Since 1965, Medicaid has been the backbone of this country's health care safety net. Jointly funded by the states and the federal government, Medicaid covers more than 58 million low-income Americans, including families, people with disabilities, and the elderly. Today, Medicaid provides coverage for almost 29 million children and pays for approximately half of all long-term care costs.
Medicaid is jointly funded by the states and the federal government. Federal law requires state Medicaid programs to cover certain categories of individuals and services. Beyond that, states have wide flexibility in the design and implementation of their Medicaid programs.
Medicaid Today: Even though Medicaid has helped millions gain access to health care, many low-income people have been left out. In 30 states, income eligibility for parents is set below 50 percent of poverty (in 2012, that’s an annual income of $9,545 for a family of three). In most states, adults without dependent children, no matter how poor, cannot get Medicaid coverage at all.
Medicaid Expansion: In 2014, as a result of the Affordable Care Act, states can get substantial federal funding to expand Medicaid to all residents with incomes at or below 133 percent of poverty, thus extending Medicaid coverage to individuals who have been left out of the program. [Note: Since 5 percent of income is not included—is “disregarded”—when eligibility is determined, the expansion, in effect, applies to those with incomes at or below 138 percent of poverty.]
For more on how Medicaid works today, and how it will work under the Medicaid expansion, see:
Medicaid Today: Generally speaking, each state receives matching dollars from the federal government, and those matching rates vary across the states from 50 to 76 percent. This means that, for every dollar a state spends on Medicaid, the federal government contributes between $1.00 and $3.17. Federal matching rates are based on the per capita income of the states, so states with lower per capita incomes get higher matching rates.
Medicaid Expansion: In 2014, the Affordable Care Act gives states the opportunity to expand their Medicaid programs to cover all individuals with incomes at or below 138 percent of poverty (see note above), an income of about $31,809 for a family of four in 2012. That will extend coverage to many low-income adults currently left out of the program and simplify eligibility determinations across the program.
Federal law requires states to cover certain categories of people in Medicaid. In general, there are six categories of so-called “mandatory” individuals: 1) children, 2) pregnant women, 3) very low-income parents, 4) the elderly, and individuals who are 5) blind or 6) disabled. Eligibility levels for these groups of people varies by income:
- Children under age six with family incomes up to 133 percent of the federal poverty level ($25,390 for a family of three in 2012)
- Children ages 6-19 with family incomes up to 100 percent of poverty ($19.090 for a family of three in 2012)
- Pregnant women with family incomes up to 133 percent of poverty
- Parents whose income meets the state’s AFDC (former welfare program) criteria in place as of July 1996
- People who are elderly, blind, or who have disabilities and who receive Supplemental Security Income (SSI) may have incomes up to 74 percent of poverty ($8,266 for an individual in 2012)
- Certain people with severe disabilities who would qualify for SSI if they did not work
Elderly individuals and people with disabilities whose Medicare premiums are paid by Medicaid through the “QMB,” ”SLMB,” and “QI” programs—generally speaking, these are individuals who have incomes below 150 percent of poverty
States have the flexibility to increase these income limits to allow more people to qualify for Medicaid for several general categories of people, as follows:
- Low-income children, parents, and pregnant women with family incomes above mandatory cutoff levels and up to whatever income limit the states decide
- People who are blind, elderly, or disabled with incomes above the SSI level but below 100 percent of poverty ($10,830 for an individual in 2010)
- Nursing home residents with incomes above SSI levels but below 300 percent of poverty ($32,490 for an individual in 2010)
- People with disabilities who work and have incomes above the SSI limit
- Medically needy individuals who require institutional care but who have incomes that are too high to qualify for SSI—these individuals can deduct the cost of their institutional care from their income in order to qualify for Medicaid
The Affordable Care Act requires states to maintain the Medicaid eligibility levels, policies, and procedures that were in place in March 2010 (the date the Affordable Care Act was enacted) until the state has an operational exchange.
Medicaid Expansion: In 2014, states can expand their Medicaid programs to cover virtually all individuals under the age of 65 with incomes below 133 percent of poverty. Income eligibility for those over 65 will remain unchanged. For those newly eligible through this expansion, the federal government will cover 100 percent of costs for 2014 through 2016, gradually falling to 90 percent in 2020. The federal contribution will remain at 90 percent thereafter. States have the option to implement this expansion sooner.
In states that expand Medicaid, the historic federal Medicaid matching formula will still apply to individuals who meet the Medicaid eligibility criteria in place as of December 1, 2009.
For more information on current state-by-state eligibility, see Medicaid and State Children's Health Insurance Program (CHIP) Eligibility by State (May 2010) or Kaiser’s statehealthfacts.org and scroll down to “Medicaid Eligibility.”
Federal law requires states to provide a minimum benefit package in Medicaid. So-called “mandatory” benefits include physician services, hospital services, family planning, health center services, and nursing facility services. The benefit package for children is more comprehensive than the one for adults because federal law requires states to provide coverage for certain health screenings and services that are medically necessary. This requirement is called the Early and Periodic Screening Diagnostic and Treatment (EPSDT) benefit.
States are permitted to provide coverage for certain other health care services that are approved by the federal government. Such “optional” services include dental care, mental health care, eye glasses and vision care, coverage for prescription drugs, home health care, case management, and rehabilitation services. For a detailed list of what benefits state Medicaid programs cover, click here.
Medicaid Expansion: In states that take advantage of the Affordable Care Act’s Medicaid expansion, there are specific benefit requirements for those who are newly eligible. For those individuals, states must provide a set of essential health benefits. For more information on Medicaid’s essential health benefits, see Designing the Essential Health Benefits for Your State: An Advocate's Guide.