42 CFR §435.112

1. (a)If a family loses AFDC solely because of increased income from employment or increased hours of employment, the agency must continue to provide Medicaid for 4 months to all members of the family if—
   1. (1)The family received AFDC in any 3 or more months during the 6-month period immediately before the month in which it became ineligible for AFDC; and
   2. (2)At least one member of the family is employed throughout the 4-month period, although this need not be the same member for the whole period.
2. (b)The 4 calendar month period begins on the date AFDC is terminated. If AFDC benefits are terminated retroactively, the 4 calendar month period also begins retroactively with the first month in which AFDC was erroneously paid.