Transitional Medical Assistance (TMA) Under Medicaid

Publication Date: January 2008

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

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Abstract:

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 workrelated 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.