Medicaid Explained: Who Qualifies and What It Covers

What Medicaid Is and How It's Funded

Medicaid is a joint federal and state health insurance program that provides coverage to people with limited income and resources. It was established in 1965 alongside Medicare and has grown into the largest single source of health coverage in the United States, covering tens of millions of people.

Medicaid is funded jointly by the federal government and each individual state. The federal government sets minimum eligibility and coverage standards, and states can choose to expand coverage beyond those minimums. States administer their own Medicaid programs, which is why eligibility requirements, covered services, and how you apply can look quite different depending on where you live. Each state also gives its Medicaid program a distinct name — Medi-Cal in California, TennCare in Tennessee, MassHealth in Massachusetts, and so on.

Because states have significant flexibility in how they structure their programs, understanding Medicaid requires looking at both the federal floor and your specific state's rules. The federal Centers for Medicare and Medicaid Services (CMS) oversees the program nationally and publishes guidance on minimum requirements.

Who Is Eligible

Federal law requires states to cover certain groups of people in their Medicaid programs. These mandatory eligibility groups include:

• Children in low-income families (income thresholds vary by age)
• Pregnant women with household incomes below a federally set threshold
• Parents and caretaker relatives of children who meet income requirements
• Adults who qualify under the ACA Medicaid expansion (in states that adopted it)
• Seniors age 65 or older with limited income and resources
• People who are blind or have a disability and meet income requirements
• People who receive Supplemental Security Income (SSI)

States may also cover optional groups beyond these mandatory populations, and many states do. Income eligibility is typically measured as a percentage of the Federal Poverty Level (FPL), and the specific percentage thresholds vary by eligibility group and state.

Medicaid Expansion Under the ACA

The Affordable Care Act gave states the option to expand Medicaid eligibility to cover nearly all adults with household incomes up to 138 percent of the Federal Poverty Level, regardless of whether they have children or a disability. This expansion was intended to fill the gap between the original Medicaid income thresholds and the lower end of ACA Marketplace subsidies.

Not all states have adopted the expansion. As of the mid-2020s, the majority of states have adopted Medicaid expansion, but a meaningful number have not. In non-expansion states, low-income adults without dependent children often fall into a coverage gap: their incomes are too low to qualify for ACA Marketplace subsidies, yet they do not qualify for traditional Medicaid in their state.

Whether your state has expanded Medicaid is one of the most important factors in determining your eligibility. You can check your state's current status through HealthCare.gov's Medicaid expansion information or your state Medicaid agency's website.

What Medicaid Covers

Federal law requires all state Medicaid programs to cover a set of mandatory services. States may also cover additional optional services beyond the required minimum.

Mandatory Covered Services

• Inpatient and outpatient hospital services
• Physician services
• Laboratory and X-ray services
• Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services for children under 21 — this is a comprehensive benefit that includes dental, vision, hearing, and other services not required for adults
• Family planning services and supplies
• Federally Qualified Health Center (FQHC) services
• Nurse midwife and certified nurse practitioner services

Common Optional Services Many States Cover

• Prescription drugs (covered by nearly all states, though formularies vary)
• Dental services for adults
• Vision services and eyeglasses for adults
• Physical, occupational, and speech therapy
• Home health and personal care services
• Long-term care in nursing facilities
• Mental health and substance use disorder services

Costs and Cost-Sharing in Medicaid

One of Medicaid's defining features is that it provides coverage with very low or no cost-sharing for most enrollees. There are no monthly premiums for most Medicaid beneficiaries, and copayments — when they exist at all — are nominal.

Federal rules limit how much states can charge in cost-sharing. Certain groups are fully exempt from cost-sharing requirements, including children, pregnant women, and emergency services. For adults who are subject to cost-sharing, federal rules cap the amounts and protect enrollees from catastrophic out-of-pocket costs.

Some states have received federal approval to charge modest premiums for certain expansion populations or higher-income Medicaid enrollees, but these are limited by federal rules and not universal. The program remains dramatically more affordable than private insurance for eligible enrollees.

How Medicaid Managed Care Works

Most Medicaid enrollees today receive their coverage through managed care organizations (MCOs) rather than traditional fee-for-service Medicaid. In a managed care arrangement, the state contracts with private insurance companies to provide Medicaid coverage, and enrollees are assigned to or choose a specific plan from those available.

Managed care Medicaid works similarly to private HMO-style coverage: you have a network of providers, you may need a primary care physician who coordinates your care, and referrals may be required for specialists. The managed care plan is responsible for covering the required Medicaid services within its network.

How to Apply

You can apply for Medicaid at any time during the year. Unlike Marketplace coverage, Medicaid has no open enrollment period — if you qualify, coverage can start quickly, often within days of approval.

There are several ways to apply:

• Through HealthCare.gov: If you apply for Marketplace coverage and your income suggests Medicaid eligibility, your application will automatically be forwarded to your state Medicaid agency for determination.
• Directly through your state Medicaid agency: Most states have online applications, and you can also apply by phone or in person at a local office.
• Through a hospital or health center: If you receive care while uninsured, hospitals and Federally Qualified Health Centers (FQHCs) often have staff who can assist with Medicaid applications on-site.
• Through a navigator or enrollment assister: Free, trained enrollment assisters are available in most communities through HealthCare.gov's find local help tool.

CHIP: Coverage for Children

The Children's Health Insurance Program (CHIP) is a companion program to Medicaid that provides low-cost health coverage to children in families whose incomes are too high for Medicaid but who cannot afford private coverage. Like Medicaid, CHIP is jointly funded by the federal government and states.

CHIP covers the same broad categories of children's services as Medicaid, including routine check-ups, immunizations, doctor visits, hospital care, dental and vision care, and emergency services. In some states, CHIP also covers pregnant women.

Income limits for CHIP are higher than standard Medicaid income limits for children. In many states, children in families with incomes up to 200 percent of the Federal Poverty Level or higher qualify. Some states have extended CHIP to even higher income levels. Costs are very low — small premiums and copayments may apply for some families, but overall cost-sharing is far below private insurance.

To check your child's CHIP eligibility, visit InsureKidsNow.gov, the federal government's resource for children's health coverage, or apply through your state Medicaid agency. You can also apply through HealthCare.gov, which screens for Medicaid and CHIP eligibility as part of the application process.