployer pension participant.''; and
       (2) by adding at the end the following new paragraph:
       ``(5) Eligible multiemployer pension recipient.--The term 
     `eligible multiemployer pension recipient' means, with 
     respect to any month, any individual--
       ``(A) who has attained age 55 as of the first day of such 
     month,
       ``(B) who is receiving a benefit from a multiemployer plan 
     (as defined in section 3(37)(A) of the Employee Retirement 
     Income Security Act of 1974), and
       ``(C) whose former employer has withdrawn from such 
     multiemployer plan pursuant to section 4203(a) of such 
     Act.''.
       (b) Presumptive Eligibility for Petitioners for Trade 
     Adjustment Assistance.--Subsection (c) of section 35 of the 
     Internal Revenue Code of 1986, as amended by subsection (a), 
     is amended by adding at the end the following new paragraph:
       ``(6) Presumptive status as a taa recipient.--The term 
     `eligible individual' shall include any individual who is 
     covered by a petition filed with the Secretary of Labor under 
     section 221 of the Trade Act of 1974. This paragraph shall 
     apply to any individual only with respect to months which--
       ``(A) end after the date that such petition is so filed, 
     and
       ``(B) begin before the earlier of--
       ``(i) the 90th day after the date of filing of such 
     petition, or
       ``(ii) the date on which the Secretary of Labor makes a 
     final determination with respect to such petition.''.
       (c) Conforming Amendments.--
       (1) Paragraph (1) of section 7527(d) of such Code is 
     amended by striking ``or an eligible alternative TAA 
     recipient (as defined in section 35(c)(3))'' and inserting 
     ``, an eligible alternative TAA recipient (as defined in 
     section 35(c)(3)), an eligible multiemployer pension 
     recipient (as defined in section 35(c)(5), or an individual 
     who is an eligible individual by reason of section 
     35(c)(6)''.
       (2) Section 173(f)(4) of the Workforce Investment Act of 
     1998 (29 U.S.C. 2918(f)(4)) is amended--
       (A) in subparagraph (B), by striking ``and'' at the end;
       (B) in subparagraph (C), by striking the period and 
     inserting a comma; and
       (C) by inserting after subparagraph (C), the following new 
     subparagraphs:
       ``(D) an eligible multiemployer pension recipient (as 
     defined in section 35(c)(5) of the Internal Revenue Code of 
     1986), and
       ``(E) an individual who is an eligible individual by reason 
     of section 35(c)(6) of the Internal Revenue Code of 1986.''.
       (d) Technical Amendment Clarifying Eligibility of Certain 
     Displaced Workers Receiving a Benefit Under a Defined Benefit 
     Pension Plan.--The first sentence of section 35(c)(2) of the 
     Internal Revenue Code of 1986 is amended by inserting before 
     the period the following: ``, and shall include any such 
     individual who would be eligible to receive such an allowance 
     but for the fact that the individual is receiving a benefit 
     under a defined benefit plan (as defined in section 3(35) of 
     the Employee Retirement Income Security Act of 1974).''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to months beginning after the date of the 
     enactment of this Act in taxable years ending after such 
     date.

     SEC. 5. CLARIFICATION OF 3-MONTH CREDITABLE COVERAGE 
                   REQUIREMENT.

       (a) In General.--Clause (i) of section 35(e)(2)(B) of the 
     Internal Revenue Code of 1986 (defining qualifying 
     individual) is amended by inserting ``(prior to the 
     employment separation necessary to attain the status of an 
     eligible individual)'' after ``9801(c)''.
       (b) Conforming Amendment.--Section 173(f)(2)(B)(ii)(I) of 
     the Workforce Investment Act of 1998 (29 U.S.C. 
     2918(f)(2)(B)(ii)(I)) is amended by inserting ``(prior to the 
     employment separation necessary to attain the status of an 
     eligible individual)'' after ``1986''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to months beginning after the date of the 
     enactment of this Act in taxable years ending after such 
     date.

     SEC. 6. TAA PRE-CERTIFICATION PERIOD RULE FOR PURPOSES OF 
                   DETERMINING WHETHER THERE IS A 63-DAY LAPSE IN 
                   CREDITABLE COVERAGE.

       (a) ERISA Amendment.--Section 701(c)(2) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1181(c)(2)) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(C) TAA-eligible individuals.--
       ``(i) TAA pre-certification period rule.--In the case of a 
     TAA-eligible individual, the period beginning on the date the 
     individual has a TAA-related loss of coverage and ending on 
     the date that is 5 days after the postmark date of the notice 
     by the Secretary (or by any person or entity designated by 
     the Secretary) that the individual is eligible for a 
     qualified health insurance costs credit eligibility 
     certificate for purposes of section 7527 of the Internal 
     Revenue Code of 1986 shall not be taken into account in 
     determining the continuous period under subparagraph (A).
       ``(ii) Definitions.--The terms `TAA-eligible individual', 
     and `TAA-related loss of coverage' have the meanings given 
     such terms in section 605(b)(4)(C).''.
       (b) PHSA Amendment.--Section 2701(c)(2) of the Public 
     Health Service Act (42 U.S.C. 300gg(c)(2)) is amended by 
     adding at the end the following new subparagraph:
       ``(C) TAA-eligible individuals.--
       ``(i) TAA pre-certification period rule.--In the case of a 
     TAA-eligible individual, the period beginning on the date the 
     individual has a TAA-related loss of coverage and ending on 
     the date that is 5 days after the postmark date of the notice 
     by the Secretary (or by any person or entity designated by 
     the Secretary) that the individual is eligible for a 
     qualified health insurance costs credit eligibility 
     certificate for purposes of section

[[Page S10736]]

     7527 of the Internal Revenue Code of 1986 shall not be taken 
     into account in determining the continuous period under 
     subparagraph (A).
       ``(ii) Definitions.--The terms `TAA-eligible individual', 
     and `TAA-related loss of coverage' have the meanings given 
     such terms in section 2205(b)(4)(C).''.
       (c) IRC Amendment.--Section 9801(c)(2) of the Internal 
     Revenue Code of 1986 (relating to not counting periods before 
     significant breaks in creditable coverage) is amended by 
     adding at the end the following new subparagraph:
       ``(D) TAA-eligible individuals.--
       ``(i) TAA pre-certification period rule.--In the case of a 
     TAA-eligible individual, the period beginning on the date the 
     individual has a TAA-related loss of coverage and ending on 
     the date which is 5 days after the postmark date of the 
     notice by the Secretary (or by any person or entity 
     designated by the Secretary) that the individual is eligible 
     for a qualified health insurance costs credit eligibility 
     certificate for purposes of section 7527 shall not be taken 
     into account in determining the continuous period under 
     subparagraph (A).
       ``(ii) Definitions.--The terms `TAA-eligible individual', 
     and `TAA-related loss of coverage' have the meanings given 
     such terms in section 4980B(f)(5)(C)(iv).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to months beginning after the date of the 
     enactment of this Act in taxable years ending after such 
     date.

     SEC. 7. CONTINUED QUALIFICATION OF FAMILY MEMBERS AFTER 
                   CERTAIN EVENTS.

       (a) In General.--Subsection (g) of section 35 of the 
     Internal Revenue Code of 1986 is amended by redesignating 
     paragraph (9) as paragraph (10) and inserting after paragraph 
     (8) the following new paragraph:
       ``(9) Continued qualification of family members after 
     certain events.--
       ``(A) Eligible individual becomes medicare eligible.--In 
     the case of a month which would be an eligible coverage month 
     with respect to an eligible individual but for subsection 
     (f)(2)(A), such month shall be treated as an eligible 
     coverage month with respect to any qualifying family member 
     of such eligible individual (but not with respect to such 
     eligible individual).
       ``(B) Divorce.--In the case of a month which would be an 
     eligible coverage month with respect to a former spouse of a 
     taxpayer but for the finalization of a divorce between the 
     spouse and the taxpayer that occurs during the period in 
     which the taxpayer is an eligible individual, such month 
     shall be treated as an eligible coverage month with respect 
     to such former spouse.
       ``(C) Death.--In the case of a month which would be an 
     eligible coverage month with respect to an eligible 
     individual but for the death of such individual, such month 
     shall be treated as an eligible coverage month with respect 
     to any qualifying family of such eligible individual.''.
       (b) Conforming Amendment.--Section 173(f) of the Workforce 
     Investment Act of 1998 (29 U.S.C. 2918(f)) is amended by 
     adding at the end the following:
       ``(8) Continued qualification of family members after 
     certain events.--
       ``(A) Eligible individual becomes medicare eligible.--In 
     the case of a month which would be an eligible coverage month 
     with respect to an eligible individual but for subsection 
     (f)(2)(A), such month shall be treated as an eligible 
     coverage month with respect to any qualifying family member 
     of such eligible individual (but not with respect to such 
     eligible individual).
       ``(B) Divorce.--In the case of a month which would be an 
     eligible coverage month with respect to a former spouse of a 
     taxpayer but for the finalization of a divorce between the 
     spouse and the taxpayer that occurs during the period in 
     which the taxpayer is an eligible individual, such month 
     shall be treated as an eligible coverage month with respect 
     to such former spouse.
       ``(C) Death.--In the case of a month which would be an 
     eligible coverage month with respect to an eligible 
     individual but for the death of such individual, such month 
     shall be treated as an eligible coverage month with respect 
     to any qualifying family of such eligible individual.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to months beginning after the date of the 
     enactment of this Act in taxable years ending after such 
     date.

     SEC. 8. OFFERING OF FEDERAL GROUP COVERAGE.

       (a) Provision of Group Coverage.--
       (1) In general.--The Director of the Office of Personnel 
     Management jointly with the Secretary of the Treasury shall 
     establish a program under which eligible individuals (as 
     defined in section 35(c) of the Internal Revenue Code of 
     1986) are offered enrollment under health benefit plans that 
     are made available under FEHBP.
       (2) Terms and conditions.--The terms and conditions of 
     health benefits plans offered under paragraph (1) shall be 
     the same as the terms and coverage offered under FEHBP, 
     except that the percentage of the premium charged to eligible 
     individuals (as so defined) for such health benefit plans 
     shall be equal to 5 percent.
       (3) Study.--The Director of the Office of Personnel 
     Management jointly with the Secretary of the Treasury shall 
     conduct a study of the impact of the offering of health 
     benefit plans under this subsection on the terms and 
     conditions, including premiums, for health benefit plans 
     offered under FEHBP and shall submit to Congress, not later 
     than 2 years after the date of the enactment of this Act, a 
     report on such study. Such report may contain such 
     recommendations regarding the establishment of separate risk 
     pools for individuals covered under FEHBP and eligible 
     individuals covered under health benefit plans offered under 
     paragraph (1) as may be appropriate to protect the interests 
     of individuals covered under FEHBP and alleviate any adverse 
     impact on FEHBP that may result from the offering of such 
     health benefit plans.
       (4) FEHBP defined.--In this section, the term ``FEHBP'' 
     means the Federal Employees Health Benefits Program offered 
     under chapter 89 of title 5, United States Code.
       (b) Conforming Amendments.--
       (1) Paragraph (1) of section 35(e) of the Internal Revenue 
     Code of 1986 is amended by adding at the end the following 
     new subparagraph:
       ``(K) Coverage under a health benefits plan offered under 
     section 8(a)(1) of the TAA Health Care Tax Credit Improvement 
     Act of 2004.''.
       (2) Section 173(f)(2)(A) of the Workforce Investment Act of 
     1998 (29 U.S.C. 2918(f)(2)(A)) is amended by adding at the 
     end the following new clause:
       ``(xi) Coverage under a health benefits plan offered under 
     section 8(a)(1) of the TAA Health Care Tax Credit Improvement 
     Act of 2004.''.

     SEC. 9. ADDITIONAL REQUIREMENTS FOR INDIVIDUAL HEALTH 
                   INSURANCE COSTS.

       (a) In general.--Subparagraph (A) of section 35(e)(2) of 
     such Code is amended by striking ``subparagraphs (B) through 
     (H) of paragraph (1)'' and inserting ``paragraph (1) (other 
     than subparagraphs (A), (I), and (K) thereof)''.
       (b) Rating System Requirement.--Subparagraph (J) of section 
     35(e)(1) of such Code is amended by adding at the end the 
     following: ``For purposes of this subparagraph and clauses 
     (ii), (iii), and (iv) of subparagraph (F), such term does not 
     include any insurance unless the premiums for such insurance 
     are restricted based on a community rating system (determined 
     other than on the basis of age).''.
       (c) Clarification of Congressional Intent To Limit Use of 
     Individual Health Insurance Coverage Option.--Section 
     35(e)(1)(J) (relating to qualified health insurance) is 
     amended in the matter preceding clause (i), by inserting ``, 
     but only'' after ``under individual health insurance''.
       (d) Conforming Amendments.--Section 173(f)(2) of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2918(f)(2)) is 
     amended--
       (1) in subparagraph (A)(x), by adding at the end the 
     following: ``Such term does not include any insurance unless 
     the premiums for such insurance are restricted based on a 
     community rating system (determined other than on the basis 
     of age).''; and
       (2) in subparagraph (B)--
       (A) in the matter preceding subclause (I), by inserting ``, 
     but only'' after ``under individual health insurance''; and
       (B) in clause (i), by striking ``clauses (ii) through 
     (viii) of subparagraph (A)'' and inserting ``subparagraph (A) 
     (other than clauses (i), (x), and (xi) thereof)''.

     SEC. 10. ALIGNMENT OF COBRA COVERAGE WITH TAA PERIOD FOR TAA-
                   ELIGIBLE INDIVIDUALS.

       (a) ERISA.--Section 605(b) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1165(b)) is amended--
       (1) in the subsection heading, by inserting ``and 
     Coverage'' after ``Election''; and
       (2) in paragraph (2)--
       (A) in the paragraph heading, by inserting ``and period'' 
     after ``Commencement'';
       (B) by striking ``and shall'' and inserting ``, shall''; 
     and
       (C) by inserting ``, and in no event shall the maximum 
     period required under section 602(2)(A) be less than the 
     period during which the individual is a TAA-eligible 
     individual'' before the period at the end.
       (b) Internal Revenue Code of 1986.--Section 4980B(f)(5)(C) 
     of the Internal Revenue Code of 1986 is amended--
       (1) in the subparagraph heading, by inserting ``and 
     coverage'' after ``election''; and
       (2) in clause (ii)--
       (A) in the clause heading, by inserting ``and period'' 
     after ``Commencement'';
       (B) by striking ``and shall'' and inserting ``, shall''; 
     and
       (C) by inserting ``, and in no event shall the maximum 
     period required under paragraph (2)(B)(i) be less than the 
     period during which the individual is a TAA-eligible 
     individual'' before the period at the end.
       (c) Public Health Service Act.--Section 2205(b) of the 
     Public Health Service Act (42 U.S.C. 300bb-5(b)) is amended--
       (1) in the subsection heading, by inserting ``and 
     Coverage'' after ``Election''; and
       (2) in paragraph (2)--
       (A) in the paragraph heading, by inserting ``and period'' 
     after ``Commencement'';
       (B) by striking ``and shall'' and inserting ``, shall''; 
     and
       (C) by inserting ``, and in no event shall the maximum 
     period required under section 2202(2)(A) be less than the 
     period during which the individual is a TAA-eligible 
     individual'' before the period at the end.

     SEC. 11. NOTICE REQUIREMENTS.

       Section 7527 of the Internal Revenue Code of 1986 (relating 
     to advance payment of credit for health insurance costs of 
     eligible individuals), as amended by section 3(b), is

[[Page S10737]]

     amended by adding at the end the following new subsection:
       ``(f) Inclusion of Certain Information.--The notice by the 
     Secretary (or by any person or entity designated by the 
     Secretary) that an individual is eligible for a qualified 
     health insurance costs credit eligibility certificate shall 
     include--
       ``(1) the name, address, and telephone number of the State 
     office or offices responsible for determining that the 
     individual is eligible for such certificate and for providing 
     the individual with assistance with enrollment in qualified 
     health insurance (as defined in section 35(e)),
       ``(2) a list of the coverage options that are treated as 
     qualified health insurance (as so defined) by the State in 
     which the individual resides, and
       ``(3) in the case of a TAA-eligible individual (as defined 
     in section 4980B(f)(5)(C)(iv)(II)), a statement informing the 
     individual that the individual has 63 days from the date that 
     is 5 days after the postmark date of such notice to enroll in 
     such insurance without a lapse in creditable coverage (as 
     defined in section 9801(c)).''.

     SEC. 12. ANNUAL REPORT ON ENHANCED TAA BENEFITS.

       Not later than October 1 of each year (beginning in 2004) 
     the Secretary of the Treasury, after consultation with the 
     Secretary of Labor, shall report to the Committee on Finance 
     and the Committee on Health, Education, Labor, and Pensions 
     of the Senate and the Committee on Ways and Means and the 
     Committee on Education and the Workforce of the House of 
     Representatives the following information with respect to the 
     most recent taxable year ending before such date:
       (1) The total number of participants utilizing the health 
     insurance tax credit under section 35 of the Internal Revenue 
     Code of 1986, including a measurement of such participants 
     identified--
       (A) by State, and
       (B) by coverage under COBRA continuation provisions (as 
     defined in section 9832(d)(1) of such Code) and by non-COBRA 
     coverage (further identified by group and individual market).
       (2) The range of monthly health insurance premiums offered 
     and the average and median monthly health insurance premiums 
     offered to TAA-eligible individuals (as defined in section 
     4980B(f)(5)(C)(iv)(II) of such Code) under COBRA continuation 
     provisions (as defined in section 9832(d)(1) of such Code), 
     State-based continuation coverage provided under a State law 
     that requires such coverage, and each category of coverage 
     described in section 35(e)(1) of such Code, identified by 
     State and by the actuarial value of such coverage and the 
     specific benefits provided and cost-sharing imposed under 
     such coverage.
       (3) The number of States applying for and receiving 
     national emergency grants under section 173(f) of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2918(f)) and the 
     time necessary for application approval of such grants.
       (4) The cost of administering the health credit program 
     under section 35 of such Code, by function, including the 
     cost of subcontractors.

     SEC. 13. EXTENSION OF NATIONAL EMERGENCY GRANTS.

       (a) In General.--Section 173(f) of the Workforce Investment 
     Act of 1998 (29 U.S.C. 2918(f)) is amended--
       (1) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(1) Use of funds.--
       ``(A) Health insurance coverage for eligible individuals in 
     order to obtain qualified health insurance that has 
     guaranteed issue and other consumer protections.--Funds made 
     available to a State or entity under paragraph (4)(A) of 
     subsection (a) shall be used to provide an eligible 
     individual described in paragraph (4)(C) and such 
     individual's qualifying family members with health insurance 
     coverage for the 3-month period that immediately precedes the 
     first eligible coverage month (as defined in section 35(b) of 
     the Internal Revenue Code of 1986) in which such eligible 
     individual and such individual's qualifying family members 
     are covered by qualified health insurance that meets the 
     requirements described in clauses (i) through (iv) of section 
     35(e)(2)(A) of the Internal Revenue Code of 1986 (or such 
     longer minimum period as is necessary in order for such 
     eligible individual and such individual's qualifying family 
     members to be covered by qualified health insurance that 
     meets such requirements).
       ``(B) Additional uses.--Funds made available to a State or 
     entity under paragraph (4)(A) of subsection (a) may be used 
     by the State or entity for the following:
       ``(i) Health insurance coverage.--To assist an eligible 
     individual and such individual's qualifying family members 
     with enrolling in health insurance coverage and qualified 
     health insurance or paying premiums for such coverage or 
     insurance.
       ``(ii) Administrative expenses and start-up expenses to 
     establish group health plan coverage options for qualified 
     health insurance.--To pay the administrative expenses related 
     to the enrollment of eligible individuals and such 
     individuals' qualifying family members in health insurance 
     coverage and qualified health insurance, including--

       ``(I) eligibility verification activities;
       ``(II) the notification of eligible individuals of 
     available health insurance and qualified health insurance 
     options;
       ``(III) processing qualified health insurance costs credit 
     eligibility certificates provided for under section 7527 of 
     the Internal Revenue Code of 1986;
       ``(IV) providing assistance to eligible individuals in 
     enrolling in health insurance coverage and qualified health 
     insurance;
       ``(V) the development or installation of necessary data 
     management systems; and
       ``(VI) any other expenses determined appropriate by the 
     Secretary, including start-up costs and on going 
     administrative expenses, in order for the State to treat the 
     coverage described in subparagraph (C), (D), (E), or (F)(i) 
     of section 35(e)(1) of the Internal Revenue Code of 1986, or, 
     only if the coverage is under a group health plan, the 
     coverage described in subparagraph (F)(ii), (F)(iii), 
     (F)(iv), (G), or (H) of such section, as qualified health 
     insurance under that section.

       ``(iii) Outreach.--To pay for outreach to eligible 
     individuals to inform such individuals of available health 
     insurance and qualified health insurance options, including 
     outreach consisting of notice to eligible individuals of such 
     options made available after the date of enactment of this 
     clause and direct assistance to help potentially eligible 
     individuals and such individual's qualifying family members 
     qualify and remain eligible for the credit established under 
     section 35 of the Internal Revenue Code of 1986 and advance 
     payment of such credit under section 7527 of such Code.
       ``(iv) Bridge funding.--To assist potentially eligible 
     individuals purchase qualified health insurance coverage 
     prior to issuance of a qualified health insurance costs 
     credit eligibility certificate under section 7527 of the 
     Internal Revenue Code of 1986 and commencement of advance 
     payment, and receipt of expedited payment, under subsections 
     (a) and (e), respectively, of that section.
       ``(C) Rule of construction.--The inclusion of a permitted 
     use under this paragraph shall not be construed as 
     prohibiting a similar use of funds permitted under subsection 
     (g).''; and
       (2) by striking paragraph (2) and inserting the following 
     new paragraph:
       ``(2) Qualified health insurance.--For purposes of this 
     subsection and subsection (g), the term `qualified health 
     insurance' has the meaning given that term in section 35(e) 
     of the Internal Revenue Code of 1986.''.
       (b) Funding.--Section 174(c)(1) of the Workforce Investment 
     Act of 1998 (29 U.S.C. 2919(c)(1)) is amended--
       (1) in the paragraph heading, by striking ``Authorization 
     and appropriation for fiscal year 2002'' and inserting 
     ``Appropriations''; and
       (2) by striking subparagraph (A) and inserting the 
     following new subparagraph:
       ``(A) to carry out subsection (a)(4)(A) of section 173--
       ``(i) $10,000,000 for fiscal year 2002; and
       ``(ii) $300,000,000 for the period of fiscal years 2005 
     through 2007; and''.
       (c) Report Regarding Failure To Comply With Requirements 
     for Expedited Approval Procedures.--Section 173(f) of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2918(f)) is 
     amended by adding at the end the following new paragraph:
       ``(8) Report for failure to comply with requirements for 
     expedited approval procedures.--If the Secretary fails to 
     make the notification required under clause (i) of paragraph 
     (3)(A) within the 15-day period required under that clause, 
     or fails to provide the technical assistance required under 
     clause (ii) of such paragraph within a timely manner so that 
     a State or entity may submit an approved application within 2 
     months of the date on which the State or entity's previous 
     application was disapproved, the Secretary shall submit a 
     report to Congress explaining such failure.''.
       (d) Technical Amendment.--Effective as if included in the 
     enactment of the Trade Act of 2002 (Public Law 107-210; 116 
     Stat. 933), subsection (f) of section 203 of that Act is 
     repealed.

     SEC. 14. EXTENSION OF FUNDING FOR OPERATION OF STATE HIGH 
                   RISK HEALTH INSURANCE POOLS.

       (a) Extension of Seed Grants.--Section 2745 of the Public 
     Health Service Act (42 U.S.C. 300gg-45) is amended--
       (1) in subsection (a), in the subsection heading by 
     inserting ``Extension of'' before ``Seed''; and
       (2) in subsection (c)(1), by striking ``$20,000,000'' and 
     all that follows through ``2003'' and inserting ``$15,000,000 
     for the period of fiscal years 2005 and 2006''.
       (b) Funds for Operations.--Section 2745 of the Public 
     Health Service Act (42 U.S.C. 300gg-45) is amended--
       (1) in subsection (b)--
       (A) in the subsection heading by striking ``Matching''; and
       (B) by striking paragraph (2) and inserting the following 
     new paragraph:
       ``(2) Allotment.--The amounts appropriated under subsection 
     (c)(2) for a fiscal year shall be made available to the 
     States (or the entities that operate the high risk pool under 
     applicable State law) as follows:
       ``(A) An amount equal to 50 percent of the appropriated 
     amount for the fiscal year shall be allocated in equal 
     amounts among each eligible State that applies for assistance 
     under this subsection.
       ``(B) An amount equal to 25 percent of the appropriated 
     amount for the fiscal year shall be allocated among the 
     States so that the amount provided to a State bears the same 
     ratio to such available amount as the number of uninsured 
     individuals in the State

[[Page S10738]]

     bears to the total number of uninsured individuals in all 
     States (as determined by the Secretary).
       ``(C) An amount equal to 25 percent of the appropriated 
     amount for the fiscal year shall be allocated among the 
     States so that the amount provided to a State bears the same 
     ratio to such available amount as the number of individuals 
     enrolled in health care coverage through the qualified high 
     risk pool of the State bears to the total number of 
     individuals so enrolled through qualified high risk pools in 
     all States (as determined by the Secretary).''; and
       (2) in subsection (c)(2), by striking ``$40,000,000'' and 
     all that follows through the period and inserting 
     ``$75,000,000 for each of fiscal years 2005 through 2009 to 
     make allotments under subsection (b)(2).''.
       (c) Definitions.--Section 2745 of the Public Health Service 
     Act (42 U.S.C. 300gg-45) is amended--
       (1) in subsection (d), by inserting after ``2744(c)(2)'' 
     the following: ``, except that with respect to subparagraph 
     (A) of such section a State may elect to provide for the 
     enrollment of eligible individuals through an acceptable 
     alternative mechanism,''; and
       (2) by adding at the end the following new subsection:
       ``(e) Standard Risk Rate.--In subsection (b)(1)(A), the 
     term `standard risk rate' means a rate--
       ``(1) determined under the State high risk pool by 
     considering the premium rates charged by other health 
     insurers offering health insurance coverage to individuals in 
     the insurance market served;
       ``(2) that is established using reasonable actuarial 
     techniques; and
       ``(3) that reflects anticipated claims experience and 
     expenses for the coverage involved.''.
                                 ______