Medicaid is a joint federal and state program providing health coverage to millions of Americans, including low-income adults, children, pregnant women, and people with disabilities. Standard Medicaid eligibility has strict financial limits, and an increase in income from new employment can cause families to abruptly lose their health care benefits. This sudden loss of coverage is known as the “cliff effect” and acts as a barrier to entering the workforce. Transitional Medical Assistance (TMA) was created to serve as a temporary health coverage extension, bridging the gap for families moving from public assistance to self-sufficiency through employment.
Defining Transitional Medical Assistance
TMA is a mandatory Medicaid eligibility category authorized under Section 1925 of the Social Security Act, providing a safety net for families whose financial status improves due to work. The purpose of TMA is to encourage adults to seek and maintain employment without immediately forfeiting their family’s health insurance. This stability allows families to access necessary medical care while they adjust to their new income and explore private coverage options.
The assistance extends Medicaid coverage for up to 12 months for parents, other caretaker relatives, and their dependent children. The medical services provided during this transitional period are the same comprehensive benefits received under the state’s standard Medicaid program. This continuity ensures that medical needs are met during the job transition.
Initial Qualification Requirements
Qualification for TMA is not automatic upon the loss of standard Medicaid; it requires a specific set of circumstances. The family must have been enrolled in and receiving standard Medicaid for a set period. Specifically, the family must have been eligible for and received coverage in at least three of the six months immediately preceding the month they became ineligible for standard Medicaid.
The loss of eligibility must be directly and exclusively due to new or increased earnings from employment or an increase in the number of hours worked by a caretaker relative. If the family loses standard Medicaid eligibility for other reasons, such as a change in assets, a child aging out, or a failure to comply with program requirements, they will not qualify for TMA.
The Duration and Reporting Requirements
The maximum duration of TMA is 12 consecutive months, beginning with the first month the family would have otherwise lost their standard Medicaid coverage. This period is often structured as two separate six-month extensions, each having its own maintenance requirements. During the first six-month period, the family’s eligibility is generally protected, and there is no additional income test.
To qualify for the second six-month extension, the family must comply with mandatory reporting requirements, usually involving submitting a report of their gross income and family composition. The family must also demonstrate that the caretaker relative has continued employment or has a good cause for not working. Many states impose an income test for this second period, requiring the family’s gross income to remain below a state-determined level, commonly set at 185% of the Federal Poverty Level (FPL). Failure to submit the required report or exceeding the income threshold can result in the early termination of the TMA coverage.
Some states have opted for a simpler structure, choosing to provide a single 12-month extension period. This option eliminates the need for the second six-month reporting and income test requirements, simplifying the process for families.
Transitioning Off of TMA
The 12-month period of Transitional Medical Assistance is strictly temporary and cannot be extended past its conclusion. As the end of the TMA period approaches, families must actively explore new health coverage options to avoid a gap in care. State Medicaid agencies are required to review the family’s information to determine if any members qualify for coverage under a different Medicaid eligibility group.
Children, for instance, are often evaluated for eligibility under the Children’s Health Insurance Program (CHIP), which has higher income thresholds than standard Medicaid. For adults who no longer qualify for any Medicaid category, the primary pathway to continuous coverage is through the Health Insurance Marketplace, established by the Affordable Care Act. Losing Medicaid eligibility, including the end of a TMA period, qualifies individuals for a Special Enrollment Period on the Marketplace, allowing them to sign up for a private health plan with potential premium tax credits.