Medicaid is a federal health insurance program administered by individual states that covers one in five Americans. It provides low-cost or free health coverage to low-income families and individuals, including qualified children, qualified pregnant women, and individuals receiving Supplemental Security Income (SSI). In some states, Medicaid will cover all low-income adults below a certain income threshold.
Read on to find out what Medicaid is, how it works, its eligibility requirements, and how it compares to Medicare.
Definition of Medicaid
Medicaid is the nation’s public insurance program through which low-income families and qualifying individuals—like parents, children, elderly adults, pregnant women, and people living with disabilities—receive health coverage. Subject to federal government rules, each state administers its own Medicaid program and has the flexibility to determine health care delivery models, covered populations, and covered services.
Your state may even have a unique name for its Medicaid program, such as Medi-Cal in California.
Good health is important for us all. If you can’t offset the cost of medical care right now, Medicaid can be your ticket to getting the care you need.
How Does Medicaid Work?
Created in 1965, Medicaid is a state-managed, federal-government supervised program that, in conjunction with the Children’s Health Insurance Program (CHIP), provides health coverage to millions of Americans—74.2 million in February 2021, according to the Medicaid enrollment report.
Each state runs and oversees its own Medicaid program to determine the type, duration, amount, and scope of health services within the larger federal guidelines. Federal law mandates that states issue specific benefits—while still letting each state choose optional coverages to provide.
The Affordable Care Act of 2010 created a provision for states to expand Medicaid to accommodate all low-income Americans below 65 years of age.
The chart below lists some of the mandatory and optional Medicaid benefits:
|Mandatory Medicaid Benefits||Optional Medicaid Benefits|
|Outpatient hospital services||Clinic services|
|Inpatient hospital services||Prescription drugs|
|Home health services||Physical therapy|
|Nursing facility services||Respiratory care services|
|Physician services||Vision services|
|Rural health clinic services||Dental services and dentures|
|Laboratory and X-ray services||Prosthetics|
|Family planning services||Eyeglasses|
|Transportation to medical care||Chiropractic services|
You can find the full list of mandatory and optional Medicaid benefits at Medicaid.gov.
State Medicaid programs may also provide coverage for various types of home and community-based services (HCBS) to help patients live actively and independently at home and in the community. Your individual needs will determine the level of support these programs provide. Some of the home health care and residential senior care services provided through HCBS programs include:
- Skilled nursing care
- Personal care like showering
- Managing nutrition and diet
- Speech, occupational, and physical therapy
- Home-delivered meals
Medicaid doesn’t provide health care directly. A huge majority of Medicaid beneficiaries receive health care coverage through privately managed care plans. For other beneficiaries, state Medicaid programs pay doctors, hospitals, nursing homes, and other care providers for the covered services they give eligible patients.
How To Get Medicaid
Since Medicaid programs are state-managed, eligibility requirements vary from state to state. Your eligibility for Medicaid coverage depends in part on whether the state you live in has adopted the expanded program. In all states, you may qualify for Medicaid based on your household size, income, family status, and disability, among other factors.
In states that run an expanded Medicaid program (programs that accommodate all low-income Americans below 65), your income alone level can qualify you for coverage. Your family may be eligible for Medicaid if your current household income is at or below the 2021 100% federal poverty level.
The federal government sets income limits every year to define the federal poverty level for different households. Children between 1 and 6 years are eligible for Medicaid benefits when the household income doesn’t exceed 133% of the federal poverty level. Pregnant women and infants younger than one year are eligible for Medicaid with a family income not exceeding the 200% federal poverty level. Pregnant women are factored as two (or more) family members.
Depending on how your household income is calculated, some states will use an income limit at or below 138% of the federal poverty level.
Not every low-income individual is eligible for Medicaid. In states that are yet to implement the Affordable Care Act (ACA) Medicaid expansion, adults over 21 are often ineligible for Medicaid no matter how low their incomes are. Exceptions include when they’re pregnant, elderly, caring for children, or have a disability.
Non-U.S. citizens don’t qualify for Medicaid despite being lawful immigrants. This group includes individuals who hold temporary federal protection to live in the country for humanitarian reasons and those granted temporary permission to study, work, or travel in the country. Also, green card holders—who are lawful permanent residents—can’t enroll in Medicaid for the first five years, even when they satisfy all eligibility requirements.
You should still seek coverage if you need assistance, even if your income level alone doesn’t qualify you for Medicaid. You may still qualify for Medicaid in your state, especially if you’re pregnant, have children, or live with a disability.
You can apply for Medicaid at any time of the year in either of these two ways:
- The health insurance marketplace: You can fill out a Medicaid application via the health insurance marketplace. If anyone in your household qualifies, your information is relayed to your state agency, who should contact you about enrollment.
- Your state Medicaid agency: You may also apply for coverage directly to your state Medicaid agency.
Medicaid vs. Medicare
Medicaid and Medicare are both programs that provide government assistance to individuals who need health care support. As you weigh your health coverage options, note the key differences between these programs.
The main difference is that Medicaid is an assistance program serving low-income individuals of every age, while Medicare is an insurance program that primarily serves people over 65 years, no matter their income.
|Available for individuals over 65 years. People under 65 years must have a qualifying disability or end-stage renal disease.||All age groups are eligible depending on the household income, family size, or disability.|
|Patients pay part of the costs through deductibles, coinsurance, copays, and premiums.||Patients may have a small co-payment that varies by state.|
|As a federally-run program, it’s similar throughout the U.S.||The program varies from state to state, but it must remain within federal guidelines.|
|You can apply for Medicare during specified enrollment periods.||You can apply and enroll in Medicaid at any time.|
- Medicaid is a way for individuals to get health care coverage at a lower cost or no cost.
- Each state runs its own Medicaid program, so eligibility requirements can vary. Anyone who satisfies the eligibility requirements has a right to enroll.
- Most Medicaid beneficiaries are enrolled in privately managed care plans contracted by states to provide comprehensive services.
- Unlike Medicare, Medicaid has no special enrollment period—you can apply and enroll at any time.
- The federal law requires states to provide mandatory Medicaid benefits and allows them to provide additional optional benefits.