Aid to Families and Employment Transition Act of 1986

Aid to Families and Employment Transition Act of 1986 - Amends part A (Aid to Families with Dependent Children) of title IV of the Social Security Act to provide that AFDC beneficiaries making the transition to unsubsidized employment by participating in employment preparation programs established pursuant to the Employment Preparation Act of 1986 shall have their salary excluded from the AFDC eligibility determination for one year following the initial placement. Continues Medicaid (title XIX of the Act) coverage of individuals making such a transition to unsubsidized employment until the individual either becomes eligible for an employer health plan, or 15 months elapse since his or her placement in unsubsidized employment.

Provides AFDC benefits to two-parent families if at least one parent participates in an employment preparation program.