; and (B) in paragraph (18), by inserting or (I) after subparagraph (H) . (f) Exemption from work requirements for older caregiver relatives and caregiver relatives caring for a child with a disability (1) In general Section 408 of the Social Security Act ( 42 U.S.C. 608 ), by subsection (d)(1), is amended by adding at the end the following new subsection: (i) State required To exempt caregiver relatives from work participation where caregiver receives assistance A State shall not require an individual to engage in work, and, at the option of the State and on a case-by-case basis, may disregard such individual in determining the participation rates under section 407(a), if the individual— (1) is an older caregiver relative or a caregiver relative caring for a child with a disability (as such terms are defined for purposes of subsection (a)(14)); and (2) directly receives assistance on the individual’s own behalf 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)). . (2) Penalty Paragraph (18) of section 409(a) of the Social Security Act ( 42 U.S.C. 609(a) ), as added by subsection (d)(2), is amended by inserting or (i) after subsection (h) . (3) Conforming amendments 402(a)(1)(A) of the Social Security Act ( 42 U.S.C. 602(a)(1)(A) ) is amended— (A) in clause (ii), by inserting and subject to subsections (h) and (i) of section 408 before the period