Family Medicaid Reform Amendments of 1987

Family Medicaid Reform Amendments of 1987 - Amends title XIX (Medicaid) of the Social Security Act to require States to extend for six months the Medicaid eligibility of families which become ineligible for benefits under part A (Aid to Families with Dependent Children) (AFDC) of title IV of the Act, but have been eligible for AFDC benefits for at least three of the preceding six months. Terminates such extension period if: (1) the family ceases to include a dependent child; (2) the family fails to make a monthly report on its earnings for the preceding month; or (3) the caretaker relative of the dependent child voluntarily ceases employment and no longer has any earnings.

Authorizes a State to: (1) require a caretaker relative, as a condition of extending Medicaid coverage under this Act, to apply for employer health coverage provided he or she is not required to make financial contributions for such coverage; and (2) pay the premium for a caretaker relative's employee health coverage.

Requires States to give families who have received six months of extended Medicaid coverage the option of receiving an additional 36 months of coverage. Provides that, in addition to satisfying the conditions imposed on eligibility for the six-month extension period, a family must pay a monthly premium for the 36-month extension period if its monthly income exceeds monthly minimum wage earnings. Terminates such extension period if the family's earned income exceeds 185 percent of the Federal poverty level. Authorizes States to eliminate certain Medicaid nonacute care benefits for the 36-month extension period.

Authorizes a State, as an alternative to the Medicaid benefits otherwise provided over the 36-month extension period, to provide Medicaid coverage of the costs over such period of a family's enrollment in: (1) the caretaker relative's employment health plan; (2) State employee plans or State plans for those otherwise unable to obtain health insurance; or (3) a Medicaid health maintenance organization.

Makes the benefits of this Act inapplicable to those whose AFDC benefits have been terminated due to fraud or the imposition of a sanction.

Provides that individuals who become ineligible for AFDC benefits as a result of the collection of child or spousal support shall be deemed AFDC recipients for the purpose of Medicaid eligibility for six months after the termination of AFDC eligibility. (Currently a four-month extension is provided.)