; and (ii) do not receive assistance under the State program funded under this part or any other State program funded with qualified expenditures (as defined in section 409(a)(7)(B)(i)) on their own behalf. . (2) Penalty Section 409(a) of the Social Security Act ( 42 U.S.C. 609(a) ), as previously amended by this section, is amended— (A) in paragraph (9), by inserting (other than subparagraph (H)) after section 408(a)(7) ; and (B) by adding at the end the following new paragraph: (18) Penalty for failure to comply with 5-year cap exemptions If the Secretary determines that a State to which a grant is made under section 403 in a fiscal year has violated subparagraph (H) of section 408(a)(7) during the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to 3 percent of the State family assistance grant . (d) Exemption from work requirements for nonparent caregiver relatives in child-Only cases (1) In general Section 408 of the Social Security Act ( 42 U.S.C. 608 ) is amended by adding at the end the following new subsection: (h) State required To exempt nonparent caregiver relatives from work participation in child-Only cases A State shall not require an individual to engage in work if the individual— (1) is the nonparent caregiver relative of a child who does not reside in the same household as a parent of the child