2000
<PRE>[DOCID: f:h3501ih.txt]






107th CONGRESS
  1st Session
                                H. R. 3501

  To amend the Internal Revenue Code of 1986 to provide for economic 
                               recovery.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 13, 2001

 Mr. Smith  of Washington (for himself, Mr. Dooley of California, Mr. 
  Moran of Virginia, Ms. Harman, Mr. Maloney of Connecticut, and Mr. 
   Inslee) introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committees on 
 Energy and Commerce, and Education and the Workforce, for a period to 
      be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to provide for economic 
                               recovery.

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

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Economic Recovery 
Act of 2001''.
    (b) References to Internal Revenue Code of 1986.--Except as 
otherwise expressly provided, whenever in this Act an amendment or 
repeal is expressed in terms of an amendment to, or repeal of, a 
section or other provision, the reference shall be considered to be 
made to a section or other provision of the Internal Revenue Code of 
1986.
    (c) Table of Contents.--

Sec. 1. Short title; etc.
                      TITLE I--BUSINESS PROVISIONS

Sec. 101. Special depreciation allowance for certain property acquired 
                            after september 10, 2001, and before 
                            september 11, 2004.
Sec. 102. Temporary increase in expensing under section 179.
             TITLE II--SUPPLEMENTAL REBATE FOR INDIVIDUALS.

Sec. 201. Supplemental rebate.
          TITLE III--TEMPORARY ENHANCED UNEMPLOYMENT BENEFITS

Sec. 301. Short title.
Sec. 302. Federal-State agreements.
Sec. 303. Temporary supplemental unemployment compensation account.
Sec. 304. Payments to States having agreements under this title.
Sec. 305. Financing provisions.
Sec. 306. Fraud and overpayments.
Sec. 307. Definitions.
Sec. 308. Applicability.
Sec. 309. Rule of construction regarding changes to State law.
  TITLE IV--HEALTH INSURANCE COVERAGE OPTIONS FOR RECENTLY UNEMPLOYED 
                     INDIVIDUALS AND THEIR FAMILIES

Sec. 401. Premium assistance for COBRA continuation coverage for 
                            individuals and their families.
Sec. 402. State option to provide temporary medicaid coverage for 
                            certain uninsured individuals.
Sec. 403. State option to provide temporary coverage under medicaid for 
                            the unsubsidized portion of COBRA 
                            continuation premiums.
Sec. 404. Temporary increases of medicaid FMAP for fiscal year 2002.
Sec. 405. Definitions.
                        TITLE V--REVENUE OFFSET

Sec. 501. Slowing reductions in highest marginal income tax rate.
 TITLE VI--EMERGENCY EMPLOYMENT AND TRAINING ASSISTANCE FOR DISLOCATED 
                                WORKERS

Sec. 601. Additional funding for national emergency grants under the 
                            Workforce Investment Act of 1998.

                      TITLE I--BUSINESS PROVISIONS

SEC. 101. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED 
              AFTER SEPTEMBER 10, 2001, AND BEFORE SEPTEMBER 11, 2004.

    (a) In General.--Section 168 (relating to accelerated cost recovery 
system) is amended by adding at the end the following new subsection:
    ``(k) Special Allowance for Certain Property Acquired After 
September 10, 2001, and Before September 11, 2004.--
            ``(1) Additional allowance.--In the case of any qualified 
        property--
                    ``(A) the depreciation deduction provided by 
                section 167(a) for the taxable year in which such 
                property is placed in service shall include an 
                allowance equal to 30 percent of the adjusted basis of 
                the qualified property, and
                    ``(B) the adjusted basis of the qualified property 
                shall be reduced by the amount of such deduction before 
                computing the amount otherwise allowable as a 
                depreciation deduction under this chapter for such 
                taxable year and any subsequent taxable year.
            ``(2) Qualified property.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified property' 
                means property--
                            ``(i)(I) to which this section applies 
                        which has a recovery period of 20 years or less 
                        or which is water utility property, or
                            ``(II) which is computer software (as 
                        defined in section 167(f)(1)(B)) for which a 
                        deduction is allowable under section 167(a) 
                        without regard to this subsection, or
                            ``(ii) the original use of which commences 
                        with the taxpayer after September 10, 2001,
                            ``(iii) which is--
                                    ``(I) acquired by the taxpayer 
                                after September 10, 2001, and before 
                                September 11, 2004, but only if no 
                                written binding contract for the 
                                acquisition was in effect before 
                                September 11, 2001, or
                                    ``(II) acquired by the taxpayer 
                                pursuant to a written binding contract 
                                which was entered into after September 
                                10, 2001, and before September 11, 
                                2004, and
                            ``(iv) which is placed in service by the 
                        taxpayer before January 1, 2005.
                Such term includes qualified leasehold improvement 
                property if such property meets the requirements of 
                clauses (ii), (iii), and (iv), determined by 
                substituting `2002' for `2004' each place it appears 
                and by substituting `2003' for `2005'.
                    ``(B) Exceptions.--
                            ``(i) Alternative depreciation property.--
                        The term `qualified property' shall not include 
                        any property to which the alternative 
                        depreciation system under subsection (g) 
                        applies, determined--
                                    ``(I) without regard to paragraph 
                                (7) of subsection (g) (relating to 
                                election to have system apply), and
                                    ``(II) after application of section 
                                280F(b) (relating to listed property 
                                with limited business use).
                            ``(ii) Election out.--If a taxpayer makes 
                        an election under this clause with respect to 
                        any class of property for any taxable year, 
                        this subsection shall not apply to all property 
                        in such class placed in service during such 
                        taxable year.
                            ``(iii) Repaired or reconstructed 
                        property.--Except as otherwise provided in 
                        regulations, the term `qualified 
2000
property' 
                        shall not include any repaired or reconstructed 
                        property.
                            ``(iv) Qualified leasehold improvement 
                        property.--The term `qualified property' shall 
                        not include any qualified leasehold improvement 
                        property (as defined in section 168(e)(6)).
                    ``(C) Special rules relating to original use.--
                            ``(i) Self-constructed property.--In the 
                        case of a taxpayer manufacturing, constructing, 
                        or producing property for the taxpayer's own 
                        use, the requirements of clause (iii) of 
                        subparagraph (A) shall be treated as met if the 
                        taxpayer begins manufacturing, constructing, or 
                        producing the property after September 10, 
                        2001, and before September 11, 2004.
                            ``(ii) Sale-leasebacks.--For purposes of 
                        subparagraph (A)(ii), if property--
                                    ``(I) is originally placed in 
                                service after September 10, 2001, by a 
                                person, and
                                    ``(II) sold and leased back by such 
                                person within 3 months after the date 
                                such property was originally placed in 
                                service,
                        such property shall be treated as originally 
                        placed in service not earlier than the date on 
                        which such property is used under the leaseback 
                        referred to in subclause (II).
                    ``(D) Coordination with section 280f.--For purposes 
                of section 280F--
                            ``(i) Automobiles.--In the case of a 
                        passenger automobile (as defined in section 
                        280F(d)(5)) which is qualified property, the 
                        Secretary shall increase the limitation under 
                        section 280F(a)(1)(A)(i) by $4,600.
                            ``(ii) Listed property.--The deduction 
                        allowable under paragraph (1) shall be taken 
                        into account in computing any recapture amount 
                        under section 280F(b)(2).
                    ``(E) Certain aircraft contracts disregarded for 
                purpose of binding contract limitation.--
                            ``(i) In general.--For purposes of 
                        paragraph (2)(A)(iii)(I), a qualified aircraft 
                        contract shall be disregarded for purposes of 
                        determining whether a written binding contract 
                        for the acquisition of aircraft was in effect 
                        before September 11, 2001.
            ``(ii) Qualified aircraft contract.--The term `qualified 
        aircraft contract' means a contract in effect before September 
        11, 2001, for the acquisition of one or more aircraft if, as to 
        the aircraft in question, less than 50 percent of the stated 
        purchase price for the aircraft had been paid to the seller of 
        the aircraft as of September 11, 2001.
            ``(iii) Aircraft.--The term `aircraft' means aircraft used 
        by a corporation engaged in the business of transporting 
        persons or property by air.
            ``(3) Qualified leasehold improvement property.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `qualified leasehold 
                improvement property' means any improvement to an 
                interior portion of a building which is nonresidential 
                real property if--
                            ``(i) such improvement is made under or 
                        pursuant to a lease (as defined in subsection 
                        (h)(7))--
                                    ``(I) by the lessee (or any 
                                sublessee) of such portion, or
                                    ``(II) by the lessor of such 
                                portion,
                            ``(ii) such portion is to be occupied 
                        exclusively by the lessee (or any sublessee) of 
                        such portion, and
                            ``(iii) such improvement is placed in 
                        service more than 3 years after the date the 
                        building was first placed in service.
                    ``(B) Certain improvements not included.--Such term 
                shall not include any improvement for which the 
                expenditure is attributable to--
                            ``(i) the enlargement of the building,
                            ``(ii) any elevator or escalator,
                            ``(iii) any structural component benefiting 
                        a common area, and
                            ``(iv) the internal structural framework of 
                        the building.
                    ``(C) Definitions and special rules.--For purposes 
                of this paragraph--
                            ``(i) Binding commitment to lease treated 
                        as lease.--A binding commitment to enter into a 
                        lease shall be treated as a lease, and the 
                        parties to such commitment shall be treated as 
                        lessor and lessee, respectively.
                            ``(ii) Related persons.--A lease between 
                        related persons shall not be considered a 
                        lease. For purposes of the preceding sentence, 
                        the term `related persons' means--
                                    ``(I) members of an affiliated 
                                group (as defined in section 1504), and
                                    ``(II) persons having a 
                                relationship described in subsection 
                                (b) of section 267; except that, for 
                                purposes of this clause, the phrase `80 
                                percent or more' shall be substituted 
                                for the phrase `more than 50 percent' 
                                each place it appears in such 
                                subsection.
                    ``(D) Improvements made by lessor.--In the case of 
                an improvement made by the person who was the lessor of 
                such improvement when such improvement was placed in 
                service, such improvement shall be qualified leasehold 
                improvement property (if at all) only so long as such 
                improvement is held by such person.''.
    (b) Allowance Against Alternative Minimum Tax.--
            (1) In general.--Section 56(a)(1)(A) (relating to 
        depreciation adjustment for alternative minimum tax) is amended 
        by adding at the end the following new clause:
                            ``(iii) Additional allowance for certain 
                        property acquired after september 10, 2001, and 
                        before september 11, 2004.--The deduction under 
                        section 168(k) shall be allowed.''
            (2) Conforming amendment.--Clause (i) of section 
        56(a)(1)(A) is amended by striking ``clause (ii)'' both places 
        it appears and inserting ``clauses (ii) and (iii)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 10, 2001, in 
taxable years ending after such date.

SEC. 102. TEMPORARY INCREASE IN EXPENSING UNDER SECTION 179.

    (a) In General.--The table contained in section 179(b)(1) (relating 
to dollar limitation) is 
2000
amended to read as follows:

        ``If the taxable year
                                                         The applicable
          begins in:
                                                             amount is:
                  2001...............................          $24,000 
                  2002 or 2003.......................          $35,000 
                  2004 or thereafter.................       $25,000.''.
    (b) Temporary Increase in Amount of Property Triggering Phaseout of 
Maximum Benefit.--Paragraph (2) of section 179(b) is amended by 
inserting before the period ``($325,000 in the case of taxable years 
beginning during 2002 or 2003)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

             TITLE II--SUPPLEMENTAL REBATE FOR INDIVIDUALS.

SEC. 201. SUPPLEMENTAL REBATE.

    (a) In General.--Section 6428 (relating to acceleration of 10 
percent income tax rate bracket benefit for 2001) is amended by adding 
at the end the following new subsection:
    ``(f) Supplemental Rebate.--
            ``(1) In general.--Each individual who was an eligible 
        individual for such individual's first taxable year beginning 
        in 2000 and who, before October 16, 2001--
                    ``(A) filed a return of tax imposed by subtitle A 
                for such taxable year, or
                    ``(B) filed a return of income tax with the 
                government of American Samoa, Guam, the Commonwealth of 
                the Northern Mariana Islands, the Commonwealth of 
                Puerto Rico, or the Virgin Islands of the United 
                States,
        shall be treated as having made a payment against the tax 
        imposed by chapter 1 for such first taxable year in an amount 
        equal to the supplemental refund amount for such taxable year.
            ``(2) Supplemental refund amount.--For purposes of this 
        subsection, the supplemental refund amount is an amount equal 
        to the excess (if any) of--
                    ``(A)(i) $600 in the case of taxpayers to whom 
                section 1(a) applies,
                    ``(ii) $500 in the case of taxpayers to whom 
                section 1(b) applies, and
                    ``(iii) $300 in the case of taxpayers to whom 
                subsections (c) or (d) of section 1 applies, over
                    ``(B) the amount of any advance refund amount paid 
                to the taxpayer under subsection (e).
            ``(3) Timing of payments.--In the case of any overpayment 
        attributable to this subsection, the Secretary shall, subject 
        to the provisions of this title, refund or credit such 
        overpayment as rapidly as possible.
            ``(4) No interest.--No interest shall be allowed on any 
        overpayment attributable to this subsection.
            ``(5) Special rule for certain nonresidents.--The 
        determination under subsection (c)(2) as to whether an 
        individual who filed a return of tax described in paragraph 
        (1)(B) is a nonresident alien individual shall, under rules 
        prescribed by the Secretary, be made by reference to the 
        possession or Commonwealth with which the return was filed and 
        not the United States.''.
    (b) Technical Correction.--
            (1) In general.--Subsection (b) of section 6428 is amended 
        to read as follows:
    ``(b) Credit Treated as Nonrefundable Personal Credit.--For 
purposes of this title, the credit allowed under this section shall be 
treated as a credit allowable under subpart A of part IV of subchapter 
A of chapter 1.''.
            (2) Conforming amendments.--
                    (A) Subsection (d) of section 6428 is amended to 
                read as follows:
    ``(d) Coordination With Advance Refunds of Credit.--
            ``(1) In general.--The amount of credit which would (but 
        for this paragraph) be allowable under this section shall be 
        reduced (but not below zero) by the aggregate refunds and 
        credits made or allowed to the taxpayer under subsection (e). 
        Any failure to so reduce the credit shall be treated as arising 
        out of a mathematical or clerical error and assessed according 
        to section 6213(b)(1).
            ``(2) Joint returns.--In the case of a refund or credit 
        made or allowed under subsection (e) with respect to a joint 
        return, half of such refund or credit shall be treated as 
        having been made or allowed to each individual filing such 
        return.''.
                    (B) Paragraph (2) of section 6428(e) is amended to 
                read as follows:
            ``(2) Advance refund amount.--For purposes of paragraph 
        (1), the advance refund amount is the amount that would have 
        been allowed as a credit under this section for such first 
        taxable year if--
                    ``(A) this section (other than subsections (b) and 
                (d) and this subsection) had applied to such taxable 
                year, and
                    ``(B) the credit for such taxable year were not 
                allowed to exceed the excess (if any) of--
                            ``(i) the sum of the regular tax liability 
                        (as defined in section 26(b)) plus the tax 
                        imposed by section 55, over
                            ``(ii) the sum of the credits allowable 
                        under part IV of subchapter A of chapter 1 
                        (other than the credits allowable under subpart 
                        C thereof, relating to refundable credits).''.
    (c) Conforming Amendments.--
            (1) Paragraph (1) of section 6428(d), as amended by 
        subsection (b), is amended by striking ``subsection (e)'' and 
        inserting ``subsections (e) and (f)''.
            (2) Paragraph (2) of section 6428(d), as amended by 
        subsection (b), is amended by striking ``subsection (e)'' and 
inserting ``subsection (e) or (f)''.
            (3) Paragraph (3) of section 6428(e) is amended by striking 
        ``December 31, 2001'' and inserting ``the date of the enactment 
        of the Economic Recovery Act of 2001''.
    (d) Reporting Requirement.--For purposes of determining the 
individuals who are eligible for the supplemental rebate under section 
6428(f) of the Internal Revenue Code of 1986, the governments of 
American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, 
the Commonwealth of Puerto Rico, and the Virgin Islands of the United 
States shall provide, at such time and in such manner as provided by 
the Secretary of the Treasury, the names, addresses, and taxpayer 
identifying numbers (within the meaning of section 6109 of the Internal 
Revenue Code of 1986) of residents who filed returns of income tax with 
such governments for 2000.
    (e) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall take effect on the date 
        of the enactment of this Act.
            (2) Technicals.--The amendments made by subsection (b) 
        shall take effect as if included in the amendment made by 
        section 101(b)(1) of the Economic Growth and Tax Relief 
        Reconciliation Act of 2001.

          TITLE III--TEMPORARY ENHANCED UNEMPLOYMENT BENEFITS

SEC. 301. SHORT TITLE.

    This title may be cited as the ``Temporary Unemployment 
Compensation Act of 2001''.

SEC. 302. FEDERAL-STATE AGREEMENTS.

    (a) In General.--Any State which desires to do so may enter into 
and participate in an agreement under this title with the Secretary of 
Labor (in this title referred to as the ``Secretary''). Any State which 
is a party to an agreement under this title may, upon providing 30 
days' written notice to the Secretary, terminate such agreement.
    (b) Provisions of Agreement.--
            (1) In general.--Any agreement under subsection (a) shall 
        provide that the State agency of the 
2000
State will make--
                    (A) payments of temporary enhanced regular 
                unemployment compensation to individuals; and
                    (B) payments of temporary supplemental unemployment 
                compensation to individuals who--
                            (i) have--
                                    (I) exhausted all rights to regular 
                                compensation under the State law (or, 
                                as the case may be, all rights to 
                                temporary enhanced regular unemployment 
                                compensation); or
                                    (II) received 26 weeks of regular 
                                compensation under the State law (or, 
                                as the case may be, 26 weeks of 
                                temporary enhanced regular unemployment 
                                compensation);
                            (ii) do not have any rights to regular 
                        compensation under the State law of any other 
                        State (or to temporary enhanced regular 
                        unemployment compensation); and
                            (iii) are not receiving compensation under 
                        the unemployment compensation law of any other 
                        country.
            (2) Temporary enhanced regular unemployment compensation 
        defined.--For purposes of this title, the term ``temporary 
        enhanced regular unemployment compensation'' means compensation 
        in amounts and to the extent that regular compensation would be 
        determined if the State law was applied with the following 3 
        conditions:
                    (A) Alternative base period.--An individual shall 
                be eligible for regular compensation if the individual 
                would be so eligible, determined by applying--
                            (i) the base period that would otherwise 
                        apply under the State law if this title had not 
                        been enacted; or
                            (ii) a base period ending at the close of 
                        the calendar quarter most recently completed 
                        before the date of the individual's application 
                        for benefits, provided that wage data for that 
                        quarter has been reported to the State or 
                        supplied to the State agency on behalf of the 
                        individual;
                whichever results in the greater amount.
                    (B) Part-time employment.--An individual shall not 
                be denied regular compensation under the State law's 
                provisions relating to availability for work, active 
                search for work, or refusal to accept work, solely by 
                virtue of the fact that such individual is seeking, or 
                is available for, only part-time (and not full-time) 
                work, if--
                            (i) the individual's employment on which 
                        eligibility for the regular compensation is 
                        based was part-time employment; or
                            (ii) the individual can show good cause for 
                        seeking, or being available for, only part-time 
                        (and not full-time) work.
                    (C) Increased benefits.--
                            (i) In general.--The amount of regular 
                        compensation (including dependents' allowances) 
                        payable for any week shall be equal to the 
                        amount determined under the State law (before 
                        the application of this subparagraph), plus an 
                        amount equal to the greater of--
                                    (I) 15 percent of the amount so 
                                determined; or
                                    (II) $25.
                            (ii) Rounding.--For purposes of determining 
                        the amount under clause (i)(I), such amount 
                        shall be rounded to the dollar amount specified 
                        under State law.
    (c) Nonreduction Rule.--Under the agreement, subsection (b)(2)(C) 
shall not apply (or shall cease to apply) with respect to a State upon 
a determination by the Secretary that the method governing the 
computation of regular compensation under the State law of that State 
has been modified in a way such that the average weekly amount of 
regular compensation which will be payable during the period of the 
agreement (determined disregarding any temporary enhanced regular 
unemployment compensation) will be less than the average weekly amount 
of regular compensation which would otherwise have been payable during 
such period under the State law, as in effect on September 11, 2001.
    (d) Coordination Rules.--
            (1) Regular compensation payable under a federal law.--The 
        conditions described in subparagraphs (A), (B), and (C) of 
        subsection (b)(2) shall also apply in determining the amount of 
        benefits payable under any Federal law to the extent that those 
        benefits are determined by reference to regular compensation 
        payable under the State law of the State involved.
            (2) Temporary supplemental unemployment compensation to 
        serve as second-tier benefits.--Notwithstanding any other 
        provision of law, neither regular compensation, temporary 
        enhanced regular unemployment compensation, extended 
compensation, nor additional unemployment compensation under any 
Federal or State law shall be payable to any individual for any week 
for which temporary supplemental unemployment compensation is payable 
to such individual.
            (3) Treatment of other unemployment compensation.--After 
        the date on which a State enters into an agreement under this 
        title, any regular compensation (or, as the case may be, 
        temporary enhanced regular unemployment compensation) in excess 
        of 26 weeks, any extended compensation, and any additional 
        compensation under any Federal or State law shall be payable to 
        an individual in accordance with the State law after such 
        individual has exhausted any rights to temporary supplemental 
        unemployment compensation under the agreement.
    (e) Exhaustion of Benefits.--For purposes of subsection 
(b)(1)(B)(i)(I), an individual shall be considered to have exhausted 
such individual's rights to regular compensation (or, as the case may 
be, rights to temporary enhanced regular unemployment compensation) 
under a State law when--
            (1) no payments of regular compensation can be made under 
        such law because the individual has received all such 
        compensation available to the individual based on employment or 
        wages during the individual's base period; or
            (2) the individual's rights to such compensation have been 
        terminated by reason of the expiration of the benefit year with 
        respect to which such rights existed.
    (f) Weekly Benefit Amount, Terms and Conditions, etc. Relating to 
Temporary Supplemental Unemployment Compensation.--For purposes of any 
agreement under this title--
            (1) the amount of temporary supplemental unemployment 
        compensation which shall be payable to an individual for any 
        week of total unemployment shall be equal to--
                    (A) the amount of regular compensation (including 
                dependents' allowances) payable to such individual 
                under the State law for a week for total unemployment 
                during such individual's benefit year; plus
                    (B) the amount of any temporary enhanced regular 
                unemployment compensation payable to such individual 
                for a
2000
 week for total unemployment during such 
                individual's benefit year;
            (2) the terms and conditions of the State law which apply 
        to claims for regular compensation and to the payment thereof 
        shall apply to claims for temporary supplemental unemployment 
        compensation and the payment thereof, except where inconsistent 
        with the provisions of this title or with the regulations or 
        operating instructions of the Secretary promulgated to carry 
        out this title; and
            (3) the maximum amount of temporary supplemental 
        unemployment compensation payable to any individual for whom a 
        temporary supplemental unemployment compensation account is 
        established under section 303 shall not exceed the amount 
        established in such account for such individual.

SEC. 303. TEMPORARY SUPPLEMENTAL UNEMPLOYMENT COMPENSATION ACCOUNT.

    (a) In General.--Any agreement under this title shall provide that 
the State will establish, for each eligible individual who files an 
application for temporary supplemental unemployment compensation, a 
temporary supplemental unemployment compensation account.
    (b) Amount in Account.--
            (1) In general.--The amount established in an account under 
        subsection (a) shall be equal to the greater of--
                    (A) 50 percent of--
                            (i) the total amount of regular 
                        compensation (including dependents' allowances) 
                        payable to the individual during the 
                        individual's benefit year under such law; plus
                            (ii) the amount of any temporary enhanced 
                        regular unemployment compensation payable to 
                        the individual during the individual's benefit 
                        year; or
                    (B) 13 times the individual's weekly benefit 
                amount.
            (2) Weekly benefit amount.--For purposes of paragraph 
        (1)(B), an individual's weekly benefit amount for any week is 
        an amount equal to--
                    (A) the amount of regular compensation (including 
                dependents' allowances) under the State law payable to 
                the individual for such week for total unemployment; 
                plus
                    (B) the amount of any temporary enhanced regular 
                unemployment compensation payable to the individual for 
                such week for total unemployment.

SEC. 304. PAYMENTS TO STATES HAVING AGREEMENTS UNDER THIS TITLE.

    (a) General Rule.--There shall be paid to each State which has 
entered into an agreement under this title an amount equal to--
            (1) 100 percent of any temporary enhanced regular 
        unemployment compensation made payable to individuals by such 
        State by virtue of the conditions which are described in 
        section 302(b)(2) and deemed to be in effect with respect to 
        such State pursuant to such section;
            (2) 100 percent of any regular compensation--
                    (A) which is paid to individuals by such State by 
                reason of the fact that its State law contains 
                provisions comparable to the conditions described in 
                subparagraphs (A) and (B) of section 302(b)(2); but 
                only
                    (B) to the extent that those amounts would, if such 
                amounts were instead payable by virtue of the State 
                law's being deemed to be in compliance with such 
                conditions pursuant to such section, have been 
                reimbursable under paragraph (1); and
            (3) 100 percent of the temporary supplemental unemployment 
        compensation paid to individuals by the State pursuant to such 
        agreement.
    (b) Determination of Amount.--Sums under subsection (a) payable to 
any State by reason of such State having an agreement under this title 
shall be payable, either in advance or by way of reimbursement (as may 
be determined by the Secretary), in such amounts as the Secretary 
estimates the State will be entitled to receive under this title for 
each calendar month, reduced or increased, as the case may be, by any 
amount by which the Secretary finds that the Secretary's estimates for 
any prior calendar month were greater or less than the amounts which 
should have been paid to the State. Such estimates may be made on the 
basis of such statistical, sampling, or other method as may be agreed 
upon by the Secretary and the State agency of the State involved.
    (c) Administrative Expenses, etc.--There is hereby appropriated, 
without fiscal year limitation, out of the employment security 
administration account of the Unemployment Trust Fund (as established 
by section 901(a) of the Social Security Act (42 U.S.C. 1101(a))) 
$500,000,000 to reimburse States for the costs of the administration of 
agreements under this title (including any improvements in technology 
in connection therewith) and to provide reemployment services to 
unemployment compensation claimants in States having agreements under 
this title. Each State's share of the amount appropriated by the 
preceding sentence shall be determined by the Secretary according to 
the factors described in section 302(a) of the Social Security Act (42 
U.S.C. 501(a)) and certified by the Secretary to the Secretary of the 
Treasury.

SEC. 305. FINANCING PROVISIONS.

    (a) In General.--Funds in the extended unemployment compensation 
account (as established by section 905(a) of the Social Security Act 
(42 U.S.C. 1105(a))), and the Federal unemployment account (as 
established by section 904(g) of such Act (42 U.S.C. 1104(g))), of the 
Unemployment Trust Fund (as established by section 904(a) of such Act 
(42 U.S.C. 1104(a))) shall be used, in accordance with subsection (b), 
for the making of payments (described in section 304(a)) to States 
having agreements entered into under this title.
    (b) Certification.--The Secretary shall from time to time certify 
to the Secretary of the Treasury for payment to each State the sums 
described in section 304(a) which are payable to such State under this 
title. The Secretary of the Treasury, prior to audit or settlement by 
the General Accounting Office, shall make payments to the State in 
accordance with such certification by transfers from the extended 
unemployment compensation account, as so established (or, to the extent 
that there are insufficient funds in that account, from the Federal 
unemployment account, as so established) to the account of such State 
in the Unemployment Trust Fund (as so established).

SEC. 306. FRAUD AND OVERPAYMENTS.

    (a) In General.--If an individual knowingly has made, or caused to 
be made by another, a false statement or representation of a material 
fact, or knowingly has failed, or caused another to fail, to disclose a 
material fact, and as a result of such false statement or 
representation or of such nondisclosure such individual has received 
any temporary enhanced regular unemployment compensation or temporary 
supplemental unemployment compensation under this title to which such 
individual was not entitled, such individual--
            (1) shall be ineligible for any further benefits under this 
        title in accordance with the provisions of the applicable State 
        unemployment compensation law relating to fraud in connection 
        with a claim for unemployment compensation; and
            (2) shall be subject to prosecution under section 1001 of 
        title 18, United States Code.
    (b) Repayment.--In the case of individuals who have received any 
temporary enhanced regular unemployment compensation or temporary 
supplemental unemployment compensation under this title to which such 
individuals were not entitled, the State shall require such individuals 
to repay those benefits to the State agency, except that the State 
agency may waive such repayment if it determines that--
         
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   (1) the payment of such benefits was without fault on the 
        part of any such individual; and
            (2) such repayment would be contrary to equity and good 
        conscience.
    (c) Recovery by State Agency.--
            (1) In general.--The State agency may recover the amount to 
        be repaid, or any part thereof, by deductions from any regular 
        compensation, temporary enhanced regular unemployment 
        compensation, or temporary supplemental unemployment 
        compensation payable to such individual under this title or 
        from any unemployment compensation payable to such individual 
        under any Federal unemployment compensation law administered by 
        the State agency or under any other Federal law administered by 
        the State agency which provides for the payment of any 
        assistance or allowance with respect to any week of 
        unemployment, during the 3-year period after the date such 
        individuals received the payment of the temporary enhanced 
        regular unemployment compensation or temporary supplemental 
        unemployment compensation to which such individuals were not 
        entitled, except that no single deduction may exceed 50 percent 
        of the weekly benefit amount from which such deduction is made.
            (2) Opportunity for hearing.--No repayment shall be 
        required, and no deduction shall be made, until a determination 
        has been made, notice thereof and an opportunity for a fair 
        hearing has been given to the individual, and the determination 
        has become final.
    (d) Review.--Any determination by a State agency under this section 
shall be subject to review in the same manner and to the same extent as 
determinations under the State unemployment compensation law, and only 
in that manner and to that extent.

SEC. 307. DEFINITIONS.

    In this title the terms ``compensation'', ``regular compensation'', 
``extended compensation'', ``additional compensation'', ``benefit 
year'', ``base period'', ``State'', ``State agency'', ``State law'', 
and ``week'' have the respective meanings given such terms under 
section 205 of the Federal-State Extended Unemployment Compensation Act 
of 1970.

SEC. 308. APPLICABILITY.

    (a) In General.--An agreement entered into under this title shall 
apply to weeks of unemployment--
            (1) beginning after the date on which such agreement is 
        entered into; and
            (2) ending before January 1, 2003.
    (b) Specific Rules.--
            (1) In general.--Under such an agreement, the following 
        rules shall apply:
                    (A) Alternative base periods.--
                            (i) Applicability.--The payment of 
                        temporary enhanced regular unemployment 
                        compensation by reason of the condition 
                        described in section 302(b)(2)(A) (relating to 
                        alternative base periods) shall not apply 
                        except in the case of initial claims filed on 
                        or after the first day of the week that 
                        includes September 11, 2001.
                            (ii) Nonretroactivity.--The weekly benefit 
                        amount payable with respect to weeks of regular 
                        compensation and temporary supplemental 
                        unemployment compensation shall not be 
                        recalculated as a result of the application of 
                        the condition described in clause (i) with 
                        respect to an individual who was receiving any 
                        unemployment compensation as of the date on 
                        which the State enters into such an agreement.
                    (B) Part-time employment and increased benefits.--
                The payment of temporary enhanced regular unemployment 
                compensation by reason of the conditions described in 
                subparagraphs (B) and (C) of section 302(b)(2) 
                (relating to part-time employment and increased 
                benefits, respectively) shall apply to weeks of 
                unemployment described in subsection (a), regardless of 
                the date on which an individual's initial claim for 
                benefits is filed.
                    (C) Eligibility for temporary supplemental 
                unemployment compensation.--The payment of temporary 
                supplemental unemployment compensation pursuant to 
                section 302(b)(1)(B) shall not apply except in the case 
                of individuals who meet either the condition described 
                in subclause (I) or subclause (II) of clause (i) of 
                such section on or after the first day of the week that 
                includes September 11, 2001.
            (2) Reapplication process.--
                    (A) Alternative base periods.--In the case of an 
                individual who filed an initial claim for regular 
compensation on or after the first day of the week that includes 
September 11, 2001, and before the date that the State entered into an 
agreement under subsection (a)(1) that was denied as a result of the 
application of the base period that applied under the State law prior 
to the date on which the State entered into such agreement, such 
individual--
                            (i) may refile a claim for temporary 
                        enhanced regular unemployment compensation 
                        based on the condition described in section 
                        302(b)(2)(A) (relating to alternative base 
                        periods) on or after the date on which the 
                        State enters into such agreement and before the 
                        date on which such agreement terminates; and
                            (ii) if eligible, shall be entitled to such 
                        compensation only for weeks of unemployment 
                        described in subsection (a) beginning on or 
                        after the date on which the individual files 
                        such claim.
                    (B) Part-time employment.--In the case of an 
                individual who before the date that the State entered 
                into an agreement under subsection (a)(1) was denied 
                regular compensation under the State law's provisions 
                relating to availability for work, active search for 
                work, or refusal to accept work, solely by virtue of 
                the fact that such individual is seeking, or available 
                for, only part-time (and not full-time) work, such 
                individual--
                            (i) may refile a claim for temporary 
                        enhanced regular unemployment compensation 
                        based on the condition described in section 
                        302(b)(2)(B) (relating to part-time employment) 
                        on or after the date on which the State enters 
                        into the agreement under subsection (a)(1) and 
                        before the date on which such agreement 
                        terminates; and
                            (ii) if eligible, shall be entitled to such 
                        compensation only for weeks of unemployment 
                        described in subsection (a) beginning on or 
                        after the date on which the individual files 
                        such claim.
            (3) No retroactive payments for weeks prior to agreement.--
        No amounts shall be payable to an individual under an agreement 
        entered into under this title for any week of unemployment 
        prior to the week beginning after the date on which such 
        agreement is entered into.

SEC. 309. RULE OF CONSTRUCTION REGARDING CHANGES TO STATE LAW.

    Nothing in this title shall be construed as requiring a State
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 to 
modify the laws of such State in order to enter into an agreement under 
this title or to comply with the provisions of the agreement described 
in section 302(b).

  TITLE IV--HEALTH INSURANCE COVERAGE OPTIONS FOR RECENTLY UNEMPLOYED 
                     INDIVIDUALS AND THEIR FAMILIES

SEC. 401. PREMIUM ASSISTANCE FOR COBRA CONTINUATION COVERAGE FOR 
              INDIVIDUALS AND THEIR FAMILIES.

    (a) Establishment.--
            (1) In general.--Not later than 30 days after the date of 
        enactment of this Act, the Secretary of the Treasury, in 
        consultation with the Secretary of Labor, shall establish a 
        program under which 75 percent of the premium for COBRA 
        continuation coverage shall be provided for an individual who--
                    (A) at any time during the period that begins on 
                September 11, 2001, and ends on December 31, 2002, is 
                separated from employment; and
                    (B) is eligible for, and has elected coverage 
                under, COBRA continuation coverage.
            (2) Inclusion of certain other individuals.--
                    (A) In general.--For purposes of paragraph (1), the 
                spouse, child, or other individual who was an insured 
                under health insurance coverage of an individual who 
                was killed as a result of the terrorist-related 
                aircraft crashes on September 11, 2001, or as a result 
                of any other terrorist-related event occurring during 
                the period described in that paragraph, and who is 
                eligible for, and has elected coverage under, COBRA 
                continuation coverage shall be eligible for premium 
                assistance under the program established under this 
                section.
                    (B) Other individuals.--For purposes of paragraph 
                (1), an individual who, at any time during the period 
                described in paragraph (1)(A)--
                            (i) elects to take a voluntary leave 
                        program offered by their employer after the 
                        employer has announced that employee 
                        separations will occur as a result of the 
                        terrorist-related aircraft crashes on September 
11, 2001, or as a result of any other terrorist-related event occurring 
during the period described in that paragraph;
                            (ii) is eligible under such voluntary leave 
                        program, and has elected, to continue their 
                        health insurance coverage under a group health 
                        plan through payment of 100 percent of the 
                        premium for such coverage; and
                            (iii) is not eligible for COBRA 
                        continuation coverage,
                shall be eligible for premium assistance for 75 percent 
                of the premium for such health insurance coverage under 
                the program established under this section in the same 
                manner as an individual who is eligible for premium 
                assistance under this section for COBRA continuation 
                coverage.
            (3) Temporary extension of election period for certain 
        separated individuals.--Notwithstanding any other provision of 
        law, the election period for COBRA continuation coverage with 
        respect to any individual who meets the requirements of 
        paragraph (1)(A), but for whom such period has expired as of 
        the date of the enactment of this Act, shall not end before the 
        date that is 60 days after the date the individual receives the 
        supplemental notice required under subsection (g)(3).
            (4) Immediate implementation.--The program established 
        under this section shall be implemented without regard to 
        whether or not final regulations to carry out such program have 
        been promulgated by the date described in paragraph (1).
    (b) Limitation of Period of Premium Assistance.--
            (1) In general.--Premium assistance provided in accordance 
        with this section shall end with respect to an individual on 
        the earlier of--
                    (A) the date the individual is no longer covered 
                under COBRA continuation coverage; or
                    (B) 12 months after the date the individual is 
                first enrolled in the premium assistance program 
                established under this section.
            (2) No assistance after december 31, 2002.--No premium 
        assistance may be provided under this section for any month 
        beginning after December 31, 2002.
    (c) Payment Arrangements; Crediting of Assistance.--
            (1) Provision of assistance.--
                    (A) Direct payment arrangements.--
                            (i) In general.--Premium assistance shall 
                        be provided under the program established under 
                        this section through direct payment 
                        arrangements with a group health plan 
                        (including a multiemployer plan), an issuer of 
                        health insurance coverage, an administrator, an 
                        employer, or other entity, that collects the 
                        monthly premium for the COBRA continuation 
                        coverage for such individual, as appropriate 
                        with respect to the individual provided such 
                        assistance.
                            (ii) Immediate, provisional payment of 
                        assistance.--Payment of such assistance shall 
                        commence beginning with the month in which the 
                        Secretary of the Treasury receives a copy of 
                        the eligibility and enrollment forms completed 
                        by the individual in accordance with subsection 
                        (g). The payment of such assistance shall be 
                        subject to verification by the Secretary of the 
                        Treasury or the Secretary of Labor of the 
                        individual's eligibility for such assistance.
                    (B) Advance payment; retrospective adjustment.--The 
                Secretary of the Treasury may make payments under this 
                section for each month on the basis of advance 
                estimates of the assistance to be provided under this 
                section and such other investigation as the Secretary 
                of the Treasury may find necessary, and may reduce or 
                increase the payments as necessary to adjust for any 
                overpayment or underpayment for prior months.
            (2) Premiums payable by individual reduced by amount of 
        assistance.--Premium assistance provided under this section 
        shall be credited by the group health plan, issuer of health 
        insurance coverage, or an administrator against the premium 
        otherwise owed by the individual involved for COBRA 
        continuation coverage. Such coverage shall not be terminated 
        based on a failure to pay the full amount of the monthly 
        premium owed for the coverage if an individual is current with 
        the non-subsidized portion of the monthly premium for the 
        coverage.
    (d) Application of Fraud Prevention Provisions.--Sections 1128A and 
1128B of the Social Security Act (42 U.S.C. 1320a-7a, 1320a-7b) shall 
apply to the provision of premium assistance under this section.
    (e) Limitation on Entitlement.--Nothing in this section shall be 
construed as establishing any entitlement of individuals described in 
paragraph (1) or (2) of subsection (a) to premium assistance under this 
section.
    (f) Disregard of Subsidies for Purposes of Federal and State 
Programs.--Notwithstanding any other provision of 
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law, any premium 
assistance provided to, or on behalf of, an individual under this 
section, shall not be considered income or resources in determining 
eligibility for, or the amount of assistance or benefits provided 
under, any other Federal public benefit or State or local public 
benefit.
    (g) Implementation Requirements.--
            (1) Change in cobra notice.--
                    (A) In general.--In the case of notices provided 
                under section 4980B(f)(6) of the Internal Revenue Code 
                of 1986, section 2206 of the Public Health Service Act 
                (42 U.S.C. 300bb-6), section 606 of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                1166), or section 8905a(f)(2)(A) of title 5, United 
                States Code, with respect to individuals who, during 
                the period described in subsection (a)(1)(A), become 
                entitled to elect COBRA continuation coverage, such 
                notices shall include an additional notification to the 
                recipient of the availability of premium assistance for 
                such coverage under this section and for temporary 
                medicaid assistance under section 403 for the remaining 
                portion of COBRA continuation premiums, in accordance 
                with the requirements of this subsection.
                    (B) Alternative notice.--In the case of COBRA 
                continuation coverage to which the notice provision 
                under such sections does not apply, the Secretary of 
                the Treasury, in consultation with the Secretary of 
                Labor, shall, in coordination with administrators of 
                the group health plans (or other entities) that provide 
                or administer the COBRA continuation coverage involved, 
                assure the provision of such notice.
                    (C) Form.--The requirement of the additional 
                notification under this paragraph may be met by 
                amendment of existing notice forms or by inclusion of a 
                separate document with the notice otherwise required.
            (2) Specific requirements.--Each additional notification 
        under paragraph (1) shall include the following:
                    (A) The forms necessary for establishing 
                eligibility and enrollment in the premium assistance 
                program established under this section in connection 
                with the COBRA continuation coverage with respect to 
                individuals described in paragraph (1) or (2) of 
                subsection (a).
                    (B) The following displayed in a prominent manner:
                            (i) The name, address, and telephone number 
                        necessary to contact the employer, 
                        administrator, and any other person maintaining 
                        relevant information in connection with how to 
                        enroll for the premium assistance.
                            (ii) The toll-free telephone number and 
                        Internet website address established under 
                        paragraph (4)(A)(i).
                            (iii) The name, address, and telephone 
                        number for the group health plan (including a 
                        multiemployer plan), issuer of health insurance 
                        coverage, administrator, an employer, or other 
                        entity (as appropriate with respect to the 
                        individual) that will collect the monthly 
                        premium for such coverage, specifying that the 
                        eligibility and enrollment forms are to be 
                        completed by the individual and sent to such 
                        entity.
                            (iv) The following statement:
    ``You may be eligible to receive assistance with payment of 75 
percent of your COBRA continuation coverage premiums and with temporary 
medicaid coverage for the remaining premium portion for a duration of 
not to exceed 12 months. This assistance will not be available after 
December 31, 2002. Return the enclosed eligibility and enrollment forms 
as soon as possible to the address specified.''.
                    (C) The dollar amount equal to 25 percent of the 
                monthly 2002 premium that would be owed during 2002 by 
                each individual for the coverage if the individual is 
                eligible for, and enrolls in, the program established 
                under this section.
            (3) Supplemental notice for individuals previously provided 
        notice or whose election period is temporarily extended.--In 
        the case of such notices previously transmitted before the date 
        of enactment of this Act in the case of an individual described 
        in paragraph (1) or subsection (a)(2) who has elected (or is 
        still eligible to elect, including as a result of subsection 
        (a)(3)) COBRA continuation coverage as of the date of enactment 
        of this Act, the employer, administrator, or other entity 
        involved, or the Secretary of the Treasury, in consultation 
        with the Secretary of Labor, (in the case described in the 
        paragraph (1)(B)) shall provide (within the period required 
        under paragraph (4)(C)(i)) for the additional notification 
        required to be provided under this subsection.
            (4) Required timeline.--
                    (A) Secretary of labor.--Not later than 15 days 
                after the date of enactment of this Act, the Secretary 
                of Labor shall--
                            (i) establish a toll-free telephone number 
                        and an Internet website to provide information 
                        and answer inquiries about the program 
                        established under this section;
                            (ii) prescribe models for the additional 
                        notification required under this subsection and 
                        the forms necessary for establishing 
                        eligibility and enrollment in the program, in 
                        accordance with the requirements of this 
                        subsection; and
                            (iii) consult with the Secretary of the 
                        Treasury regarding the additional notification 
                        required for individuals described in paragraph 
                        (1)(B).
                    (B) Secretary of the treasury.--Not later than 15 
                days after the date of enactment of this Act, the 
                Secretary of the Treasury shall--
                            (i) notify each covered employer of the 
                        program established under this section and the 
                        additional notification required under this 
                        subsection;
                            (ii) make the model notification, and 
                        eligibility and enrollment forms prescribed by 
                        the Secretary of Labor under subparagraph 
                        (A)(ii) available to each such covered 
                        employer; and
                            (iii) provide, in consultation with the 
                        Secretary of Labor, the additional notification 
                        required for individuals described in paragraph 
                        (1)(B).
                    (C) Covered employers.--Not later than 15 days 
                after the model notification and eligibility and 
                enrollment forms are made available under subparagraph 
                (B)(ii), each covered employer or their designee 
                shall--
                            (i) provide the additional notification 
                        required under this subsection to the 
        
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                individuals described in paragraph (3) (other 
                        than such individuals who are also described in 
                        paragraph (1)(B)); and
                            (ii) be able to comply with such additional 
                        notification requirement in the case of any 
                        individual described in paragraph (1)(A).
                    (D) Definition of covered employer.--For purposes 
                of this section, the term ``covered employer'' means, 
                for any calendar year, any person on whom an excise tax 
                is imposed under section 3111 or 1401 of the Internal 
                Revenue Code of 1986 with respect to having an 
                individual in the person's employ to whom wages are 
                paid by such person during such calendar year.
    (h) Reports.--Beginning on January 1, 2002, and every 3 months 
thereafter until January 1, 2003, the Secretary of the Treasury shall 
submit a report to Congress regarding the premium assistance program 
established under this section that includes the following:
            (1) The status of the implementation of the program.
            (2) The number of individuals provided assistance under the 
        program as of the date of the report.
            (3) The average dollar amount (monthly and annually) of the 
        premium assistance provided under the program.
            (4) The total amount of expenditures incurred (with 
        administrative expenditures noted separately) under the program 
        as of the date of the report.
    (i) Appropriation.--
            (1) In general.--Out of any funds in the Treasury not 
        otherwise appropriated, there is appropriated to carry out this 
        section, such sums as are necessary for each of fiscal years 
        2002 and 2003.
            (2) Obligation of funds.--This section constitutes budget 
        authority in advance of appropriations Acts and represents the 
        obligation of the Federal Government to provide for the payment 
        of premium assistance under this section.
    (j) Sunset.--No premium assistance may be provided under this 
section for any month beginning after December 31, 2002.

SEC. 402. STATE OPTION TO PROVIDE TEMPORARY MEDICAID COVERAGE FOR 
              CERTAIN UNINSURED INDIVIDUALS.

    (a) State Option.--Notwithstanding any other provision of law, a 
State may elect to provide under its medicaid program under title XIX 
of the Social Security Act medical assistance in the case of an 
individual--
            (1) who at any time during the period that begins on 
        September 11, 2001, and ends on December 31, 2002, is separated 
        from employment;
            (2) who is not eligible for COBRA continuation coverage;
            (3) who is uninsured; and
            (4) whose assets, resources, and earned or unearned income 
        (or both) do not exceed such limitations (if any) as the State 
        may establish.
    (b) Limitation of Period of Coverage.--Medical assistance provided 
in accordance with this section shall end with respect to an individual 
on the earlier of--
            (1) the date the individual is no longer uninsured; or
            (2) subject to subsection (c)(4), 12 months after the date 
        the individual first receives such assistance.
    (c) Special Rules.--In the case of medical assistance provided 
under this section--
            (1) the Federal medical assistance percentage under section 
        1905(b) of the Social Security Act (42 U.S.C. 1396d(b)) shall 
        be the enhanced FMAP (as defined in section 2105(b) of such Act 
        (42 U.S.C. 1397ee(b)));
            (2) a State may elect to apply any income, asset, or 
        resource limitation permitted under the State medicaid plan or 
        under title XIX of such Act;
            (3) the provisions of section 1916(g) of the Social 
        Security Act (42 U.S.C. 1396o) shall apply to the provision of 
        such assistance in the same manner as the provisions of such 
        section apply with respect to individuals provided medical 
        assistance only under subclause (XV) or (XVI) of section 
        1902(a)(10)(A)(ii) of such Act (42 U.S.C. 1396a(a)(10)(A)(ii));
            (4) a State may elect to provide such assistance in 
        accordance with section 1902(a)(34) of the Social Security Act 
        (42 U.S.C. 1396a(a)(34)) and any assistance provided with 
        respect to a month described in that section shall not be 
        included in the determination of the 12-month period under 
        subsection (b)(2);
            (5) a State may elect to make eligible for such medical 
        assistance a dependent spouse or children of an individual 
        eligible for medical assistance under subsection (a), if such 
        spouse or children are uninsured;
            (6) individuals eligible for medical assistance under this 
        section shall be deemed to be described in the list of 
        individuals described in the matter preceding paragraph (1) of 
        section 1905(a) of such Act (42 U.S.C. 1396d(a));
            (7) a State may elect to provide such medical assistance 
        without regard to any limitation under sections 401(a), 402(b), 
        403, and 421 of the Personal Responsibility and Work 
        Opportunity Reconciliation Act of 1996 (8 U.S.C. 1611(a), 
        1612(b), 1613, and 1631) and no debt shall accrue under an 
        affidavit of support against any sponsor of an individual who 
        is an alien who is provided such assistance, and the cost of 
        such assistance shall not be considered as an unreimbursed 
        cost; and
            (8) the Secretary of Health and Human Services shall not 
        count, for purposes of section 1108(f) of the Social Security 
        Act (42 U.S.C. 1308(f)), such amount of payments under this 
        section as bears a reasonable relationship to the average 
        national proportion of payments made under this section for the 
        50 States and the District of Columbia to the payments 
        otherwise made under title XIX for such States and District.
    (d) Sunset.--No medical assistance may be provided under this 
section for any month beginning after December 31, 2002.

SEC. 403. STATE OPTION TO PROVIDE TEMPORARY COVERAGE UNDER MEDICAID FOR 
              THE UNSUBSIDIZED PORTION OF COBRA CONTINUATION PREMIUMS.

    (a) State Option.--
            (1) In general.--Notwithstanding any other provision of 
        law, a State may elect to provide under its medicaid program 
        under title XIX of the Social Security Act medical assistance 
        in the form of payment for the portion of the premium for COBRA 
        continuation coverage for which an individual does not receive 
        a subsidy under the premium assistance program established 
        under section 401 in the case of an individual--
                    (A) who at any time during the period that begins 
                on September 11, 2001, and ends on December 31, 2002, 
                is separated from employment;
                    (B) who is eligible for, and has elected coverage 
                under, COBRA continuation coverage;
                    (C) who is receiving premium assistance under the 
                program established under section 401; and
                    (D) whose family income does not exceed 200 percent 
                of the poverty line.
            (2) Inclusion of certain individuals.--For purposes of 
        paragraph (1), the spouse, child, or other individual who was 
        an insured under health insurance coverage of an individual who 
        was killed as a result of the terrorist-related aircraft 
        crashes on September 11, 2001, or as a result of any other 
        terrorist-related event occurring during the period described 
        in that paragraph, and who satisfies the requirements of 
        subparagraphs (B), (C), and (D) of paragraph (1) shall be 
        eligible for medical assistance under this 
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section.
    (b) Limitation of Period of Coverage.--Medical assistance provided 
in accordance with this section shall end with respect to an individual 
on the earlier of--
            (1) the date the individual is no longer covered under 
        COBRA continuation coverage; or
            (2) 12 months after the date the individual first receives 
        such assistance under this section.
    (c) Special Rules.--In the case of medical assistance provided 
under this section--
            (1) such assistance may be provided without regard to--
                    (A) whether the State otherwise has elected to make 
                medical assistance available for COBRA premiums under 
                section 1902(a)(10)(F) of the Social Security Act (42 
                U.S.C. 1396a(a)(10)(F)); or
                    (B) the conditions otherwise imposed for the 
                provision of medical assistance for such COBRA premiums 
                under clause (XII) of the matter following section 
                1902(a)(10)(G) of the Social Security Act (42 U.S.C. 
                1396a(a)(10)(G)), or paragraphs (1)(B), (1)(C), (1)(D), 
                and (4) of section 1902(u) of such Act (42 U.S.C. 
                1396a(u)); and
            (2) paragraphs (1), (2), (4), (5), (7), and (8) of 
        subsection (c) of section 402 apply to such assistance in the 
        same manner as such paragraphs apply to the provision of 
        medical assistance under that section.
    (d) Sunset.--No medical assistance may be provided under this 
section for any month beginning after December 31, 2002.

SEC. 404. TEMPORARY INCREASES OF MEDICAID FMAP FOR FISCAL YEAR 2002.

    (a) Permitting Maintenance of Fiscal Year 2001 FMAP.--
Notwithstanding any other provision of law, but subject to subsection 
(d), if the FMAP determined without regard to this section for a State 
for fiscal year 2002 is less than the FMAP as so determined for fiscal 
year 2001, the FMAP for the State for fiscal year 2001 shall be 
substituted for the State's FMAP for fiscal year 2002, before the 
application of this section.
    (b) General 1.50 Percentage Points Increase.--Notwithstanding any 
other provision of law, but subject to subsections (d) and (e), for 
each State for each calendar quarter in fiscal year 2002, the FMAP 
(taking into account the application of subsection (a)) shall be 
increased by 1.50 percentage points.
    (c) Further Increase for States With High Unemployment Rates.--
            (1) In general.--Notwithstanding any other provision of 
        law, but subject to subsections (d) and (e), the FMAP for a 
        high unemployment State for a calendar quarter in fiscal year 
        2002 (and any subsequent calendar quarter in such fiscal year 
        regardless of whether the State continues to be a high 
        unemployment State for a calendar quarter in such fiscal year) 
        shall be increased (after the application of subsections (a) 
        and (b)) by 1.50 percentage points.
            (2) High unemployment state.--For purposes of this 
        subsection, a State is a high unemployment State for a calendar 
        quarter if, for any 3 consecutive months beginning on or after 
        June 2001 and ending with the second month before the beginning 
        of the calendar quarter, the State has an unemployment rate 
        that exceeds the national average unemployment rate. Such 
        unemployment rates for such months shall be determined based on 
        publications of the Bureau of Labor Statistics of the 
        Department of Labor.
    (d) 1-Year Increase in Cap On Medicaid Payments To Territories.--
Notwithstanding any other provision of law, with respect to fiscal year 
2002, the amounts otherwise determined for Puerto Rico, the Virgin 
Islands, Guam, the Northern Mariana Islands, and American Samoa under 
section 1108 of the Social Security Act (42 U.S.C. 1308) shall each be 
increased by an amount equal to 3.093 percentage points of such 
amounts.
    (e) Scope of Application.--The increases in the FMAP for a State 
under this section shall apply only for purposes of title XIX of the 
Social Security Act and shall not apply with respect to--
            (1) disproportionate share hospital payments described in 
        section 1923 of such Act (42 U.S.C. 1396r-4); and
            (2) payments under titles IV and XXI of such Act (42 U.S.C. 
        601 et seq. and 1397aa et seq.).
    (f) State Eligibility.--A State is eligible for an increase in its 
FMAP under subsection (b) or (c) only if the eligibility under its 
State plan under title XIX of the Social Security Act (including any 
waiver under such title or under section 1115 of such Act (42 U.S.C. 
1315)) is no more restrictive than the eligibility under such plan (or 
waiver) as in effect on October 1, 2001.

SEC. 405. DEFINITIONS.

    In this title:
            (1) Administrator.--The term ``administrator'' has the 
        meaning given that term in section 3(16)(A) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1002(16)(A)).
            (2) COBRA continuation coverage.--
                    (A) In general.--The term ``COBRA continuation 
                coverage'' means coverage under a group health plan 
                provided by an employer pursuant to title XXII of the 
                Public Health Service Act, section 4980B of the 
                Internal Revenue Code of 1986, part 6 of subtitle B of 
                title I of the Employee Retirement Income Security Act 
                of 1974, or section 8905a of title 5, United States 
                Code.
                    (B) Application in states requiring such 
                coverage.--Such term includes such continuation 
                coverage provided in a State that has enacted a law 
                that requires such continuation coverage even though 
                the continuation coverage would not otherwise be 
                required under the provisions of law referred to in 
                subparagraph (A).
            (3) Covered employee.--The term ``covered employee'' has 
        the meaning given that term in section 607(2) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1167(2)).
            (4) Election period.--The term ``election period'' has the 
        meaning given that term in section 605(1) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1165(1)).
            (5) Federal public benefit.--The term ``Federal public 
        benefit'' has the meaning given that term in section 401(c) of 
        the Personal Responsibility and Work Opportunity Reconciliation 
        Act of 1996 (8 U.S.C. 1611(c)).
            (6) FMAP.--The term ``FMAP'' means the Federal medical 
        assistance percentage, as defined in section 1905(b) of the 
        Social Security Act (42 U.S.C. 1396d(b)).
            (7) Group health plan.--The term ``group health plan'' has 
        the meaning given that term in section 2791(a) of the Public 
        Health Service Act (42 U.S.C. 300gg-91(a)), section 607(1) of 
        the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1167(1)), and section 4980B(g)(2) of the Internal Revenue Code 
        of 1986.
            (8) Health insurance coverage.--The term ``health insurance 
        coverage'' has the meaning given that term in section 
        2791(b)(1) of the Public Health Service Act (42 U.S.C. 300gg-
        91(b)(1)).
            (9) Multiemployer plan.--The term ``multiemployer plan'' 
        has the meaning given that term in section 3(37) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1002(37)).
            (10) Poverty line.--The term ``poverty line'' has the 
        meaning given that term in section 2110(c)(5) of the Social 
        Security Act (42 U.S.C. 1397jj(c)(5)).
            (11) State.--The term ``State'' has the meaning given such 
        term for purposes of title XIX of the Social Security Act (42 
        U.S.C. 1396 et seq.).
            (12) State
a62
 or local public benefit.--The term ``State or 
        local public benefit'' has the meaning given that term in 
        section 411(c) of the Personal Responsibility and Work 
        Opportunity Reconciliation Act of 1996 (8 U.S.C. 1621(c)).
            (13) Uninsured.--
                    (A) In general.--The term ``uninsured'' means, with 
                respect to an individual, that the individual is not 
                covered under--
                            (i) a group health plan;
                            (ii) health insurance coverage; or
                            (iii) a program under title XVIII, XIX, or 
                        XXI of the Social Security Act (other than 
                        under such title XIX pursuant to section 402).
                    (B) Exclusion.--Such coverage under clause (i) or 
                (ii) shall not include coverage consisting solely of 
                coverage of excepted benefits (as defined in section 
                2791(c) of the Public Health Service Act (42 U.S.C. 
                300gg-91(c)).

                        TITLE V--REVENUE OFFSET

SEC. 501. HIGHEST MARGINAL INCOME TAX RATE NOT REDUCED BELOW 37.6 
              PERCENT.

    (a) In General.--The table contained in paragraph (2) of section 
1(i) is amended in the column under the 39.6 percentage by striking 
``35.0%'' and inserting ``37.6%''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2001.
    (c) Section 15 Not To Apply.--The amendment made by subsection (a) 
shall not be treated as a change in the rate of a tax imposed by 
chapter 1 of the Internal Revenue Code of 1986 for purposes of section 
15 of such Code.

 TITLE VI--EMERGENCY EMPLOYMENT AND TRAINING ASSISTANCE FOR DISLOCATED 
                                WORKERS

SEC. 601. ADDITIONAL FUNDING FOR NATIONAL EMERGENCY GRANTS UNDER THE 
              WORKFORCE INVESTMENT ACT OF 1998.

    Section 173 of the Workforce Investment Act of 1998 (29 U.S.C. 
2918) is amended by adding at the end the following:
    ``(f) Authorization of Appropriations.--
            ``(1) In general.--In addition to amounts made available 
        under section 132(a)(2)(A) to carry out this section, there are 
        authorized to be appropriated $5,000,000,000 to carry out this 
        section for fiscal years 2002 and 2003.
            ``(2) Availability.--Amounts appropriated pursuant to the 
        authorization of appropriations under paragraph (1) are 
        authorized to remain available until expended.''.
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