The Affordable Care Act (ACA) and Medicaid are not the same thing. The ACA is a federal law passed in 2010 that reshaped health insurance across the country. Medicaid is a government health insurance program that has existed since 1965. What connects them is that the ACA significantly expanded Medicaid, making millions more people eligible for coverage who previously didn’t qualify.
How the ACA Changed Medicaid
Before the ACA, Medicaid was limited mostly to specific groups: children in low-income families, pregnant women, people with disabilities, and some elderly adults. In many states, a single adult without children couldn’t qualify for Medicaid no matter how low their income was.
The ACA changed that by requiring states to open Medicaid to all adults aged 18 to 65 with household incomes up to 138% of the federal poverty level, regardless of age, family status, or health. For a single person in 2024, that translates to roughly $20,800 per year. This one change, known as Medicaid expansion, brought about 21 million adults into Medicaid coverage as of mid-2024.
Not Every State Expanded Medicaid
The ACA originally required all states to expand Medicaid, but a 2012 Supreme Court ruling made expansion optional. As a result, 41 states (including Washington, D.C.) have adopted expansion, while 10 states have not: Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming.
If you live in a state that hasn’t expanded Medicaid, you may fall into what’s called the “coverage gap.” Your income might be too high for traditional Medicaid but too low to qualify for subsidized insurance through the ACA Marketplace. This gap affects millions of people, predominantly in southern states with large uninsured populations.
Who Pays for Expansion
One reason most states have opted in is the financial deal. The federal government pays 90% of the costs for people covered through the Medicaid expansion. That’s considerably more generous than traditional Medicaid funding, where the federal share ranges from 50% to 77% depending on the state’s per capita income. States with lower average incomes receive a higher federal match rate.
For expansion states, the math has generally worked out. The 10% state share is offset in part by reduced spending on uncompensated care at hospitals and emergency rooms, since fewer residents show up uninsured.
What Expansion Medicaid Covers
The ACA established 10 categories of essential health benefits that insurance plans must cover. Medicaid expansion plans follow these requirements, which include doctor visits, hospital stays (both inpatient and outpatient), prescription drugs, pregnancy and childbirth care, mental health services, and preventive screenings. Children’s dental coverage is required, though dental benefits for adults are optional and vary by state.
Medicaid expansion coverage typically has no monthly premiums and very low or zero out-of-pocket costs. This makes it distinct from ACA Marketplace plans, which charge premiums (though subsidies can reduce them) and include deductibles and copays.
How to Find Out Which One You Qualify For
The ACA Marketplace and Medicaid share a single front door. When you fill out an application at HealthCare.gov (or your state’s marketplace website), the system automatically checks whether your income qualifies you for Medicaid. If it does, your information gets sent to your state’s Medicaid agency, which contacts you about enrollment. You don’t need to apply separately.
If you’re denied Medicaid or CHIP coverage, the process works in reverse. Your state sends your contact information back to the Marketplace, which mails you a letter about options for subsidized Marketplace plans instead. This handoff means you won’t accidentally slip through the cracks between the two programs.
You can also apply for Medicaid directly through your state’s Medicaid office, by phone, by mail, or in person. In expansion states, eligibility is based almost entirely on income, so the application process is straightforward.
ACA Marketplace Plans vs. Medicaid
If your income is above 138% of the federal poverty level in an expansion state (or above your state’s Medicaid limit in a non-expansion state), you won’t qualify for Medicaid. Instead, you’d shop for a private insurance plan through the ACA Marketplace, where subsidies can lower your monthly premium based on income. These Marketplace plans also cover the same 10 essential health benefit categories, but they come with cost-sharing like deductibles and copays that Medicaid largely avoids.
Your income can fluctuate during the year, and if it drops below the Medicaid threshold, you can transition from a Marketplace plan to Medicaid (or vice versa). The two systems are designed to work as a continuous ladder of coverage rather than competing programs.