Prior to enactment of P.L 104-193, the Personal Responsibility and Work Opportunities Act of 1996:
o Individuals who received AFDC cash assistance or who were deemed to have received AFDC were automatically eligible for Medicaid. (Section 1902(a)(10)(A)(i)(I) of the Social Security Act)
o Families who lost AFDC cash assistance because of employment or receipt of child (or spousal) support payments were eligible for transitional Medicaid assistance for an additional period of time. (Sections 1902(a)(10)(A)(i)(I) and 1925 of the Social Security Act)
o Various rules of the AFDC program were used to establish Medicaid eligibility for other Medicaid-only eligibility groups (e.g., pregnant women and children whose eligibility is related to the poverty level, optional groups of children and caretaker relatives who do not receive AFDC, and the medically needy.) (Section 1902 of the Social Security Act)
The new welfare reform law eliminates the AFDC cash assistance program and replaces it with a block grant program called Temporary Assistance for Needy Families (TANF) (Section 103 of the new law). However, families who meet the AFDC eligibility criteria prior to welfare reform will be eligible for Medicaid. States are not required to make a complete eligibility determination using all the pre-reform AFDC program rules. This determination is replaced by two basic eligibility requirements:
o The family income and resources must meet the pre-reform AFDC standards (Section 1931(b)(1)(I) of the Social Security Act).
o The pre-reform AFDC deprivation requirement must be met. (i.e., a child must be living with a parent or other relative and deprived of parental support or care by the death, absence, incapacity or unemployment of a parent.) (Section 1931(b)(1)(A)(ii) of the Social Security Act)
As under pre-reform law, if a family loses Medicaid eligibility because of employment or receipt of support payments or employment and received Medicaid in three of the preceding six months, the family is eligible for a period of extended Medicaid benefits. (Sections 408(a)(11) and 1931(c) of the Social Security Act)
States are permitted to deny Medicaid benefits to adults and heads of household who lose TANF benefits because of refusal to work. However, welfare reform law specifically exempts poverty-related pregnant women and children from this provision and mandates their continued Medicaid eligibility. (Section 1931(b)(3) of the Social Security Act)
Because the AFDC cash assistance program is eliminated, welfare reform provides that any reference in Title XIX to an AFDC provision or an AFDC State Plan will be considered a reference to the AFDC provision or plan in effect for the State on July 16, 1996, i.e. "pre-reform" AFDC. This effectively freezes the pre-reform AFDC program for all Medicaid eligibility purposes, except that welfare reform also permits States to retain flexibility to change the applicable income and resource methodologies, as follows:
o A State may lower its income standards, but not below the standards it applied on May 1, 1988. (Section 1931(b)(2)(A) of the Social Security Act)
o A State may increase its income and resource standards up to the percentage increase in the CPI subsequent to July 16, 1996. (Section 1931(b)(2)(B) of the Social Security Act)
o A State may also use less restrictive income and resource methodologies than those in effect on July 16, 1996. (Section 1931(b)(2)(C) of the Social Security Act)
Related Fact Sheets:
Link Between Medicaid and SSI Coverage of Children under Welfare Reform - Fact Sheet #2
Link Between Medicaid and the Immigration Provisions of the Personal Responsibility and Work Opportunity Act of 1996 - Fact Sheet #3
Increased Federal Matching Rates for Increased Administrative Costs of Eligibility Determinations under Welfare Reform - Fact Sheet #4
Last Updated: 10/18/96