Title VII, SEC. 7501. COORDINATION WITH COBRA CONTINUING CARE PROVISIONS. 
      (a) Period of Coverage. Clause (iv) of section 4980B(f)(2)(B) (defining 
    period of coverage) is amended 

        (1) by striking ``or'' at the end of subclause (I), by striking the 
      period at the end of subclause (II) and inserting ``, or'', and by adding 
      at the end the following new subclause: 

        ``(III) eligible for comprehensive health coverage described in section 
      1101 of the Health Security Act.'', and 

        (2) by striking ``or medicare entitlement'' in the heading and 
      inserting ``, medicare entitlement, or health security act eligibility''. 

      (b) Qualified Beneficiary. Section 4980B(g)(1) (defining qualified 
    beneficiary) is amended by adding at the end the following new 
    subparagraph: 

      ``(E) Special rule for individuals covered by health security act. The 
    term `qualified beneficiary' shall not include any individual who, upon 
    termination of coverage under a group health plan, is eligible for 
    comprehensive health coverage described in section 1101 of the Health 
    Security Act.'' 

      (c) Repeal Upon Implementation of Health Security Act. 

        (1) In general. Section 4980B (relating to failure to satisfy 
      continuation coverage requirements of group health care plans) is hereby 
      repealed. 

        (2) Conforming amendments. 

          (A) Section 414(n)(3)(C) is amended by striking ``505, and 4980B'' 
        and inserting ``and 505''. 

          (B) Section 414(t)(2) is amended by striking ``505, or 4980B'' and 
        inserting ``or 505''. 

          (C) The table of sections for chapter 43 is amended by striking the 
        item relating to section 4980B. 

        (3) Effective date. The amendments made by this subsection shall take 
      effect on the earlier of 

          (A) January 1, 1998, or 

          (B) the first day of the first calendar year following the calendar 
        year in which all States have in effect plans under which individuals 
        are eligible for comprehensive health coverage described in section 
        1101 of this Act. 

          Such amendments shall not apply in determining the amount of any tax 
        under section 4980B of the Internal Revenue Code of 1986 with respect 
        to any failure occurring before the date determined under the preceding 
        sentence.