Order Code RL31698
CRS Report for Congress
Received through the CRS Web
Transitional Medical Assistance (TMA)
Under Medicaid
Updated June 30, 2004
April Grady
Analyst in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

---

Transitional Medical Assistance (TMA) Under Medicaid
Summary
Medicaid, a means-tested federal/state program that provides health care
coverage to certain groups of individuals, requires that states continue Medicaid
benefits for certain low-income families who would otherwise lose coverage because
of changes in their income. This continuation of benefits is known as transitional
medical assistance (TMA). The law permanently requires four months of TMA for
families who lose Medicaid eligibility due to increased child or spousal support
collections, as well as those who lose eligibility due to an increase in earned income
or hours of employment. Congress expanded work-related TMA under Section 1925
of the Social Security Act as part of the Family Support Act of 1988, and states
currently must provide TMA to families who lose Medicaid eligibility for work-
related reasons for at least six, and up to 12, months. The requirement to provide
work-related TMA beyond four months is set to expire on September 30, 2004.
To qualify for TMA under Section 1925, a family must have received Medicaid
in at least three of the six months preceding the month in which eligibility is lost and
have a dependent child in the home. During the first six months of TMA, states must
provide the same benefits the family was receiving, although this requirement may
be met by paying a family’s premiums, deductibles, coinsurance, and similar costs
for employer-based health coverage. An additional six months of TMA (for a total
of up to 12 months) is available for families who continue to have a dependent child
in the home, who meet reporting requirements, and whose average gross monthly
earnings (less work-related child care costs) are below 185% of the federal poverty
guideline. States may impose a premium, limit the scope of benefits, and use an
alternative service delivery system during the second six months of TMA.
Although federal statute outlines requirements for TMA, states have modified
these requirements in a number of ways. A survey of state Medicaid directors
conducted by the Congressional Research Service (CRS) in July 2002 collected
information on TMA programs in 46 states. Although not required by law, 11 states
provide more than 12 months of TMA coverage. Many states also have policies that
modify the “three of six months” requirement (17 states), change reporting
requirements (19 states), or allow individuals to self-declare earnings and child care
costs (20 states). None of the states have limited the scope of benefits provided
during the second six months, and three states impose a premium. States are not
required to report TMA participation and expenditures, but a number of states were
able to provide this information for the CRS survey. Based on available data,
approximately 682,800 individuals in 32 states were enrolled in TMA in December
2001. Total expenditures in 19 states for calendar year 2001 were $652.8 million.
Legislation to extend TMA under Section 1925 has been introduced in the 108th
Congress as part of welfare reauthorization, and the program has continued to exist
under a series of temporary continuations. If Congress does not extend Section 1925
beyond September 30, 2004 (the expiration date of the latest continuation), states will
still be required to provide four months of TMA to families who lose Medicaid
eligibility due to an increase in earned income, hours of employment, or child or
spousal support.

---

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Medicaid and Cash Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Medicaid Eligibility Under Section 1931 . . . . . . . . . . . . . . . . . . . . . . . 2
Transitional Medical Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Initial Six-Month Period of Section 1925 TMA Coverage . . . . . . . . . . 5
Second Six-Month Period of Section 1925 TMA Coverage . . . . . . . . . 6
TMA Enrollment and Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
State TMA Program Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Legislative Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
List of Figures
Figure 1. Monthly Amount a Family of 3 Could Earn and Qualify for
Section 1931 Medicaid, June 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
List of Tables
Table 1. TMA Enrollment and Expenditures for Selected Months in 2001 . . . . . 7
Table 2. Overview of State TMA Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Table A-1. State TMA Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

---

Transitional Medical Assistance (TMA)
Under Medicaid
Introduction
Medicaid, a means-tested federal/state program that provides health care
coverage to certain groups of individuals, requires that states continue Medicaid
benefits for certain low-income families who would otherwise lose coverage because
of changes in their income. This continuation of benefits is known as transitional
medical assistance (TMA). The law permanently requires four months of TMA for
families who lose Medicaid eligibility due to increased child or spousal support
collections. It also permanently requires four months of TMA for families who lose
Medicaid eligibility due to an increase in earned income or hours of employment.
However, Congress expanded work-related TMA benefits as part of the Family
Support Act of 1988 (P.L. 100-485). As a result, states are currently required to
provide at least six, and up to 12, months of TMA coverage to families losing
Medicaid eligibility due to increased hours of work or income from employment, as
well as to families who lose eligibility due to the loss of a time-limited earned
income disregard.1 An additional six months of TMA (for a total of up to 12 months)
is required for families who meet certain conditions. These expanded TMA
requirements are outlined in Section 1925 of the Social Security Act, and Congress
has acted several times to extend the program beyond its original sunset date of
September 30, 1998. TMA requirements under Section 1925 are currently set to
expire on September 30, 2004.
This report provides an overview of TMA. While Section 1925 of the Social
Security Act outlines the provisions requiring states to provide TMA for up to 12
months, states have considerable flexibility in designing and implementing their
TMA programs. To better understand these programs, the Congressional Research
Service (CRS) conducted a survey of state TMA policies in effect on July 1, 2002.
This report summarizes the results of the survey and discusses legislation introduced
to extend, and in some instances to modify, TMA.
1 Under the Aid to Families with Dependent Children (AFDC) program, the predecessor to
the Temporary Assistance for Needy Families (TANF) program, states were required to
disregard the earnings of a recipient family for a limited time (special rules applied to
applicants and child students). For the first four months of a job (less for part-time work),
the disregard per month was $120, one-third of remaining earnings, and actual dependent
child care costs up to $175 (up to $200 for a child under age 2). In months five through 12,
the disregard per month was $120 plus dependent care costs. After 12 months, the disregard
per month was $90 plus dependent care costs. The intent of these disregards was to allow
individuals to remain on cash assistance for a limited period of time as they transitioned to
work.

---

CRS-2
Medicaid and Cash Welfare
Medicaid is a health insurance program jointly funded by the federal
government and the states. While states have considerable flexibility to design and
administer their programs, certain groups of individuals must be covered for certain
categories of services. Generally, eligibility is limited to low-income children,
pregnant women, parents of dependent children, the elderly, and people with
disabilities. Overall, the federal government finances about 57% of all Medicaid
costs annually. Total expenditures for Medicaid for FY2002 were $228 billion, the
federal share of which was $130 billion.

Medicaid Eligibility Under Section 1931. Prior to TANF, individuals
qualifying for the Aid to Families with Dependent Children (AFDC) program were
automatically eligible for and, in most states, automatically enrolled in Medicaid. The
Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-
193, herein referred to as the welfare reform law) formally “de-linked” Medicaid and
cash assistance. Medicaid entitlement was retained only for individuals who meet
the income and resource eligibility standards of their state’s former AFDC program
in effect on July 16, 1996 (herein referred to as eligibility under Section 1931),
regardless of whether they receive TANF or ever received AFDC. However, states
were given flexibility to modify their income and resource eligibility standards for
Medicaid in three ways: (1) states may lower their income standards, but not below
those used for AFDC on May 1, 1988; (2) states may increase their income and
resource standards by an amount that is no more than the percentage increase in the
Consumer Price Index (CPI); or (3) states may use less restrictive income and
resource methodologies than those in effect on July 16, 1996.
Since the welfare reform law of 1996, a number of states have aligned Section
1931 Medicaid eligibility with eligibility for TANF, and many use less restrictive
methods for counting income and resources to allow individuals and families to
qualify for Medicaid at higher income and resource levels than those in place on July
16, 1996. As part of their methodology for determining Medicaid eligibility, some
states have policies in place to disregard a portion of earnings or income for a limited
period of time. For example, Texas disregards the first $120 plus 90% of earnings
during a family’s first four months of Medicaid coverage. After month four, the
disregard drops to $120. As a result, the amount a family can earn and still qualify
for Medicaid is reduced in the fifth month of coverage and beyond.
Figure 1 illustrates the maximum monthly amount a family of three receiving
Medicaid could earn as of June 2001 and still qualify for coverage under Section
1931 after any time-limited income disregards have ended. Thirty-five states and the
District of Columbia do not have time-limited income disregard policies, meaning
that the amount a family can earn and still qualify for Medicaid does not vary from
month to month. In the 15 states with these policies, the length of the disregard
period ranges from four to 12 months. As Figure 1 illustrates, after disregards have
ended, families remain eligible for Medicaid under Section 1931 at different income
levels in different states. A family of three must have earnings at or below 50% of

---

CRS-3
the federal poverty line (FPL)2 to remain eligible for Medicaid under Section 1931
in 14 states. The same family may remain eligible with earnings between 50% and
100% FPL in 25 states, and 100% FPL or greater in 11 states and the District of
Columbia.3
In addition to disregarding income for a period of time, states may disregard the
value of a family’s assets (resources) when determining eligibility for Section 1931
Medicaid. As of June 2001, 15 states and the District of Columbia had eliminated
their asset test for eligibility. Eighteen of the remaining 35 states had policies to
disregard the value of one automobile entirely when determining eligibility.
2 The 2001 federal poverty guideline for a family of three is $14,630 ($18,290 in Alaska and
$16,830 in Hawaii).
3 Kaiser Commission on Medicaid and the Uninsured, Can Medicaid Work for Low-Income
Working Families? (April 2002).
Available: [http://www.kff.org/medicaid/4032-index.cfm].

---

CRS-4
Figure 1. Monthly Amount a Family of 3 Could Earn and Qualify for Section 1931 Medicaid, June 2001
District of Columbia
Rhode Island
Maine
Connecticut
Alaska
California
New Jersey
Massachusetts
Hawaii
New Hampshire
Ohio
New York
Illinois
Federal Poverty Line, 2001
Washington
Iowa
North Dakota*
Vermont
Tennessee
Delaware*
Oregon
Montana
South Dakota
Pennsylvania
Florida
Wyoming
Michigan*
Kansas
North Carolina
New Mexico
Utah*
South Carolina*
Nebraska
Minnesota*
Arkansas
Arizona
Kentucky*
Wisconsin*
Oklahoma
West Virginia
Maryland
Georgia*
Colorado
Mississippi*
Nevada*
Idaho
Texas*
Virginia*
Missouri*
Indiana
Louisiana
Alabama*
$0
$250
$500
$750
$1,000
$1,250
$1,500
$1,750
$2,000
$2,250
$2,500
Source: Kaiser Commission on Medicaid and the Uninsured, Can Medicaid Work for Low-Income Working Families? (April 2002).
Notes: Monthly amounts represent the maximum a family of three receiving Medicaid could earn and still qualify for coverage under Section 1931 after any time-limited income
disregards have ended. An asterisk (*) indicates that the state has a time-limited disregard policy (see accompanying text for an explanation). Families in all but 15 states and the District
of Columbia must also meet an asset (resource) test to qualify for coverage.

---

CRS-5
Transitional Medical Assistance
Currently, states must provide TMA to families losing eligibility for Section
1931 Medicaid under two scenarios.4 First, states are required to provide four
months of TMA coverage to families who lose Medicaid eligibility under Section
1931 due to increased child or spousal support. This provision was included in the
Child Support Amendments of 1984 (P.L. 98-378) and was made permanent by the
Omnibus Budget Reconciliation Act of 1989 (P.L. 101-239).
Second, under Section 1902 and Section 1925 of the Social Security Act, states
are required to provide TMA to families losing Section 1931 Medicaid eligibility for
work-related reasons. While states were originally required under Section 1902 to
provide four months of TMA to families losing eligibility due to an increase in hours
of work or income from employment, the Family Support Act (FSA) of 1988 (P.L.
100-485) expanded state TMA requirements under Section 1925. As a result, states
are currently required to provide at least six, and up to 12, months of TMA coverage
to families losing Section 1931 Medicaid eligibility due to increased hours of work
or income from employment, as well as to families who lose eligibility due to the loss
of a time-limited earned income disregard. FSA originally authorized Section 1925
to replace the four-month requirement in Section 1902 through FY1998. However,
Section 1925 was extended through FY2001 by the welfare reform law of 1996,
through FY2002 by the Consolidated Appropriations Act, 2001 (P.L. 106-554), and
through June 30, 2004 by a number of temporary continuations.5 On June 22, 2004,
the House and Senate passed H.R. 4589, a bill to extend TANF and related programs
(including TMA under Section 1925) through September 30, 2004.
If Congress does not extend Section 1925 beyond September 30, 2004, states
will still be required to provide four months of TMA to families who lose Section
1931 Medicaid eligibility due to increased hours of work or income from
employment. Regardless of activity to extend Section 1925, states will also still be
required to provide four months of TMA to families who lose Section 1931 eligibility
due to increased child or spousal support.
Initial Six-Month Period of Section 1925 TMA Coverage. Families
losing Section 1931 Medicaid eligibility due to the loss of a time-limited earned
income disregard or an increase in hours of work or income from employment must
receive at least six months of TMA coverage. To be eligible, federal statute specifies
that families must have received Medicaid under Section 1931 in at least three of the
six months preceding their loss of eligibility and have a dependent child in the home.6
During this initial six-month period of TMA, states must provide families with the
4 Section 1931(c) of the Social Security Act.
5 P.L. 107-229, P.L. 107-235, P.L. 107-240, P.L. 107-244, P.L. 107-294, P.L. 108-02, P.L.
108-40, P.L. 108-89, and P.L. 108-210 extended TMA under Section 1925 from Oct. 1, 2002
through June 30, 2004.
6 Families losing eligibility due to increased child or spousal support are eligible for a total
of four months of TMA if they received Medicaid under Section 1931 in at least three of the
six months preceding their loss of eligibility and have a dependent child in the home. There
are no additional eligibility requirements for support-related TMA.

---

CRS-6
same amount, duration, and scope of benefits offered under Section 1931 (that is, the
Medicaid coverage the family was previously receiving). However, states may opt
to meet this requirement by using Medicaid funds to pay a family’s premiums,
deductibles, coinsurance, and similar costs for employer-based health coverage
(referred to in statute as “wrap-around”). TMA may not be terminated during this
initial six-month period so long as the family continues to have a dependent child in
the home.
Second Six-Month Period of Section 1925 TMA Coverage. During the
initial six-month period, states must notify families of the availability of up to six
additional months of TMA, for a total of up to 12 months of coverage. To maintain
eligibility for the second six-month period of TMA, families must report their gross
monthly earnings and child care costs in months four, seven, and 10 of their coverage
(that is, on a quarterly basis). In addition, TMA coverage may be terminated during
the second six-month period if any of the following apply:
! the family ceases to include a dependent child;
! the family’s average gross monthly earnings (less child care costs
necessary for employment) exceed 185% of the federal poverty line
(approximately $2,353 for a family of three in 2003);
! the caretaker relative had no earnings in one or more of the three
previous months (unless the state determines that the lack of
earnings was due to an involuntary loss of employment, illness, or
other good cause);
! the family fails to file a quarterly report; or
! the family fails to pay any required premiums (should the state
choose to impose them).
TMA Enrollment and Expenditures
While states are required to submit data on their Medicaid programs to the
Department of Health and Human Services (HHS), they are not required to report
TMA enrollment and expenditures separately from other Medicaid program data. In
the summer of 2002, the Congressional Research Service (CRS) surveyed state
Medicaid directors on their TMA policies. As part of this survey, states were asked
to report, if available, monthly enrollment and expenditures for TMA for selected
months in 2001. These data are provided in Table 1.
As Table 1 illustrates, approximately 682,800 individuals in 32 states were
enrolled in TMA in December 2001. The vast majority of TMA enrollees are eligible
for work-related reasons, as nearly all states indicated that less than 10% of their
TMA population lost Medicaid eligibility under Section 1931 because of an increase
in child or spousal support collections. Table 1 also illustrates that expenditures for
the 19 states reporting totaled $652.8 million in calendar year 2001.

---

CRS-7
Table 1. TMA Enrollment and Expenditures for
Selected Months in 2001
Monthly enrollment
Total expenditures
(in thousands)
(federal and state share, $ in millions)
Calendar
Jun.
Sept.
Dec.
Jun.
Sept.
Dec.
Year
State
2001
2001
2001
2001
2001
2001
2001
Alaska
1.7
2.0
1.9
$ 3.9
$ 2.9
$ 4.1
$ 49.2
Arizonaa
43.3
16.9
27.2
NA
NA
NA
NA
Arkansasb
9.3
10.0
9.8
NA
NA
NA
NA
Californiac
38.3
41.5
43.4
4.2
3.9
4.2
49.8
Colorado
No data provided
No data provided
Connecticut
38.8
30.2
28.5
NA
NA
NA
NA
Delawared
12.8
14.4
16.1
2.5
2.7
3.0
36.6
District of Columbia
No data provided
No data provided
Florida
81.2
78.0
78.2
8.7
8.4
8.4
102.9
Georgia
No data provided
No data provided
Hawaii
4.4
4.3
4.6
0.6
0.6
0.7
1.9
Idahod
8.4
8.6
9.4
1.6
1.2
1.7
17.6
Illinois
No data provided
No data provided
Indiana
26.8
28.1
30.1
NA
NA
NA
NA
Kansas
9.8
9.9
9.6
1.1
1.1
1.5
14.2
Kentuckye
15.9
17.6
18.8
3.2
3.0
3.2
39.7
Louisianaf
3.3
3.1
3.8
NA
NA
NA
NA
Maine
No data provided
No data provided
Maryland
20.0
20.2
20.5
3.7
3.3
3.6
42.6
Massachusetts
No data provided
No data provided
Michiganb
69.1
66.2
63.5
NA
NA
NA
NA
Minnesotag
16.2
16.0
15.7
0.9
2.6
2.8
34.1
Missourid
20.3
20.7
19.6
3.4
3.5
3.0
NA
Montana
8.0
9.7
8.6
1.2
1.3
1.2
16.5
Nebraska
16.9
15.0
14.6
1.7
2.1
2.9
30.4
Nevada
8.5
9.9
10.2
1.2
1.3
1.3
17.2
New Hampshire
1.1
1.1
1.1
NA
NA
NA
NA
New Jersey
27.5
31.3
25.5
3.1
3.4
2.8
44.0
New Mexico
12.3
13.8
11.6
2.3
2.8
2.4
28.8
New York
No data provided
No data provided
North Carolina
14.6
16.8
20.3
1.5
2.2
2.2
18.4
North Dakota
2.9
2.8
3.0
0.3
NA
NA
NA
Ohio
No data provided
No data provided
Oklahoma
No data provided
No data provided
Oregon
28.4
28.1
28.2
4.8
4.4
4.6
56.1
Pennsylvania
66.8
67.6
68.4
NA
NA
NA
NA
Rhode Island
1.1
1.1
1.3
NA
NA
NA
NA
South Carolinab
48.4
57.3
62.2
NA
NA
NA
NA
Tennessee
No data provided
No data provided

---

CRS-8
Monthly enrollment
Total expenditures
(in thousands)
(federal and state share, $ in millions)
Calendar
Jun.
Sept.
Dec.
Jun.
Sept.
Dec.
Year
State
2001
2001
2001
2001
2001
2001
2001
Texas
No data provided
No data provided
Utah
14.2
11.7
8.9
2.3
2.1
1.7
24.2
Vermont
7.3
7.2
7.2
NA
NA
NA
NA
Virginia
No data provided
No data provided
West Virginia
No data provided
No data provided
Wisconsin
No data provided
No data provided
Wyoming
2.4
2.6
2.8
0.3
0.4
0.3
3.3
Total
687.4
671.7
682.8
$ 50.1
$ 51.5
$ 53.1
$ 652.8
Source: July 2002 Congressional Research Service (CRS) Survey of State TMA Policies.
Notes: “NA” indicates that a specific piece of information was not available for the state to provide
as part of the CRS survey.
a. Arizona indicated in their survey response that, effective July 2001, they had increased their
income eligibility standard for Medicaid under Section 1931 Medicaid. Since this allowed many
families to retain Section 1931 coverage, TMA enrollment declined.
b. These states did not provide data as part of the CRS survey. June and Sep. 2001 data for these
states are from Kaiser Commission on Medicaid and the Uninsured, Medicaid Program
Enrollment Data Update: September 2001 (June 2002). Dec. 2001 data are from Kaiser
Commission on Medicaid and the Uninsured, Medicaid Enrollment in 50 states: December
2001 Data Update (Oct. 2002).
c. California indicated in its survey response that in 2000 it expanded its earnings disregards under
Section 1931 which allows families to remain eligible for longer periods of time, thus keeping
TMA enrollment low.
d. Monthly expenditure data are estimates provided by the state.
e. For Kentucky, Dec. enrollment represents 18,800 recipients (individuals) and 6,500 cases (families).
Since data on cases but not recipients were available for June and Sep., enrollment is estimated
using the ratio of recipients to cases in Dec.
f. For Louisiana, monthly enrollment numbers do not include child and spousal support cases.
g. Minnesota indicated that June 2001 expenditures are low due to the fact that capitation payments
were not made in that month.
State TMA Program Policies
As Table 1 illustrates, enrollment and expenditures for TMA vary tremendously
by state, due both to differences in state characteristics (such as population size) and
in Medicaid program design. As discussed above, Section 1925 of the Social
Security Act requires states to provide up to 12 months of TMA to certain families.
However, states have made considerable efforts to expand and extend their TMA
programs. Expansions and extensions of state TMA programs have occurred through
a number of avenues within the states. These include waivers of federal requirements
(also referred to as Section 1115 waivers), amendments to their Medicaid state plans
to expand eligibility under Section 1931 through modified income and resource
eligibility standards or other means, and the use of state-only funds.
The July 2002 CRS survey asked states to respond to a number of questions
designed to determine the extent to which states have extended or expanded TMA
coverage. For example, several states lengthen the period of Medicaid coverage by

---

CRS-9
providing a 12-month disregard of all earned income at the point when an increase
in income jeopardizes their Medicaid eligibility under Section 1931. This disregard
allows the family to retain Section 1931 Medicaid eligibility for 12 months. After
the disregard policy is exhausted at the end of this 12-month period, families are then
eligible for up to 12 months of TMA. Other states extend TMA coverage through the
use of state-only funds.
Another example where states use various options to provide TMA coverage is
the “three of six months” requirement. As previously discussed, federal statute
requires that individuals receive Medicaid under Section 1931 in three of the six
months immediately preceding their loss of eligibility in order to qualify for TMA.
However, some states will effectively bypass this rule by using earned income
disregards. For example, a family whose earnings are low enough to qualify for
Section 1931 Medicaid may see an increase in earnings immediately after receiving
coverage (in month two or three). This increase in earnings may mean that they no
longer qualify for Section 1931 Medicaid, and they would not qualify for TMA
because they did not receive Medicaid in three of the immediately preceding six
months. By disregarding all earnings for two months, this family will remain eligible
for Medicaid and after three months, will qualify for TMA by meeting the “three of
six month” requirement. Other states conduct “look-back” reviews to provide
retroactive coverage to low-income families who would have qualified under Section
1931 Medicaid had they applied.

Table 2 summarizes states responses to the CRS state TMA survey, which
reflects state policies in effect as of July 1, 2002. Detailed information by state is
available in Table A-1.
Table 2. Overview of State TMA Policies
Policy
Number of states
Allows self-declaration of earnings and/or child care costs
20
Does not require reporting of earnings or child care costs on a
19
quarterly basis (in months four, seven, and 10) a
Modifies the “three of six months” requirement
17
Provides Medicaid “wrap-around” coverage a, b
13
Provides more than 12 months of TMA coverage
11
Imposes a premium in the second six-month period of TMA a
3
Limits benefits provided in the second six-month period of TMA a
0
Source: July 2002 Congressional Research Service (CRS) Survey of State TMA Policies and Kaiser
Commission on Medicaid and the Uninsured, Can Medicaid Work for Low-Income Working Families?
(April 2002).
Notes: Five states (Arkansas, Michigan, Ohio, Oklahoma, and West Virginia) did not respond to the
CRS survey. Information for these states was taken from the Kaiser report, reflecting policies in place
as of June 2001. Policies in the remaining states are those as of July 1, 2002. For state-specific
information, see Table A-1.
a. Based on responses from the District of Columbia and 45 states who completed the CRS survey,
as comparable information for the remaining five states was not available from the Kaiser report.
b. “Wrap-around” refers to the state option to use Medicaid funds to pay a family’s premiums,
deductibles, coinsurance, and similar costs for employer-based health coverage.

---

CRS-10
Legislative Proposals
Proposals to extend TMA under Section 1925 were part of the debate in the
107th Congress to reauthorize TANF, and President Bush’s FY2003 and FY2004
budget requests included an extension of TMA under Section 1925. The president’s
current (FY2005) budget request once again includes a five-year extension of TMA
under Section 1925, and legislation to extend the program has been introduced in the
108th Congress. In February 2003, the House passed H.R. 4, the Personal
Responsibility, Work, and Family Promotion Act of 2003, a welfare reauthorization
bill that would have extended TMA coverage under Section 1925 through FY2004
with no statutory changes.7 In October 2003, the Senate Finance Committee
favorably reported a substitute for H.R. 4, the Personal Responsibility and Individual
Development for Everyone (PRIDE) Act.
As approved by the committee, the substitute bill would extend TMA benefits
under Section 1925 through FY2008. The bill would also amend federal statute to
provide states with options for modifying their TMA policies, although a number of
states have already implemented many of these through other avenues (see Table 2).
Under the bill, states could opt to:
! provide continuous eligibility for TMA for 12 months by waiving
quarterly reporting requirements;
! extend coverage for an additional 12 months (for a total of up to 24
months of TMA) so long as a family’s gross monthly earnings (less
necessary child care costs) remained below 185% of the federal
poverty line;
! waive the requirement that a family must have received Section
1931 Medicaid in three of the previous six months to qualify for
TMA.
The substitute bill also includes an option for states to meet Section 1925 TMA
requirements by extending Medicaid coverage under Section 1931 to families whose
gross monthly earnings (less necessary child care costs) are at or below a level that
is at least 185% FPL. In states that choose this option, families whose earnings
exceed the eligibility standard for Section 1931 Medicaid would receive no further
medical assistance. Families whose earnings remain at or below the state’s eligibility
standard (at least 185% FPL) would continue to receive Section 1931 Medicaid.
In effect, this provision would prevent states with relatively high Section 1931
eligibility standards from having to provide the automatic six months of TMA
coverage outlined in Section 1925 to families whose earnings exceed those relatively
high standards. It would not allow states with lower (less than 185% FPL) Section
1931 eligibility standards to opt out of providing the automatic six months of TMA
(even in cases where family earnings exceed 185% FPL), and it would still require
them to provide up to six additional months of TMA to families whose earnings
remain at or below 185% FPL.
7 Extension through FY2004 is no longer an issue due to the recent passage of H.R. 4589,
which temporarily continues TMA under Section 1925 through September 30, 2004.

---

CRS-11
In addition, the substitute bill would require the Centers for Medicare and
Medicaid Services (CMS) to collect quarterly data on average monthly TMA
enrollment and participation and to make this information publicly available. The
bill would also require administrators within HHS to work together to develop
guidance or other technical assistance for states regarding best practices in
guaranteeing access to TMA.
Discussion
Research shows that low-income individuals are more likely to be without
health insurance than those with higher incomes. In 2002, 34% of those with income
below the poverty line went without health insurance, compared to 11% of
individuals with incomes at least two times the poverty line. Among low-income
individuals who are working, health care coverage is not always available or
affordable. Only 20% of the poor (i.e., those with incomes below the poverty line)
received health care coverage through employment in 2002, compared to 80% of
people with incomes at least two times the poverty line.8
For low-income families, TMA continues health care coverage on a temporary
basis when they otherwise would lose coverage due to an increase in earned income,
hours of work, or child or spousal support. Although Congress has not yet reached
an agreement on extending TMA under Section 1925, there is broad agreement that
it is an important source of support for low-income families, especially those who are
transitioning from welfare to work.
Despite agreement that it plays an important role in supporting work, researchers
argue that there are a number of families eligible for TMA who do not enroll. In
addition, others have expressed concerns that programmatic aspects of TMA create
barriers that prevent individuals from continuing to receive TMA once they become
eligible. For example, a report completed by the General Accounting Office (GAO)
notes that quarterly income reporting requirements can pose barriers to family receipt
of TMA and recommends that the Congress consider allowing states to lessen or
eliminate these requirements for families receiving TMA.9 The Senate Finance
Committee version of H.R. 4 would give states this option, thereby allowing them to
provide families with 12 months of continuous eligibility for TMA.
8 See CRS Report 96-891EPW, Health Insurance Coverage: Characteristics of the Insured
and Uninsured Populations in 2002, by Chris L. Peterson.
9 See U.S. General Accounting Office, Medicaid Enrollment: Amid Declines, State Efforts
to Ensure Coverage After Welfare Reform Vary (Sep. 1999).

---

CRS-12
Appendix A
Table A-1 provides state responses to the CRS survey on state TMA policies
in effect as of July 1, 2002. This information was collected using a survey distributed
by CRS to state Medicaid directors. Five states did not respond to the CRS survey.
When available, information obtained elsewhere for these states (Arkansas,
Michigan, Ohio, Oklahoma, and West Virginia) reflects policies in place as of June
2001.10
Table A-1 provides information by state on the following:
! length of TMA coverage;
! does the state modify the “three of six months” requirement;
! has the state changed the reporting requirements;
! does the state allow self-declaration of earnings and child care costs;
! does the state impose a premium in the second six-month period of
TMA coverage;
! does the state limit benefits provided in the second six-month period
of TMA coverage;
! does the state provide Medicaid “wrap-around” coverage;
! any state-specific notes.
Because this information was collected using a survey administered to the states,
there are limitations to the data. Where possible, the state-specific notes were
included to provide more detail on how the state has implemented its TMA policies.
However, aspects of the state’s TMA program may be not represented in the table
given the variation in how states have implemented these policies and the flexibility
states have to design their programs.
10 See Kaiser Commission on Medicaid and the Uninsured, Can Medicaid Work for Low-
Income Working Families? (April 2002).

---

CRS-13
Table A-1. State TMA Policies
Limits
Modifies
Allows self-
Premium
benefits
Provides
the three
declaration of imposed in
provided in
Medicaid
Length of out of six
Changed
earnings and
the second
the second
“wrap-
TMA
months
reporting
child care
six-month
six month
around”
State
coverage requirement requirements costs
period
period
coverage
State-specific notes
Alabama
12 months No
No
No
No
No
No
Alaska
12
months No
No
No
No
No
No
Caseworkers may issue
retroactive
coverage under Section 1931 Medicaid (to
meet the three out of six months
requirement for TMA) to families who
would have been eligible for Medicaid had
they applied, although this practice is not
common among caseworkers.
Arizona
24 months No
Yes
No
No
No
No
The state conducts eligibility reviews
every six months for TMA under a federal
waiver (which expired 10/31/02). Until
April 2002, Arizona had a state plan
amendment in place to drop the three out
of six months requirement.
Arkansas
12 months No
Not available Income
Not available Not available Not available
Arkansas uses retroactive Medicaid
eligibility to ensure that families meet the
“three out of six” month requirement for
TMA. AR also allows self-declaration of
income upon redetermination to ensure
that families leaving cash assistance for
work can more easily access continued
Medicaid coverage or TMA.

---

CRS-14
Limits
Modifies
Allows self-
Premium
benefits
Provides
the three
declaration of imposed in
provided in
Medicaid
Length of out of six
Changed
earnings and
the second
the second
“wrap-
TMA
months
reporting
child care
six-month
six month
around”
State
coverage requirement requirements costs
period
period
coverage
State-specific notes
California
24 months No
No
No
No
No
No
California provides the additional
12
months (for a total of 24 months) of TMA
to persons 19 and older using state-only
funds. There are no reporting
requirements imposed by the state for the
additional 12 months (children are covered
by the state’s Child Health Insurance
Program).
Colorado
12 months No
No
Child care
No
No
No
Connecticut
24 months Yes
No
Yes
No
No
No
Connecticut, through a Medicaid state plan
amendment, extends TMA coverage to 24
months by disregarding all income for 12
months from the date a family would have
become ineligible for Section 1931
Medicaid (provided the family has
earnings at that time or becomes employed
within six months of ineligibility). For
families receiving benefits under Section
1931 that do not have earned income and
become ineligible due to increased child
support, all income is disregarded for 20
months. These disregards have the effect
of “dropping” the three out of six months
requirement for TMA. Connecticut allows
self-declaration of earnings and child care
costs unless there is reason to believe a
report is inaccurate or incomplete.

---

CRS-15
Limits
Modifies
Allows self-
Premium
benefits
Provides
the three
declaration of imposed in
provided in
Medicaid
Length of out of six
Changed
earnings and
the second
the second
“wrap-
TMA
months
reporting
child care
six-month
six month
around”
State
coverage requirement requirements costs
period
period
coverage
State-specific notes
Delaware
12 months Yes
Yes
Child care
No
No
No
Until 10/01/02, Delaware had a waiver to
provide an additional 12 months of TMA.
Delaware has a state plan amendment in
place to “drop” the three out of six months
requirement by disregarding earned
income in the 2nd and 3rd months of
Section 1931 Medicaid coverage.
Delaware has an 1115 waiver (which
expires 12/03) in place to drop TMA
reporting requirements (families are
instead required to report changes within
10 days of occurrence).
District of
12 months No
Yes
NA
Does not
No
No
Since D.C. covers families up to 200%
Columbia
apply.
FPL under their SCHIP and Medicaid
expansion programs, those who qualify for
the second six months of TMA are
certified for continuing benefits through
those programs. Therefore, the column
related to premium imposed does not
apply to D.C. as the state does not enroll
families in the second six months of TMA.
Florida
12 months No
No
Yes
No
No
No
Georgia
12 months No
No
Yes
No
No
No
Until 7/02, Georgia had a state plan
amendment in place to provide an
additional 12 months of coverage with an
income disregard under Section 1931
Medicaid.

---

CRS-16
Limits
Modifies
Allows self-
Premium
benefits
Provides
the three
declaration of imposed in
provided in
Medicaid
Length of out of six
Changed
earnings and
the second
the second
“wrap-
TMA
months
reporting
child care
six-month
six month
around”
State
coverage requirement requirements costs
period
period
coverage
State-specific notes
Hawaii
12 months No
No
No
No
No
No
Hawaii implemented its Section 1931
Medicaid category in November 2001.
Prior to that date, only families leaving
cash assistance qualified for TMA.
Idaho
12 months No
Yes
Yes
No
No
Yes
Idaho requires families to report changes
in their income and child care costs.
However, if the state does not receive a
response to a request for quarterly
information and it has no other indication
of a change, TMA is continued.
Illinois
12 months Yes
No
Yes
No
No
No
Illinois provides eight months of TMA (as
opposed to four months) to families who
lose Section 1931 Medicaid eligibility due
to increased child or spousal support with
state-only funds. Illinois also uses state-
only funds to provide TMA coverage to
families who do not meet the three out six
months requirement.
Indiana
12 months No
No
No
No
No
No
Iowa
12 months No
No
No
No
No
No
Kansas
12 months No
Yes
NA
No
No
No
Kansas has a state plan amendment to
disregard all income in excess of 185%
FPL to allow families to receive 12 months
of continuous TMA coverage with no
reporting requirements.

---

CRS-17
Limits
Modifies
Allows self-
Premium
benefits
Provides
the three
declaration of imposed in
provided in
Medicaid
Length of out of six
Changed
earnings and
the second
the second
“wrap-
TMA
months
reporting
child care
six-month
six month
around”
State
coverage requirement requirements costs
period
period
coverage
State-specific notes
Kentucky
12
months Yes
No
No
No
No
No
Kentucky provides an earned
income
disregard for up to two months under
Section 1931 Medicaid for families that do
not meet the three out of six months
requirement for TMA.
Louisiana
12 months No
No
No
No
No
No
Maine
12 months Yes
No
No
Yes
No
Yes
Premium imposed after initial six months
is 3% of net family monthly income.
Maryland
12 months No
Yes
Yes
No
No
No
For Medicaid-only families, Maryland has
a state plan amendment in place to drop
the three out of six months requirement for
TMA by disregarding earned income in the
2nd and 3rd months of Section 1931
coverage. There are no formal reporting
requirements for TMA families. The local
department of social services (whose
workers have access to various databases
to verify earnings) decides what is
necessary to verify continuing eligibility.
Massachusetts 12 months Yes
Yes
NA
No
No
No
The state implemented an 1115 waiver in
1997 (renewed for three additional years
effective July 2002) to provide 12 months
of continuous TMA coverage with no
reporting requirements to families who
lose Section 1931 Medicaid eligibility due
to an increase in earned income. The
waiver also allows Massachusetts to drop
the three out of six months requirement for
TMA.

---

CRS-18
Limits
Modifies
Allows self-
Premium
benefits
Provides
the three
declaration of imposed in
provided in
Medicaid
Length of out of six
Changed
earnings and
the second
the second
“wrap-
TMA
months
reporting
child care
six-month
six month
around”
State
coverage requirement requirements costs
period
period
coverage
State-specific notes
Michigan
12 months Yes
Not available No
Not available Not available Not available
State-funded transitional coverage is
available for 12 months for Section 1931
families who find work quickly and do not
meet the “three out of six” month rule.
Minnesota
12 months No
No
Yes
No
No
No
Mississippi
12 months No
Yes
NA
No
No
Yes
Mississippi has a state plan amendment in
place to provide 12 months of continuous
TMA coverage with no reporting
requirements. The state also disregards
earnings in the month in which a family
becomes ineligible for Section 1931
Medicaid to ensure a full 12 months of
TMA (for families losing eligibility in
their 3rd month of Section 1931 coverage,
this disregard also helps to meet the three
out of six months requirement for TMA).
Although Medicaid wrap-around coverage
is available in Mississippi, no TMA
families were covered under the option at
the time of the survey.

---

CRS-19
Limits
Modifies
Allows self-
Premium
benefits
Provides
the three
declaration of imposed in
provided in
Medicaid
Length of out of six
Changed
earnings and
the second
the second
“wrap-
TMA
months
reporting
child care
six-month
six month
around”
State
coverage requirement requirements costs
period
period
coverage
State-specific notes
Missouri
24 months No
No
Yes
No
No
Yes
Under an 1115 waiver (which expires
12/31/02), Missouri provides the
additional 12 months of TMA to uninsured
caretakers who meet eligibility
requirements (net income less than 100%
FPL and a child covered by Medicaid or
SCHIP) when the initial 12 months of
TMA is exhausted. They must report
changes in income and employment as
they occur, but quarterly reports are not
required during the additional 12-month
period. Prior to 7/02, the state provided 24
additional months of TMA to uninsured
caretakers with gross incomes below 300%
FPL. Although Missouri has not officially
dropped the three out of six months
requirement for TMA, caseworkers may
issue retroactive Section 1931 coverage to
families who would have been eligible had
they applied.
Montana
12 months No
No
No
No
No
No
Until July 2002, Montana had a federal
waiver to drop the three out of six months
requirement and allow 12 months of
coverage for families receiving TMA due
to increased child or spousal support.

---

CRS-20
Limits
Modifies
Allows self-
Premium
benefits
Provides
the three
declaration of imposed in
provided in
Medicaid
Length of out of six
Changed
earnings and
the second
the second
“wrap-
TMA
months
reporting
child care
six-month
six month
around”
State
coverage requirement requirements costs
period
period
coverage
State-specific notes
Nebraska
24 months No
No
Child care
Yes
No
No
Nebraska’s 1115 waiver (which allowed
the state to provide an additional 12
months of TMA) expired 7/1/02. The state
did not apply for renewal and is
considering other ways to continue the
extended coverage. After the initial 6
months of TMA, families with income
from 100% to 185% FPL must pay a
monthly premium that ranges from $30 to
$137 per month.
Nevada
12 months No
No
Yes
No
No
Yes
New
Hampshire
12 months No
No
No
No
No
No
New Jersey
24 months Yes
Yes
No
No
No
No
New Mexico
12 months Yes
Yes
NA
No
No
No
New Mexico has a state plan amendment
in place to allow 12 months of continuous
TMA coverage with no reporting
requirements and to disregard all earned
income in the 2nd and 3rd months of
Section 1931 Medicaid coverage if a
family exceeds the eligibility standard.

---

CRS-21
Limits
Modifies
Allows self-
Premium
benefits
Provides
the three
declaration of imposed in
provided in
Medicaid
Length of out of six
Changed
earnings and
the second
the second
“wrap-
TMA
months
reporting
child care
six-month
six month
around”
State
coverage requirement requirements costs
period
period
coverage
State-specific notes
New York
12 months No
Yes
Child care
No
No
Yes
Two quarterly reports (“mailers”) are sent,
one in the 3rd month and one in the 6th
month. If a family qualifies based on the
first report, TMA is extended until the end
of month 10 (if they report but do not
qualify, TMA is extended to the end of
month seven). If the family qualifies based
on the second report, TMA is extended
until the end of month 12. Proof of
earnings in the previous four weeks is
required with each report.
North Carolina 24 months Yes
No
Yes
No
No
No
North Carolina has a state plan amendment
in place to provide additional coverage by
disregarding earned income for 12 months
for families that would otherwise become
ineligible for Section 1931 Medicaid due
to earnings. This has the effect of dropping
the three out of six months requirement for
TMA for families receiving the disregard.
North Dakota
12 months No
Yes
No
No
No
Yes
Reports are required only in months seven
and 10, and this effectively extends the
initial period of TMA through month
seven.
Ohio
12 months No
Not available No
Not available Not available Not available
Oklahoma
12 months No
Not available Income
Not available Not available Not available
Oregon
12 months Yes
Yes
NA
No
No
Yes
CMS is currently advising Oregon on how
to modify its Medicaid state plan to reflect
the state’s TMA policies.
Pennsylvania
12 months No
No
No
No
No
Yes

---

CRS-22
Limits
Modifies
Allows self-
Premium
benefits
Provides
the three
declaration of imposed in
provided in
Medicaid
Length of out of six
Changed
earnings and
the second
the second
“wrap-
TMA
months
reporting
child care
six-month
six month
around”
State
coverage requirement requirements costs
period
period
coverage
State-specific notes
Rhode Island
18 months Yes
Yes
No
No
No
No
Under Rhode Island’s waiver, the
additional six months of TMA (for a total
of 18 months) is provided to former cash
assistance families on TMA due to
employment-related loss of Section 1931
Medicaid eligibility. Families report
earnings and child care costs in months
seven and 13.
South Carolina 12 months Yes
Yes
No
No
No
No
For families losing Section 1931 Medicaid
eligibility due to employment, coverage is
extended by disregarding earned income
for 12 months from the date a family
would have become ineligible. This has
the effect of dropping the three out of six
months requirement for TMA for families
receiving the disregard. The state currently
requires families to report earnings and
child care costs only in month four. If they
meet eligibility requirements, they are
granted the second 6 months of TMA.
When the state’s ongoing departmental
and systems reorganization is complete,
SC plans to send out reports in months
seven and 10 as well.
South Dakota
12 months No
No
No
No
No
No

---

CRS-23
Limits
Modifies
Allows self-
Premium
benefits
Provides
the three
declaration of imposed in
provided in
Medicaid
Length of out of six
Changed
earnings and
the second
the second
“wrap-
TMA
months
reporting
child care
six-month
six month
around”
State
coverage requirement requirements costs
period
period
coverage
State-specific notes
Tennessee
18 months Yes
Yes
NA
No
No
No
The extension of TMA to 18 months is
part of a federal waiver which expires
8/2007. TMA coverage is extended to
anyone who has at least one month of
TANF eligibility and individuals who lose
Medicaid eligibility under Section 1931.
Texas
12 months Yes
No
Yes
No
No
Yes
Currently, only TANF families receive
Section 1931 Medicaid and a four-month
earned income disregard designed to meet
the three out of six months requirement for
TMA. Medicaid-only families receive
coverage under the state’s medically needy
program and are eligible for up to 12
months of transitional coverage if they
become ineligible due to earnings. These
families will also receive the four-month
disregard when the state computer system
is updated to include them in the Section
1931 category (this change should be in
place by November 2002, with state-wide
implementation taking up to a year and a
half).

---

CRS-24
Limits
Modifies
Allows self-
Premium
benefits
Provides
the three
declaration of imposed in
provided in
Medicaid
Length of out of six
Changed
earnings and
the second
the second
“wrap-
TMA
months
reporting
child care
six-month
six month
around”
State
coverage requirement requirements costs
period
period
coverage
State-specific notes
Utah
24 months Yes
Yes
No
No
No
Yes
Utah has a state plan amendment in place
to extend coverage by disregarding earned
income for up to 12 months (two six-
month periods, conditioned on total gross
earned income remaining below 185%
FPL) from the date a family would have
become ineligible for Section 1931
Medicaid due to earnings. This has the
effect of dropping the three out of six
months requirement for TMA for families
receiving the disregard. Reports are
required in months seven and 10 of TMA.
Although a month 4 report is sent out,
TMA is not terminated if the family does
not respond (this effectively extends the
initial period of coverage through month
seven).
Vermont
36
months No
No
Yes
No
No
No
Vermont provides the additional
24
months (for a total of 36 months) through
state-only funds. This was originally
provided under at federal waiver (expired
7/1/01), but continued under their state
plan by making changes to eligibility
under Section 1931. TMA coverage is
extended to pregnant women, children
under 18 and their caretaker relatives, so
long as these groups meet the income
requirements
Virginia
12 months No
No
No
No
No
Yes

---

CRS-25
Limits
Modifies
Allows self-
Premium
benefits
Provides
the three
declaration of imposed in
provided in
Medicaid
Length of out of six
Changed
earnings and
the second
the second
“wrap-
TMA
months
reporting
child care
six-month
six month
around”
State
coverage requirement requirements costs
period
period
coverage
State-specific notes
Washington
12 months Yes
Yes
Yes
Yes
No
Yes
Washington has a state plan amendment in
place to drop the month 10 reporting
requirement and to disregard an income
increase in the 2nd and 3rd months of
Section 1931 Medicaid coverage to help
families meet the three out of six months
requirement for TMA. After the initial six
months of TMA, families whose
three-month average earnings (less child
care) exceed 100% FPL must pay a
monthly premium equal to 1% of that
amount. Premiums for month seven of
TMA are due by the end of month five.
West Virginia
12 months No
Not available No
Not available Not available Not available
Wisconsin
12 months No
Yes
No
No
No
No
Wyoming
12 months No
No
Yes
No
No
No
Source: July 2002 Congressional Research Service (CRS) Survey of State TMA Policies and Kaiser Commission on Medicaid and the Uninsured, Can
Medicaid Work for Low-Income Working Families? (April 2002).
Notes: “NA” for self-declaration of earnings and child care costs indicates that this column is not applicable because the state does not require families
to report earnings and child care costs (that is, the state has changed its reporting requirements). States in italics (Arkansas, Michigan, Ohio, Oklahoma,
and West Virginia) did not respond to the CRS survey. Information for these states was taken from the Kaiser report, reflecting policies in place as of
June 2001. Policies in the remaining states are those as of July 1, 2002.

---