Can You Have Medicaid and Private Insurance?

What you need to know about Medicaid combined with other insurances

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Medicaid is a U.S. entitlement program that pays medical bills for eligible low-income families and qualifying aged, blind, and disabled individuals whose income can’t cover necessary medical services. Besides income, other factors may qualify you for Medicaid, depending on your qualifying category. 

But you may be wondering if you can qualify for Medicaid and still apply for private health insurance. Well, if your income is low and you have minor children, both you and your children may be eligible for Medicaid, even if you already have private health insurance. But that’s just the tip of the iceberg—there’s more to juggling to achieve the best of both worlds with Medicaid and private insurance.

Learn more about whether you can have both Medicaid and private insurance, your eligibility for both, and how Medicaid works with other health coverage.

Key Takeaways

  • You may still qualify for Medicaid, even if you have other health insurance coverage, and coordination of benefits rules decide who pays your bill first.
  • Some Medicaid programs pay for care directly, while others use private insurance carriers to offer Medicaid coverage.
  • Some Medicaid qualifying programs require you not carry any other health insurance in order to get Medicaid.

Medicaid vs. Private Insurance

At their most basic, Medicaid and private insurance offer health coverage, but their inner workings are different. Medicaid is a state and federally funded program that covers the cost of medical services for low-income parents, children, pregnant women, older adults, those living with disabilities, and women with cervical or breast cancer. These individuals must meet the qualifying income requirements and satisfy other eligibility requirements.

Whether your income level qualifies you or your family for Medicaid depends on your household size and the program you’re applying for.

Although the federal government sets the minimum standards for Medicaid, this program gives states a lot of flexibility to customize their programs, including whom to cover, the benefits to provide, and how health care services are delivered. While there are mandatory benefits states must cover, there’s also room to cover additional optional benefits.

Private insurance is the predominant source of health coverage in the U.S. and is provided by private health insurance companies instead of a state or federal government. Private health insurance comprises two markets: group market and non-group market. The group market mainly focuses on employer-sponsored insurance plans, while the non-group, or individual, market includes plans that are purchased directly from an insurer. Individual plans can be purchased on and off health insurance exchanges. Individual plans purchased off the marketplace must cover 10 essential health benefits.

Payment rates for Medicaid providers and program administrative costs are low, which makes Medicaid a lower-cost coverage compared with private insurance. The result is that beneficiaries can enjoy more-comprehensive benefits at decreased out-of-pocket costs with Medicaid than with private health insurance. In fact, it’s cheaper to cover adults of similar health status through Medicaid than private insurance.

State governments don’t provide private health insurance. Instead, they contract with private insurance carriers to deliver health coverage to Medicaid beneficiaries.

Sure, you can have both Medicaid and private health insurance, but you may not always want to. Once you are ruled eligible for Medicaid or any health insurance that satisfies the Affordable Care Act (ACA) requirement for coverage, you no longer qualify for a marketplace plan that gives a break on your insurance premium through an advance premium tax credit. You also won’t save on out-of-pocket costs. In this case, you must also terminate any marketplace coverage with premium breaks or other cost savings for anyone in your household who is enrolled in or eligible for Medicaid.

You won’t be able to re-enroll in your marketplace plan if you terminate it before receiving the final decision about your eligibility for Medicaid. You’ll have to wait until the next open-enrollment period if you can’t qualify for special enrollment.

If You’re Eligible for Both Medicaid and Private Insurance

There are a few upsides to being eligible for both Medicaid and private insurance. For services covered by both programs, private insurance will pay first, then Medicaid picks up the difference between your provider’s allowable charge and private insurance payment, up to your state’s Medicaid payment limit.

Private health insurance policies usually have copay and deductible requirements. If you qualify for both Medicaid and private insurance, Medicaid may cover these out-of-pocket expenses for you.

Besides collaborating with other payers on a third-party basis, Medicaid may also arrange for private insurance plans and other entities to pay health care providers for services covered by Medicaid. Most Medicaid beneficiaries receive some services through managed care plans that contract with states directly.

When enrolled in Medicare (available to people ages 65 and older or, in some cases, younger people with disabilities), generally, you won’t get coverage through the health insurance marketplace. However, if you already have a marketplace plan but are not enrolled in Medicare, you can retain the marketplace plan even after your Medicare coverage kicks in. However, you can expect to lose the premium tax credits or savings you’ve been receiving on your marketplace plan.

How Medicaid Works With Other Coverage

You may still qualify for Medicaid even if you have other health insurance coverage, and coordination of benefits rules decide who pays your bill first. In this case, your private insurance, whether through Medicare or employer-sponsored, will be the primary payer and pays your health care provider first. Medicaid comes in as second insurance to settle what your private insurance doesn’t pay, up to its limit.

If you have both Medicaid and private health insurance, you should show both your private health insurance card and Medicaid card to your medical provider every time you receive services.

A health-service provider who accepts both your Medicaid and private insurance card won’t bill you for copayments or deductibles.

Any money received from an insurance company or as compensation for a medical care lawsuit must be used to pay the health provider. If Medicaid already has covered the cost of care, you must make a refund to Medicaid. If your private insurance is through an employer-sponsored plan, you may be an eligible candidate for the Health Insurance Premium Payment (HIPP) program. HIPP is a voluntary program that may pay your insurance premium as long as you or a family member qualifies for Medicaid coverage.

If your service provider won’t take your Medicaid and private insurance card, your insurance company may help you locate a doctor in its provider network.

Frequently Asked Questions

Is it better to have Medicaid or private insurance?

If you’re looking at what you get back, you’ll receive more-comprehensive benefits at lower out-of-pocket costs with Medicaid than with private insurance. Medicaid costs less per beneficiary due to lower administrative costs and payment rates to health care providers made by the Medicaid program.

Can I use Medicaid as secondary insurance after my insurance through my employer?

Yes. You can use Medicaid as secondary insurance after your employer-sponsored plan. Your employer-sponsored plan pays your health provider first and Medicaid will pick up what your employer plan doesn’t cover.

Article Sources

  1. "Frequently Asked Questions About Medicaid and Medical Assistance." Accessed Oct. 3, 2021.

  2. "What Marketplace Health Insurance Plans Cover." Accessed Oct. 3, 2021.

  3. "Canceling a Marketplace Plan When You Get Medicaid or CHIP." Accessed Oct. 3, 2021.

  4. Centers for Medicare & Medicaid Services. "Transitioning From Medicaid Coverage to Other Health Coverage." Page 14. Accessed Oct. 3, 2021.

  5. "Medicare & Other Health Benefits: Your Guide to Who Pays First." Page 10. Accessed Oct. 3, 2021.

  6. Washington State Health Care Authority. "Coordination of Benefits." Accessed Oct. 3, 2021.

  7. West Virginia Department of Health & Human Resources, Bureau for Medical Services. "Your Guide to Medicaid 2021." Accessed Oct. 3, 2021.

  8. Texas Health and Human Services. "Health Insurance Premium Payment (HIPP) Program." Accessed Oct. 3, 2021.

  9. Center on Budget and Policy Priorities. "Frequently Asked Questions About Medicaid." Accessed Oct. 3, 2021.

  10. West Virginia Department of Health & Human Resources, Bureau for Medical Services. "Your Guide to Medicaid 2021." Page 7. Accessed Oct. 3, 2021.