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What Is Medicaid?

Established in 1965, Medicaid aims to provide health insurance coverage for low-income people.

September 18, 2017 - By Ronald Barba - read

Medicaid is a social welfare program designed to provide healthcare coverage for the poor in the United States. Certain people with disabilities can also qualify. Funded both by the federal government and individual state governments, the healthcare program was created to help provide health insurance to people lacking the money or resources to afford coverage. Each state has its own eligibility requirements and policies.

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What’s the Difference Between Medicaid and Obamacare?

Medicaid: The health insurance program is provided and run by the government.

Obamacare: Health plans under Obamacare are not provided or run by the government; the government merely helps you find affordable, health coverage through its health insurance exchange (’s “Marketplace”). In some cases, though, you may qualify for an Obamacare subsidy (a sum money from the government to offset some costs) to help you pay part of your monthly health insurance premiums.

“Obamacare” doesn’t actually refer to a specific health insurance plan or program. When people say “I have Obamacare,” what they actually mean is “I’m covered by a health plan made available through Obamacare.” The Affordable Care Act (“Obamacare”) made it so that private health insurers could provide consumers with more affordable healthcare options.

Important to note: plans offered by private insurers through the Marketplace (“on-exchange”) differ from healthcare plans that those same private insurers offer outside the Marketplace (“off-exchange”). You can read more about those differences and why they’re different here.

Who Is Eligible for Medicaid?

Every state in the United States has its own set of eligibility requirements for Medicaid. Generally, though in order to qualify you have to belong to one of the following groups:

In addition, each state considers three factors:

  1. Your income
  2. Your household size
  3. Your citizenship status (must be a U.S. citizen or permanent resident, and a resident of the state in which you’ll be receiving Medicaid benefits)

The health insurance program is “means-tested.” In order for you to qualify for the healthcare benefits under Medicaid, you have to actually provide evidence that you’re poor or that you’re suffering from the disabilities that you claim. Additionally, being poor alone doesn’t necessarily mean you’ll qualify for coverage. offers a quick tool below to help you figure out if you might qualify for Medicaid. Keep in mind that it’s just a predictor tool and it makes a prediction based on your income alone (at the end of the day, whether you qualify is based on your own state’s eligibility requirements).

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What Counts as “Poor”? Are You Poor Enough for Medicaid?

What counts as “poor” will vary from state to state. Generally, the federal poverty level (FPL) is used as a guideline for states.

2017 Poverty GuidelinesWhether you’re considered poor enough for Medicaid all depends on where your income compares to the FPL and what your state’s eligibility requirements say. You potentially fall into one of three camps:

  • If you live in a state that hasn’t expanded Medicaid coverage, and your income is below 100% of the FPL: You may qualify for Medicaid depending on your state’s current eligibility requirements. You won’t qualify for savings on health insurance through Obamacare, though.
  • If you live in a state that has expanded Medicaid coverage, and your income is below 138% of the FPL: You qualify for Medicaid based only on your income level.
  • If your income is between 100% and 400% of the FPL: Regardless of what state you live in, you qualify for premium tax credits lower your monthly premiums for a health insurance plan under Obamacare.

Don’t know if your state has expanded (or plans to expand) Medicaid coverage? Check out the graphic from the Kaiser Family Foundation outlining the most recent Medicaid expansion decisions:

Status of Medicaid Expansion Decisions (January 2017)
(Status of Medicaid Expansion Decisions – January 2017 / via Kaiser Family Foundation)

What Does Medicaid Cover?

Medicaid coverage varies from state to state, with some states more services than others (like prescription drug coverage or dental services), but at minimum every plan is supposed to cover certain essential services:

  1. Inpatient and outpatient services;
  2. Family planning services and supplies;
  3. Pediatric services (screening, diagnosis, and treatment) for children under 21;
  4. Laboratory and X-ray services;
  5. Short-term skilled healthcare services (includes inpatient short-term skilled nursing or rehabilitation-facility care, as well as short-term home healthcare provided by a home healthcare agency);
  6. Physician, midwife, and nurse practitioner visits and services; and
  7. Rural health clinic and federally qualified health center services.
  8. Prescription drugs aren’t technically covered, but if you’re eligible, the program may pay the premium for the prescription drug plan under Medicare.

Who Pays for Medicaid?

Both your state government and the federal government act as insurers in this case (the ones that will cover the costs of your medical bills). The way it’s set-up, the federal government pays at least half of those bills, while the state government pays no more than half of those bills. In some states, Medicaid beneficiaries have to pay small fees for certain services.

Taking the Next Steps

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