What Medicaid Is and How It Works
Medicaid is a government health insurance program designed to help people with low to moderate incomes pay for medical care. Unlike Medicare, which is based on age or disability status, Medicaid is primarily based on income and family size. The program covers a wide range of medical services, including doctor visits, hospital stays, prescription medications, mental health treatment, and dental care for many people.
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Medicaid began in 1965 as part of President Lyndon B. Johnson's Great Society programs. Today, it covers approximately 72 million Americans, making it one of the largest health insurance programs in the United States. The program is jointly funded by the federal government and individual states, which means that each state has some flexibility in how it operates its Medicaid program. While federal guidelines set certain minimum requirements, states can decide which groups of people to cover and what services to include.
The way Medicaid works is relatively straightforward. When you receive Medicaid coverage, you can visit doctors, clinics, hospitals, and other healthcare providers that accept Medicaid. Most providers do accept it, though some may have limited availability. When you receive medical care, you typically pay little to nothing out of pocket. The state's Medicaid program pays the healthcare provider directly for the services you receive.
Each state operates its own Medicaid program with its own name and structure. For example, California calls its program Medi-Cal, New York calls it Medicaid, and Texas calls it STAR. Despite these different names, they all serve the same basic purpose: providing health coverage to low-income individuals and families. Some states have expanded their programs more than others, which affects who can receive coverage.
Practical Takeaway: Medicaid is a joint federal-state health insurance program for people with lower incomes. Understanding that your state runs its own Medicaid program means that rules and covered services may differ from neighboring states. Learning the specific name and rules of your state's program is an important first step in understanding what options may be available to you.
Income Limits and How They Are Calculated
Income limits are one of the primary factors that determine whether someone may receive Medicaid coverage. These limits vary significantly by state and by category of coverage. Federal poverty guidelines form the basis for many Medicaid income limits, though states often set their limits at different percentages of the federal poverty level.
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For 2024, the federal poverty line for a single adult is $15,060 per year, for a family of two it is $20,440, and for a family of four it is $31,200. However, Medicaid income limits are often expressed as a percentage of the federal poverty level. For example, one state might cover adults at 138% of the federal poverty level, while another covers them at 100%. This means that in the first state, a single adult earning up to approximately $20,783 per year might be covered, while in the second state, the limit would be around $15,060.
When calculating income for Medicaid purposes, most programs count gross income before taxes and deductions. Gross income includes wages from employment, self-employment income, Social Security benefits, unemployment benefits, child support, and other regular income sources. However, some income sources may not count. For example, some programs do not count Supplemental Security Income (SSI) or exclude certain amounts of income when someone is disabled or over age 65.
States also consider household size when determining income limits. A household typically includes the person requesting coverage, their spouse if they have one, and any children under age 21 living in the home. The income limit increases for each additional household member. For instance, a program might set the income limit at 138% of federal poverty for one person, but for each additional family member, an additional amount (such as the poverty guideline for one person) is added to the total allowable income.
Many states have different income limits for different groups of people. For example, children may have higher income limits than adults, meaning a child in a family with a higher income might receive coverage even if the parents do not. Pregnant women and parents sometimes also have different limits. Seniors and people with disabilities may have other limits entirely. Understanding which category you fall into is important for understanding what income limit might apply.
Practical Takeaway: Income limits are the main financial requirement for Medicaid and vary by state and by category of person. To understand what income limit applies to you, you need to know your state's program rules and identify which category of coverage you might fall into. Looking up your state's specific income limits is an essential step in learning what may apply to your situation.
Categories of Medicaid Coverage
Medicaid covers many different categories of people, and understanding which category or categories you might fit into helps clarify what coverage options may be available. The main categories include children, parents and caretakers, pregnant women, seniors, and people with disabilities. Each category has its own income limits, rules, and benefits.
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Children represent one of the largest groups covered by Medicaid. Most states cover children up to age 19 with family incomes up to at least 133% of the federal poverty level. Many states cover children at even higher income levels. For example, some states cover children in families earning up to 200% or even 300% of federal poverty. This means that Medicaid covers approximately 28 million children across the United States, making it one of the most important sources of health insurance for children in low-income families.
Parents and caretakers are another major category. This includes parents living with their children and sometimes other adults serving as caretakers. However, not all states cover parents at the same income levels as they cover children. Some states have relatively low income limits for parents, while others, particularly those that have expanded their Medicaid programs, cover parents at much higher income levels. A parent might have a higher income limit if they are caring for multiple children.
Pregnant women and new mothers are covered in all states, usually through a temporary coverage period. Coverage typically begins as soon as someone is found to be pregnant and continues for a certain number of months after delivery, often 60 days or longer depending on the state. Income limits for pregnant women are often higher than for other adults, recognizing that pregnancy and childbirth require significant medical care.
Seniors and people with disabilities represent another important category. People age 65 and older may be covered under Medicaid, typically regardless of prior work history, if they meet income and resource limits. People of any age with disabilities may also be covered. The income and resource limits for this category may differ from those for other groups. Some people in this category receive both Medicare and Medicaid, a situation called "dual eligible."
Many states also have expanded coverage categories that go beyond these traditional groups. The Affordable Care Act of 2010 created an opportunity for states to expand Medicaid to cover all adults earning up to 138% of federal poverty. As of 2024, 40 states plus the District of Columbia have adopted this expansion, while 10 states have not. This expansion significantly changed who may be covered in participating states.
Practical Takeaway: Medicaid serves many different categories of people with different rules for each category. Identifying which category or categories you might fall into—whether that's as a child, parent, pregnant woman, senior, or person with disability—is the first step in understanding what coverage options may be available in your state.
Resources and Asset Limits
In addition to income limits, many Medicaid programs also consider resources or assets when determining who may receive coverage. Resources typically include savings accounts, checking accounts, retirement accounts, investments, real estate (other than a home in some cases), vehicles, and other items of value. If your resources exceed the program's limit, you may not be covered, even if your income is low enough. However, rules around resources vary considerably by state and by category of person.
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For most categories of Medicaid, resource limits are relatively low. Traditionally, many programs set resource limits at $2,000 for a single person and $3,000 for a couple. However, these are older federal standards, and many states have updated them or eliminated them entirely. Some states have raised their resource limits to $10,000 or higher for individuals. A few states have removed resource limits altogether for certain categories of people, particularly for children and parents.
Certain resources are not counted when determining whether someone meets resource limits. A home that someone lives in is typically not counted as a resource. A vehicle used for transportation may not be counted, and sometimes a