Marketplace insurance and Medicaid are not the same thing. They are two separate programs that both provide health coverage but work very differently in terms of cost, eligibility, and how you get care. The Marketplace (sometimes called the “exchange” or Healthcare.gov) offers private insurance plans with possible government subsidies to lower your premium, while Medicaid is a joint federal and state program that provides free or very low-cost coverage to people with limited income.
If you’re wondering which one you qualify for, or whether you might have both, the key factor is your household income relative to the federal poverty level. The two programs are designed to work together so that most people fall into one or the other, though gaps exist in some states.
How Eligibility Is Divided by Income
In the 41 states (including Washington, D.C.) that have expanded Medicaid under the Affordable Care Act, adults generally qualify for Medicaid if their household income is at or below 138% of the federal poverty level. For a single person in 2025, that’s roughly $21,600 per year. Above that line, you shift to the Marketplace, where you can apply for premium tax credits to reduce the cost of a private plan.
Marketplace subsidies are available to people earning at least 100% of the federal poverty level. Through 2025, Congress has temporarily removed the upper income cap that previously cut off subsidies at 400% of the poverty level. That means even higher earners can qualify for at least some help with premiums, though the amount shrinks as income rises. Starting in 2026, the 400% cap is set to return unless Congress extends the expanded subsidies.
Ten states have not expanded Medicaid: Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming. In these states, many adults earning below 100% of the poverty level earn too much for their state’s traditional Medicaid program but too little to qualify for Marketplace subsidies. This is often called the “coverage gap,” and it affects people who fall between the two programs with no affordable option from either one.
The Cost Difference Is Significant
Medicaid is designed to be nearly free at the point of care. A study published in JAMA Network Open comparing the two programs among low-income adults found that out-of-pocket costs averaged just $45 per year for Medicaid enrollees, compared to $569 per year for people on subsidized Marketplace plans. That gap shows up everywhere: office visit copays averaged $2.80 under Medicaid versus $20.29 under Marketplace coverage. Emergency room visits cost Medicaid enrollees about $7 out of pocket, compared to $106 for Marketplace enrollees. Even prescription copays were lower, at $2.40 per fill versus $6.82.
Marketplace plans come with monthly premiums that vary based on your age, location, plan level, and income. Subsidies can reduce those premiums substantially, sometimes to $0 for the lowest-cost plans, but you’ll still typically face deductibles and copays when you use care. Silver-level plans offer additional cost-sharing reductions for people earning under 250% of the poverty level, which helps close the gap somewhat, but Medicaid remains far cheaper for those who qualify.
What Each Program Covers
Both programs provide comprehensive health coverage, and there’s significant overlap. All Marketplace plans are required to cover ten categories of essential health benefits: outpatient care, emergency services, hospitalization, maternity and newborn care, mental health and substance use treatment, prescription drugs, rehabilitative services, lab work, preventive care, and pediatric services including dental and vision for children.
Medicaid covers most of these same categories and often goes further. Many state Medicaid programs include adult dental, vision, and transportation to medical appointments, benefits that are rarely part of a standard Marketplace plan. Medicaid also has no annual or lifetime limits on coverage. On the other hand, Marketplace plans sometimes offer broader specialist networks or shorter wait times for certain services, depending on your area and plan.
Doctor Networks Don’t Always Overlap
One practical concern when switching between programs is whether your doctor accepts both types of coverage. Research published in JAMA Internal Medicine found that only about 29% of primary care doctors who accept Medicaid also appear in an average Marketplace plan’s network. The overlap varies wildly by state. In Iowa, nearly 60% of doctors participated in both. In South Carolina, that number dropped to under 9%.
Looking at it from the other direction, about 57% of Medicaid-participating primary care doctors accepted at least one Marketplace plan in their area. So if you’re moving from Medicaid to a Marketplace plan, there’s a reasonable chance your current doctor takes some Marketplace coverage, but you’ll need to check which specific plan they accept. Don’t assume continuity.
You Can’t Have Both at the Same Time (With Subsidies)
This is a point that catches people off guard. If you qualify for Medicaid, you are not eligible for premium tax credits or cost-sharing reductions on a Marketplace plan. You could technically buy a Marketplace plan, but you’d pay the full unsubsidized price, which rarely makes financial sense when Medicaid is available at little to no cost.
If you’re enrolled in a Marketplace plan with subsidies and then become eligible for Medicaid, you need to end your Marketplace coverage. If you don’t, Healthcare.gov will send you a letter giving you 30 days to cancel. After that, your subsidies stop automatically, and you’ll owe the full premium for any months you kept both.
How the Application Process Works
You don’t need to figure out which program you qualify for before applying. When you fill out an application on Healthcare.gov (or your state’s exchange), the system checks your income and household information against both Medicaid and Marketplace eligibility criteria. If you appear to qualify for Medicaid, your application gets forwarded to your state’s Medicaid agency. If not, you’ll see Marketplace plans and any subsidies you’re eligible for.
The process also works in reverse. If you lose Medicaid coverage or get denied, your state securely sends your contact information to the Marketplace, which will reach out by mail (and sometimes phone, text, or email) to let you know you can apply for a Marketplace plan. Losing Medicaid triggers a special enrollment period, so you won’t have to wait for open enrollment.
During the Marketplace application, the system may re-check whether you’re eligible for Medicaid, especially if your income or household size has changed since your state’s determination. This back-and-forth coordination is built into the process to prevent people from falling through the cracks, though in practice, transitions between programs can still involve paperwork delays and temporary gaps in coverage.
Which One Is Better for You
If your income qualifies you for Medicaid, it’s almost always the better financial choice. The out-of-pocket costs are dramatically lower, and the coverage is comprehensive. The main trade-off is that fewer doctors accept Medicaid, so your choice of providers may be more limited.
If you earn too much for Medicaid, Marketplace plans with premium tax credits are your next best option. The higher your income, the more you’ll pay in premiums and cost-sharing, but subsidies can still make coverage affordable for most people through 2025. Pay attention to whether those expanded subsidies get renewed for 2026, as your costs could increase if they expire.
If your income fluctuates, especially if you’re self-employed or work variable hours, you may move between the two programs from year to year. Report income changes promptly through Healthcare.gov or your state exchange so your coverage and subsidies stay accurate. Owing back premium tax credits at tax time because your income was higher than estimated is an avoidable headache.