; or (B) for a highly-compensated essential worker, the amount determined under subsection (b)(2)(B) minus the amount of any premium pay the worker received under subsection (b) prior to the death. (2) Treatment of lump sum payments (A) Treatment as premium pay For purposes of this title, any payment made under this subsection shall be treated as a premium pay under subsection (b). (B) Treatment for purposes of Internal Revenue Code of 1986 For purposes of the Internal Revenue Code of 1986, any payment made under this subsection shall be treated as a payment for work performed by the essential worker. (g) Application to self-Directed care workers funded through Medicaid or the Veteran-Directed Care Program (1) Medicaid In the case of an essential work employer receiving a grant under section 806 that is a covered employer described in paragraph (4) who, under a State Medicaid plan under title XIX of the Social Security Act ( 42 U.S.C. 1396 et seq.) or under a waiver of such plan, has opted to receive items or services using a self-directed service delivery model, the preceding requirements of this section, including the requirements to provide premium pay under subsection (b) (including a lump sum payment in the event of an essential worker death under subsection (f)) and the requirements of sections 806 and 807, shall apply to the State Medicaid agency responsible for the administration of such plan or waiver with respect to self-directed care workers employed by that employer. In administering payments made under this title to such self-directed care workers on behalf of such employers, a State Medicaid agency shall— (A) exclude and disregard any payments made under this title to such self-directed workers from the individualized budget that applies to the items or services furnished to the individual client employer under the State Medicaid plan or waiver