State Policy Documentation Project



State Implementation of Selected Medicaid Provisions of the Personal Responsibility and Work Opportunities Act of 1996

Most of the SPDP Medicaid data describe how states have implemented the requirement of the 1996 federal welfare law to replace the automatic eligibility link between Medicaid and welfare with a new family coverage category.   Under the family coverage category, states must at a minimum extend Medicaid to families with children if they meet the income, asset, and family composition rules used by states in their AFDC programs on July 16, 1996. (The category is sometimes known as the "section 1931" category because it was created by section 1931 of the Social Security Act). Families do not need to be on welfare in order to qualify for Medicaid under the new family coverage category.

Along with establishing this minimum criteria for Medicaid eligibility, federal law gives states broad flexibility to set the rules for their family coverage categories, including to expand coverage for families with children beyond the basic requirements. (For a detailed explanation of the flexibility that states have to establish the rules for their family coverage categories, see Jocelyn Guyer and Cindy Mann, Taking the Next Step: States Can Now Take Advantage of Federal Medicaid Matching Funds to Expand Health Care Coverage to Low-Income Working Parents, Center on Budget and Policy Priorities, August, 1998.)

  • First, states can raise their July 1996 family income and asset standards for Medicaid to reflect changes in the cost of living. States can also lower their July 1996 income standards, but not below the level they were at as of May, 1988.
  • Second, the law accords states broad flexibility to define what counts as income and assets. States can use the income and asset methodologies they used in their AFDC programs on July 16, 1996, or they can adopt "less restrictive" methodologies.

For example, a state that disregarded $90 in earnings for families applying for welfare under its AFDC program on July 16, 2023 could use the "less restrictive" methodologies option to increase its earnings disregard for the family coverage category to $180 a month, or more.

  • Third, states can use income, asset, and family composition rules that differ from the ones in their AFDC plans as of July 16, 2023 if they had an AFDC waiver that allowed them to adopt alternative rules. The waiver had to have been submitted to HHS before August 22, 1996, and approved on or before July 1, 1997.
  • Fourth, as a result of a regulation issued by HHS on August 7, 1998, states can elect to drop the family composition rule that effectively limits Medicaid coverage under the family coverage category to single-parent families and a small number of two-parent families. In particular, states can ease or eliminate the "100 hour rule," a requirement that the principal wage earner in a two-parent family work fewer than 100 hours a month if a family is to qualify for Medicaid coverage. If they do so, it allows two-parent families to qualify for Medicaid on the same grounds as single-parent families.1

Tables 1 through 7 capture the extent to which states have implemented the delinking of TANF and Medicaid, as well as how they have elected to take advantage of the flexibility available to them when establishing a family coverage category. Unless otherwise specified, the tables are based on the eligibility rules that apply to a three-person family under the family coverage category.  Since most children are eligible for Medicaid at significantly higher income and asset levels under categories other than the family coverage category (e.g., the poverty level eligibility groups for children), the eligibility rules noted in Tables 1 through 7 relate primarily to the circumstances under which parents can qualify for Medicaid.

Tables 1 through 7 also provide some information on the rules that states use to establish eligibility for TANF cash assistance, and whether these rules diverge from the Medicaid eligibility rules. In a number of cases, states have more generous eligibility rules for TANF than for Medicaid, creating the possibility that a family could be enrolled in TANF, but not enrolled in Medicaid. In practice, however, it appears that some states with more generous TANF eligibility rules have nevertheless continued to provide Medicaid coverage to all TANF recipients. Since such a policy is not allowed under federal law and so was not anticipated by the initial SPDP survey, readers should note that Tables 1 through 7 generally do not indicate whether a state with more generous TANF rules nevertheless provides Medicaid to all TANF recipients.2  The only states for which the tables provide information on the use of such a policy is in states that have not yet established a family coverage category.

The 1996 federal welfare law also included other Medicaid-related provisions that gave states broader flexibility to make policy choices around the use of Medicaid sanctions and Medicaid coverage of legal immigrants.  Table 8 provides information on which states have elected to take advantage of an option included in the 1996 federal welfare law to terminate the Medicaid coverage of a non-pregnant head of households who loses TANF as a result of refusal to work. Table 9 describes the choices states have made around coverage of legal immigrants in light of changes in rules regarding immigrants’ eligibility for benefits included in the 1996 federal welfare law.

1.  Note that two-parent families subject to the 100-hour rule requirement used to also be required to meet a "work history requirement" that restricted coverage to those two-parent families in which the principal wage earner had been employed for at least three out of the previous six months. When Medicaid eligibility for families with children was delinked from cash assistance, the work history requirement was eliminated.

2.  Federal law does not allow states to provide special treatment to families under Medicaid simply because they happen to be enrolled in TANF. In order to provide Medicaid to all TANF recipients, a state must offer coverage on the same terms to families with children who elect not to participate in TANF. This means that states can automatically provide Medicaid to all families enrolled in TANF , but only as long as their Medicaid eligibility rules for families with children are the same or more generous than their TANF rules.


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This page last updated September 02, 2023

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