Medicaid Infant Mortality Amendments of 1986 - Amends title XIX (Medicaid) of the Social Security Act to give States the option of extending coverage to women in need of pregnancy-related medical services and infants up to age one whose family income exceeds current income eligibility thresholds, but does not exceed a State maximum income level to be established at or below the Federal poverty level. Allows States to continue such coverage for women until 60 days after pregnancy without regard to any change in her family income.

Requires the State maximum income level for eligibility under this program to be no less than the payment level applicable to a family with no income under part A (Aid to Families with Dependent Children) of title IV of the Act. Prohibits States which provide coverage pursuant to this Act from reducing AFDC payment levels.