Medicaid is government health insurance for people with limited income. It’s funded jointly by the federal government and individual states, and it currently covers about 76 million Americans. Unlike private insurance, Medicaid costs little or nothing for the people enrolled in it.
How Medicaid Works
Medicaid is a partnership between the federal government and each state. The federal government sets broad rules that every state must follow, then each state designs and runs its own version of the program. That’s why Medicaid looks different depending on where you live. What you qualify for in California may not be the same as what you’d qualify for in Texas.
The federal government pays a set percentage of each state’s Medicaid costs, and the state covers the rest. The federal share varies by state but is always at least 50%. Lower-income states receive a higher federal match, sometimes covering 70% or more of the program’s costs.
Who Qualifies
Federal law requires every state to cover certain groups: low-income families with children, pregnant women, and people receiving Supplemental Security Income (which generally means people with disabilities or very low income who are 65 or older). Children are covered in every state up to at least 133% of the federal poverty level, and most states set that threshold even higher.
Beyond those required groups, states can choose to cover additional populations. The biggest example is Medicaid expansion under the Affordable Care Act, which gave states the option to cover nearly all adults earning up to 138% of the federal poverty level. For an individual in 2025, that’s about $21,597 a year. So far, 41 states (including Washington, D.C.) have adopted the expansion, while 10 have not.
In states that haven’t expanded Medicaid, adults without children or a disability often can’t qualify regardless of how low their income is. This creates what’s known as a “coverage gap,” where people earn too little to get subsidized marketplace insurance but don’t fit into one of the groups their state covers.
What Medicaid Covers
Every state Medicaid program must cover a core set of services: hospital stays, outpatient care, doctor visits, lab work and X-rays, and home health services. Beyond that core, states choose from a menu of optional benefits. Prescription drugs, physical therapy, dental care, and vision services are technically optional, though most states do cover them in some form.
Because each state decides the “type, amount, duration, and scope” of services within federal guidelines, the generosity of coverage varies. One state might offer extensive dental benefits while another covers only emergency dental procedures. If you’re enrolled or considering applying, your state Medicaid agency’s website will list exactly what’s included.
What It Costs You
Most people on Medicaid pay nothing or very close to nothing. There are no monthly premiums for the majority of enrollees, and copays, when they exist, are kept to small, nominal amounts for people with incomes at or below 150% of the federal poverty level. Children and pregnant women are exempt from most out-of-pocket costs entirely.
States do have the option to charge limited premiums and slightly higher copays to certain groups with somewhat higher incomes. For example, copays on non-preferred prescription drugs can reach up to 20% of the drug’s cost for people above 150% of the poverty level. But even then, total out-of-pocket spending is capped. Emergency room visits for actual emergencies never carry a copay.
Medicaid vs. Medicare
These two programs are easy to confuse, but they serve different populations and work differently. Medicare is federal health insurance primarily for people 65 and older, plus some younger people with certain disabilities. It works the same in every state because it’s run entirely by the federal government, and enrollees typically pay monthly premiums, deductibles, and coinsurance.
Medicaid is for people with limited income regardless of age. It’s run by each state individually, so benefits and eligibility rules vary by location. And unlike Medicare, most Medicaid enrollees pay little to nothing out of pocket. Some people qualify for both programs simultaneously. These “dual-eligible” individuals get coverage from both Medicaid and Medicare, with Medicaid often picking up costs that Medicare doesn’t cover.
CHIP: Medicaid’s Partner for Kids
The Children’s Health Insurance Program, or CHIP, works alongside Medicaid to cover children in families that earn too much to qualify for Medicaid but still can’t afford private insurance. In some states, CHIP also covers pregnant women. Each state runs CHIP closely with its Medicaid program, and when you apply for Medicaid, your children are automatically screened for CHIP eligibility too. There’s no separate application.
How to Apply
You can apply for Medicaid in several ways. The fastest route is online through HealthCare.gov, which will determine whether you qualify for Medicaid, CHIP, or subsidized marketplace coverage based on your income and household size. You can also apply directly through your state’s Medicaid agency, by phone at 1-800-318-2596, or by mailing a paper application.
Many communities also have in-person counselors who can walk you through the process at no cost. If your application is denied, you have the right to appeal, either through the Marketplace or through your state Medicaid agency depending on where you live.