Application of portion of unused tax credits by States for indigent health care

(a) Computation of unused credits The Secretary, in consultation with the Secretary of the Treasury, shall calculate for each State for each year, beginning with 2026, using the most recent data available— (1) the maximum aggregate amount of credits under section 36C of the Internal Revenue Code of 1986 that would have been allowed for the year for qualified residents of the State for taxable years ending in the year if all eligible qualified residents had qualified for such credits; (2) the aggregate amount of credits under such section that were allowed for taxable years ending in the year by qualified residents of such State; and (3) 25 percent of the amount by which— (A) the amount determined under paragraph (1) with respect to qualified residents of the State for such year; exceeds (B) the amount determined under paragraph (2) for such State for that year. (b) Appropriation For the purpose of making grants to States under this section, there is hereby appropriated to the Secretary, out of any funds in the Treasury not otherwise appropriated, for each year (beginning with 2025) an amount equivalent to the amount determined under subsection (a)(3) for all States under subsection (a) for the year in which such fiscal year ends, subject to adjustment under subsection (d)(2). (c) Grants to States for indigent assistance (1) Application A State may file with the Secretary (in a form and manner specified by the Secretary) an application to provide assistance in furnishing health services to indigent individuals residing in the State. Such application shall demonstrate the manner in which such assistance is furnished in an equitable manner to individuals residing in all parts of the State. (2) Amount of funds From the funds appropriated under subsection (b) for a year, the amount of funds paid to any State in any year under this section with an application filed in accordance with paragraph (1) is equal to an amount specified in the application, but not to exceed the amount computed under subsection (a)(3) for the State and the year. (3) Use of funds Funds paid to a State under this subsection may be used only to assist in the furnishing of health services to uninsured individuals residing in the State or for purposes of increasing the payment adjustments made under sections 1886(d)(5)(F) and 1923 of the Social Security Act (42 U.S.C. 1395ww(d)(5)(F), 1396r–4) to hospitals that serve a disproportionate share of such individuals in the State. (d) Initial estimate; final calculation and reconciliation (1) Use of estimates The calculations under subsection (a) for a year shall initially be estimated before the beginning of the year. Payments under this section to a State for a year shall be made, subject to reconciliation under paragraph (2), based on the amount so estimated. (2) Reconciliation based on final calculation The calculations under subsection (a) for a year shall also be made after the end of the year. Insofar as the amount calculated under this paragraph for subsection (a)(3) for a State for a year exceeds (or is less than) by a material amount from the amount for subsection (a)(3) estimated and applied for the State and year under paragraph (1), the amount calculated under subsection (a)(3) for the State for the 2nd year beginning after such year, shall be reduced or increased, respectively by the amount of such excess or deficit.