Exceptions to exclusion of children of employees of a public agency in the State

(A) In general A child shall not be considered to be described in paragraph (2)(B) if— (i) the public agency that employs a member of the child’s family to which such paragraph applies satisfies subparagraph (B); or (ii) subparagraph (C) applies to such child.

(B) Maintenance of effort with respect to agency contribution for family coverage For purposes of subparagraph (A)(i), a public agency satisfies this subparagraph if the amount of annual agency expenditures made on behalf of employees enrolled in health coverage paid for by the agency that includes dependent coverage for the most recent State fiscal year is not less than the amount of such expenditures made by the agency for the 1997 State fiscal year, increased by the percentage increase in the medical care expenditure category of the Consumer Price Index for All-Urban Consumers (all items: U.S. City Average) for such preceding fiscal year.

(C) Hardship exception For purposes of subparagraph (A)(ii), this subparagraph applies to a child if the State determines that the annual aggregate amount of premiums and cost-sharing imposed for coverage of the family of the child would exceed 5 percent of such family’s income for the year involved.