Title VI, SEC. 6113. LIMITATION OF LIABILITY BASED ON INCOME. 
      (a) In General. In the case of an eligible family described in subsection 
    (b), the repayment amount required under this subpart (after taking into 
    account any work credit earned under section 6112) with respect to a year 
    shall not exceed the amount of liability described in subsection (c) for 
    the year. 

      (b) Eligible Family Described. An eligible family described in this 
    subsection is a family which is determined, under subpart B of part 2 of 
    subtitle D of title I by the regional alliance for the alliance area in 
    which the family resides, to have wage-adjusted income (as defined in 
    subsection (d)) below 250 percent of the applicable poverty level. 

      (c) Amount of Liability. 

        (1) Determination. Subject to paragraph (2), in the case of a family 
      enrolled in a class of enrollment with wage-adjusted income (as defined 
      in subsection (d)), the amount of liability under this subsection is 
      determined as follows: 

          (A) No obligation if income below income threshold amount or if afdc 
        or ssi family. If such income is than the income threshold amount 
        (specified in section 6104(c)(4)) or if the family is an AFDC or SSI 
        family, the amount of liability is zero. 

          (B) Income above income threshold amount. If such income is at least 
        such income threshold amount and the family is not an AFDC or SSI 
        family, the amount of liability is the sum of the following: 

            (i) 5.5 percent of income (above income threshold amount) up to the 
          poverty level. The initial marginal rate (specified in paragraph 
          (2)(A)) of the amount by which 

          (I) the wage-adjusted income (not including any portion that exceeds 
        the applicable poverty level for the class of family involved), exceeds 

          (II) such income threshold amount. 

            (ii) Graduated phase out of discount up to 250 percent of poverty 
          level. The final marginal rate (specified in paragraph (2)(B)) of the 
          amount by which the wage-adjusted income exceeds 100 percent of the 
          applicable poverty level. 

        (2) Marginal rates. In paragraph (1) 

          (A) Initial marginal rate. The initial marginal rate, for a year for 
        a class of enrollment, is the ratio of 

            (i) 5.5 percent of the applicable poverty level for the class of 
          enrollment for the year, to 

            (ii) the amount by which such poverty level exceeds such income 
          threshold amount. 

          (B) Final marginal rate. The final marginal rate, for a year for a 
        class of enrollment, is the ratio of 

            (i) the amount by which (I) the amount of the alliance credit 
          exceeds (II) 5.5 percent of the applicable poverty (for the class and 
          year); to 

            (ii) 150 percent of such poverty level. 

          (C) Application for family enrollment based on based on dual parent 
        enrollment. The marginal rates under this paragraph for any family 
        class of enrollment shall be determined based on the applicable poverty 
        level for a dual parent class of enrollment. 

      (d) Wage-Adjusted Income Defined. In this subtitle, the term 
    ``wage-adjusted income'' means, for a family, family adjusted income of the 
    family (as defined in section 1372(d)(1)), reduced by the sum of the 
    following: 

        (1)(A) Subject to subparagraph (B), the amount of any wages included in 
      such family's income that is received for employment which is taken into 
      account in the computation of the amount of employer premiums under 
      section 6121 (without consideration of section 6126). 

          (B) The reduction under subparagraph (A) shall not exceed for a year 
        $5,000 (adjusted under section 6104(c)(3)(B)) multiplied by the number 
        of months (including portions of months) of employment with respect to 
        which employer premiums were payable under section 6121 (determined in 
        a manner consistent with section 6121(e)). 

        (2) The amount of net earnings from self employment of the family taken 
      into account under section 6126). 

        (3) The amount of unemployment compensation included in income under 
      section 85 of the Internal Revenue Code of 1986. 

      (e) Determinations. A family's wage-adjusted income and the amount of 
    liability under subsection (c) shall be determined by the applicable 
    regional alliance upon application by a family under under subpart B of 
    part 2 of subtitle D of title I. 

      (f) No Liability for Indians and Certain Veterans and Military Personnel. 
    The provisions of paragraph (3) of section 6104(a) shall apply to the 
    reduction in liability under this section in the same manner as such 
    paragraph applies to the premium discount under section 6104.