A bill to amend part A of title IV of the Social Security Act to authorize States, with Federal matching under the AFDC program, to encourage and assist individuals receiving aid under that program in achieving self-support by making private health insurance reasonably available to such individuals when their income rises to the point where they are no longer entitled to such aid and as a consequence they lose their medicaid eligibility.

Amends part A (Aid to Families with Dependent Children) of title IV of the Social Security Act to permit a State to provide private health insurance coverage to an individual who: (1) received AFDC in January 1982 or later; (2) subsequently became ineligible for AFDC because of an increase in earned income; and (3) as a result is no longer eligible. Permits a State to require the individual to pay for a portion of the cost of the coverage.