Transitional Medical Assistance (TMA) and the Unwinding

Late last month, CMS released long-awaited guidance on Medicaid coverage for low-income working parents in the context of the unwinding of continuous coverage. Technically, this coverage is a mandatory eligibility category known as transitional medical assistance, or TMA, because it was originally designed to help parents transition from Medicaid to private insurance coverage through the workplace. TMA is particularly important to working poor parents in the ten states that still refuse to cover Medicaid expansion adults, where it is an temporary alternative to becoming uninsured in the coverage gap.

The guidance takes the form of “Frequently Asked Questions” (FAQs).  This is not without irony; because TMA has long operated below the radar (except during the Trump administration, which tried to waive it), few, if any, questions have been asked about it. Nonetheless, the FAQs are most welcome and should be helpful to state Medicaid agencies, navigators, and advocates in assisting low-income working parents keep their Medicaid coverage for up to 12 months, both during the unwinding and afterwards.

The rules of Medicaid eligibility can get complicated, and TMA is no exception.  When the complexity of TMA is layered on top of the complexity of the unwinding, the going gets particularly challenging.  Variations from state to state in both TMA and unwinding policies will produce a wide range of scenarios.  As a result, the FAQs are highly technical and detailed.  At the risk of over-simplifying, this blog focuses on just a few key take-aways.

TMA in a nutshell.  TMA is Medicaid coverage of up to 12 months for working parents, other caretaker relatives, and their dependent children.  In order to qualify, parents (or caretaker relatives) must have been enrolled in the “section 1931” eligibility group and subsequently lost their eligibility because their earnings or hours of employment increased, raising their income above their state’s 1931 eligibility threshold.  (Among the ten non-expansion states in 2023, the median 1931 threshold was 37 percent of FPL, or $9,198.)  Without earning more or working more hours, a parent cannot qualify.

While states are required to offer TMA coverage to working parents, they have considerable flexibility in how to structure that coverage, including altering the scope of benefits.  The key state option is whether to offer two six-month coverage periods or one 12-month coverage period.  In states that choose the two six-month period option, parents must comply with quarterly reporting requirements, and during the second six months, their gross incomes minus childcare expenses cannot exceed 185 percent of FPL ($3,833 per month for a family of three).  In states that choose the one 12-month period option, these reporting requirements and income limits don’t apply, making paperwork-driven coverage loss much less likely.

A search of the CMS Medicaid State Plan Amendments webpage indicates that 21 states (including DC) have opted for the 12-month coverage period.  Twelve are expansion states: AK, CT, CO, DC, MD, ME, MT, ND, NV, NY, OR, and SD.  Five are non-expansion states:  AL, FL, MS, TN, and WI.  (Ohio opted for the 12-month period in 2009 then changed its mind in 2016).

A brief note about coverage of the dependent children.  TMA, like section 1931, can be a basis for Medicaid eligibility for children, but as the FAQ notes, “[t]he parent or caretaker’s dependent children, although entitled to TMA, will commonly remain eligible under the mandatory eligibility group serving infants and children under age 19, described in 42 CFR 435.118 (“low-income children’s group”).”  This blog focuses on the transition from 1931 to TMA eligibility for working parents, which is not nearly so straightforward. (All references to parents should also be read to include caretaker relatives.)

TMA and the Unwinding of Continuous Coverage.  The Medicaid continuous coverage period ran from March 18, 2020 through March 31, 2023.  Working parents with dependent children may have qualified for Medicaid under section 1931 throughout the entire period; they may have been in a TMA period when continuous coverage started in March 2020 and remained in that status; or they may have qualified under section 1931 (either at the beginning of or during the course of the continuous coverage period) and then be placed in TMA after an increase in income or hours worked.  During the unwinding of continuous coverage, states will need to redetermine the eligibility of these working parents along with all their other beneficiaries.

The FAQs explain what rules the states need to follow. Under the FAQ, requirements for TMA-related eligibility redeterminations during the unwinding depend on whether or not the state conducted eligibility renewals and redeterminations during the continuous coverage period.

States that did not conduct regular eligibility renewals and redeterminations.  In these states, 1931 parents who might have qualified for TMA due to an increase in earnings or hours worked remained in 1931 status because the state was not conducting eligibility redeterminations. The FAQs indicate that, if in conducting a renewal during the unwinding, a state in this category determines that a parent “experienced a TMA-qualifying event”—whenever that increase in income or hours occurred—the state “must place the individual into TMA status and begin the individual’s TMA period prospective from that point.” (emphasis added).

For example, if a 1931 parent’s earnings increased in January 2022 above the state’s 1931 income threshold but the parent remained in 1931 status because the state was not conducting eligibility renewals, when the state redetermined the parent’s eligibility in, say, September of 2023, the state would be required to enroll the parent in TMA, effective that month, not January 2022.

Of course, since this is Medicaid eligibility, there’s an exception.  In expansion states, many parents may be eligible for both TMA and for coverage as an expansion adult. FAQ #4 explains: “For such parents and caretaker relatives, the state may enroll the individual in the adult group if the coverage under the state’s Alternative Benefit Plan provides the same or greater coverage than the coverage available to other beneficiaries under the state plan.”  The FAQ also makes clear that if a state chooses to do so, and the individual loses adult group eligibility before the individual’s TMA period expires, the individual remains eligible for the remainder of the TMA period.

States that conducted regular eligibility renewals and redeterminations.   The FAQs indicate that if a parent was determined eligible for TMA during the continuous coverage period and was placed on TMA, and if the parent’s TMA period expired before the end of the continuous coverage period, the state may not give the parent another period of TMA coverage. The FAQ emphasizes, however, that “the state must determine whether the individual is eligible on another basis before disenrolling the individual, in accordance with the Medicaid redetermination requirements.”  And yes, there is one exception; see Q#3 for details.

What if the TMA period has not expired before the redetermination of eligibility during the unwinding? The FAQs provide that the state must continue the parent’s eligibility “until at least the end of their TMA period, at which time the state must conduct a full renewal, including determining whether the individual is eligible on another basis, before disenrolling them.”

There’s some uncertainty about which states fall into which bucket; the FAQs do not specify. Here is one way to think about it. Based on an analysis of states’ responses to the most recent CCF/KFF surveys from 2022 and 2023, only four states (AK, MO, NY, and WY) and DC did not conduct any eligibility renewals and redeterminations over that two-year period. An additional 14 states (HI, IL, KY, LA, MI, MN, MS, MT, RI, SC, TN, VT, VA, and WI) tried to conduct renewals on an ex parte (i.e., automated) basis for at least part of the period but did not send out pre-populated renewal forms if they were unable to process the ex parte renewal. Importantly, these data may not present the full picture as individual state practices changed over the three-year continuous coverage period. For example, Georgia was not doing any eligibility renewals in 2022 but conducted full renewals in 2023.

TMA Going Forward. There’s much more guidance in the FAQs than there’s room to cover here.  Some of it relates to the unwinding (e.g., in the case of renewals, what is the start date for the TMA period?), and some relates to permanent policies (e.g., how does TMA for dependent children interact with 12-month continuous eligibility that takes effect on January 1, 2024?).

But let’s not miss the forest for the trees. In non-expansion states, TMA may be the only source of coverage for working parents with incomes below poverty. It is particularly important in the three that have opted for the 12-month TMA period but whose low 1931 eligibility thresholds create a large coverage gap: Alabama (18 percent of FPL), Florida (28 percent of FPL), and Mississippi (28 percent of FPL). These FAQs are the roadmap to activating that coverage.