Medicaid is a joint federal-state health insurance program that covers more than 68 million Americans, making it the largest source of health coverage in the country. The federal government sets baseline rules, but each state runs its own Medicaid program with significant flexibility over who qualifies, what services are covered, and how care is delivered. That’s why Medicaid can look quite different depending on where you live.
How Federal and State Funding Works
Medicaid isn’t funded by one level of government alone. The federal government and each state split the cost using a formula called the Federal Medical Assistance Percentage (FMAP). This formula compares a state’s per capita income to the national average: poorer states get a larger federal share, while wealthier states cover more of the cost themselves.
By law, the federal government always pays at least 50% of a state’s Medicaid costs, no matter how wealthy the state is. The maximum federal share is capped at 83%. In practice, this means a state like Mississippi receives a much higher federal match than a state like Connecticut. For adults who gained coverage through the Affordable Care Act’s Medicaid expansion, the federal government covers 90% of costs, a significantly higher rate than the standard match.
Who Qualifies for Medicaid
Eligibility hinges primarily on your income, measured as a percentage of the federal poverty level (FPL). In the 41 states (including Washington, D.C.) that have adopted Medicaid expansion, most adults with household income up to 138% of the federal poverty level qualify. For a single person in 2024, that translates to roughly $20,800 per year.
In states that haven’t expanded Medicaid, eligibility for adults is far more restrictive. You typically need to fall into a specific category, such as being a parent with very low income, pregnant, or living with a disability. Simply being poor isn’t enough in those states if you don’t fit one of those groups.
Children qualify at higher income thresholds than adults in every state, and pregnant women also receive broader coverage. For older adults (65 and over) and people with blindness or disabilities, eligibility is generally determined using the same income rules as the Supplemental Security Income (SSI) program. These groups may also face asset limits, meaning the value of your savings, property, and other resources is counted alongside your income. The rules for children, pregnant women, and working-age adults under expansion do not include asset tests.
What Medicaid Covers
Federal law requires every state Medicaid program to cover a core set of services. These mandatory benefits include inpatient and outpatient hospital care, physician visits, lab work and X-rays, nursing facility care, home health services, family planning, and transportation to medical appointments. For children, states must provide a comprehensive benefit called Early and Periodic Screening, Diagnostic, and Treatment (EPSDT), which covers virtually any medically necessary service a child needs, even if that service isn’t normally covered for adults in the state.
Beyond these requirements, states can choose to cover a wide range of optional benefits. Common optional services include prescription drugs, dental care, eyeglasses, physical and occupational therapy, mental health services, and personal care assistance. Most states do cover prescription drugs, but dental and vision coverage for adults varies dramatically from state to state. Some states offer robust dental benefits while others cover only emergency extractions.
What You Pay Out of Pocket
Medicaid is designed to have minimal cost sharing. If your state does charge copayments or premiums, federal rules cap total out-of-pocket costs at 5% of your household income. Several groups are completely exempt from any cost sharing: children under 18, pregnant women (for pregnancy-related services), people receiving care in institutions or through hospice, and foster children. For everyone else, copays tend to be nominal, often just a few dollars per service or prescription.
How Care Is Delivered
Most Medicaid enrollees don’t interact with the state directly for their healthcare. About 83% of beneficiaries are enrolled in managed care, where the state contracts with a private health insurance plan to coordinate your care. You choose a primary care doctor within the plan’s network, and the plan handles referrals, prescriptions, and coverage decisions. The state pays the plan a set monthly amount per enrollee, and the plan is responsible for covering all the services you need.
The alternative is fee-for-service, where the state pays providers directly each time you receive a covered service. This model gives you more flexibility in choosing providers but offers less coordination. Only a minority of Medicaid enrollees are still in traditional fee-for-service arrangements, and the number continues to shrink as states shift toward managed care.
How to Apply and How Long It Takes
You can apply for Medicaid through your state’s Medicaid agency, through HealthCare.gov (in states that use the federal marketplace), by phone, by mail, or in person at a local office. The application asks about your household size, income, and (for certain groups) assets. Most states have online portals that let you upload documents and check your application status.
Federal rules give states up to 45 days to process applications for most groups, including children, pregnant women, parents, and expansion adults. Applications for people qualifying based on a disability generally take longer because they require medical documentation. If you’re approved, coverage can be retroactive up to three months before the month you applied, as long as you would have been eligible during that period and had medical bills.
How Medicaid Works With Medicare
About 12 million Americans qualify for both Medicaid and Medicare, a group known as “dual eligibles.” These are typically older adults or people with disabilities who have limited income. When you have both programs, Medicare acts as the primary insurer for doctor visits, hospital stays, and other acute care. Medicaid then fills in the gaps by covering Medicare premiums, deductibles, and copays, and by paying for services Medicare doesn’t cover at all, most notably long-term care in nursing facilities or at home.
This combination matters because Medicare alone doesn’t cover extended nursing home stays or many home-based support services. For people who need that level of care, Medicaid is often the only viable option for covering costs that can run $8,000 to $10,000 per month or more.
Medicaid vs. CHIP
The Children’s Health Insurance Program (CHIP) works alongside Medicaid to cover children in families whose income is too high for Medicaid but too low to comfortably afford private insurance. About 7.2 million children are enrolled in CHIP, compared to roughly 36 million children covered through Medicaid itself. Together, these programs cover nearly half of all Medicaid and CHIP enrollees. CHIP programs are also run by states with federal matching funds, and in many states the application process for Medicaid and CHIP is combined into a single form.
Why Coverage Varies by State
Because Medicaid is a federal-state partnership rather than a single national program, your experience depends heavily on where you live. A low-income adult in California has access to Medicaid expansion coverage with dental, vision, and extensive mental health benefits. The same person in a non-expansion state may not qualify for Medicaid at all. States also set their own provider reimbursement rates, which affects how many doctors and specialists accept Medicaid patients in a given area.
This variation extends to how states handle managed care contracts, what optional benefits they include, and how quickly they process applications. If you’re trying to understand what Medicaid looks like for you specifically, your state’s Medicaid website or a call to the state agency is the most reliable starting point.