Medicaid is one of the largest and most vital healthcare programs in the United States. Serving over 80 million Americans, it offers essential medical coverage to low-income individuals and families who otherwise might not be able to afford healthcare. Funded jointly by the federal and state governments, Medicaid plays a crucial role in promoting health equity and access to care.
In this in-depth guide, we’ll explore what Medicaid is, how it works, who is eligible, what services it covers, and how it differs from Medicare. Whether you're applying for yourself or helping someone understand the system, this article will give you a full overview of the Medicaid program.
What Is Medicaid?
Medicaid is a public health insurance program designed to provide coverage for low-income individuals and families. Unlike Medicare, which is primarily age-based, Medicaid eligibility is based on income and need.
Medicaid was established in 1965 under the Social Security Amendments, the same year Medicare was launched. It was created to improve access to healthcare for America’s most vulnerable populations.
Who Is Eligible for Medicaid?
Eligibility for Medicaid is determined based on household income, family size, and other factors like disability status, age, and citizenship. Thanks to the Affordable Care Act (ACA), Medicaid eligibility has expanded in many states.
General Eligibility Groups Include:
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Low-income adults
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Children
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Pregnant women
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Elderly adults
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People with disabilities
Income Limits
Income thresholds are based on the Federal Poverty Level (FPL) and vary by state. In 2025, the FPL for a single individual is approximately $15,060, and for a family of four, it's around $31,200. Medicaid eligibility typically requires an income below 138% of the FPL, especially in states that have adopted Medicaid expansion.
Medicaid Expansion
Under the ACA, states were given the option to expand Medicaid to cover all adults with incomes up to 138% of the FPL. As of now, most states have expanded Medicaid, although a few still have not, creating disparities in access.
What Services Does Medicaid Cover?
Medicaid provides a comprehensive set of benefits, many of which are mandatory, while others are optional depending on the state.
🩺 Mandatory Benefits Include:
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Inpatient and outpatient hospital services
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Physician services
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Laboratory and X-ray services
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Home health services
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Nursing facility services for adults
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Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) for children
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Family planning services
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Transportation to medical care
🦷 Optional Benefits May Include:
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Prescription drugs
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Dental and vision care
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Physical therapy
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Hospice care
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Prosthetics and durable medical equipment
Most states opt to include many optional services to meet the healthcare needs of their residents.
How to Apply for Medicaid
Applying for Medicaid is relatively straightforward and can be done in several ways:
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Online at your state’s Medicaid website or HealthCare.gov
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By phone through your state’s Medicaid office
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In person at local health departments or state social services offices
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By mail by submitting a paper application
Applicants will need to provide information such as:
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Proof of income
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Identification and Social Security number
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Proof of citizenship or legal immigration status
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Information about household size and dependents
Processing times vary by state but usually take between 15 to 45 days.
Medicaid vs. Medicare: Key Differences
Though they sound similar, Medicaid and Medicare are very different programs.
| Feature | Medicaid | Medicare |
|---|---|---|
| Funded by | Federal & State Governments | Federal Government |
| Managed by | States | Federal |
| Based on | Income & Need | Age or Disability |
| Coverage Focus | Low-income individuals & families | Seniors and disabled individuals |
| Cost to Patient | Usually free or low-cost | Premiums, deductibles, and co-insurance |
Some individuals are "dual-eligible" and can receive both Medicare and Medicaid benefits.
Medicaid for Children: CHIP
The Children’s Health Insurance Program (CHIP) works in conjunction with Medicaid to provide coverage for children in families with incomes too high for Medicaid but too low to afford private insurance.
CHIP covers:
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Routine check-ups
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Immunizations
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Doctor visits
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Prescriptions
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Dental and vision care
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Emergency services
CHIP is a critical resource that helps ensure that millions of American children receive consistent, high-quality healthcare.
Managed Care and Medicaid
Many states use Managed Care Organizations (MCOs) to deliver Medicaid services. Under this model, states contract with private insurance companies to manage Medicaid beneficiaries' care.
Managed care aims to:
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Lower costs
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Improve health outcomes
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Simplify care coordination
While this approach has improved efficiency, it has also raised concerns about provider access and service quality in some states.
Medicaid and Long-Term Care
Medicaid is the largest single payer of long-term care services in the U.S., covering:
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Nursing home care
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Home and community-based services (HCBS)
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Personal care assistance
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Assisted living in some states
Medicare does not cover long-term custodial care, making Medicaid essential for elderly individuals with chronic health needs and limited income.
Challenges Facing Medicaid
Despite its many strengths, Medicaid faces several challenges:
1. Funding Pressure
Medicaid is a significant part of both state and federal budgets. Any economic downturn or policy change can impact funding.
2. State-by-State Variability
Because each state administers its own program, coverage, eligibility, and access to care can vary greatly.
3. Access to Providers
Not all healthcare providers accept Medicaid due to lower reimbursement rates, which can limit access in certain areas.
4. Political Uncertainty
Medicaid is often at the center of healthcare reform debates, making its future dependent on changing political dynamics.
Future of Medicaid
As healthcare needs evolve, so too does Medicaid. Several trends are shaping the future of the program:
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Telehealth Expansion: Medicaid increasingly covers remote healthcare services, improving access in rural and underserved areas.
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Integrated Care Models: More states are integrating physical, behavioral, and social services.
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Medicaid Redeterminations: With the end of the COVID-19 public health emergency, states are reevaluating eligibility for millions, possibly leading to coverage losses.
Final Thoughts
Medicaid is more than just a safety net—it's a vital part of the American healthcare system that empowers low-income individuals and families to live healthier lives. Its reach spans from newborns to seniors, offering not just coverage but hope and security for millions.
Whether you're exploring eligibility, helping someone enroll, or simply trying to understand the system better, knowing how Medicaid works is essential in today’s healthcare landscape.
