People eligible for Medicaid coverage have historically included low-income children and their parents, pregnant women, people with disabilities, and people age 65 and older. Under the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended), other low-income adults may get coverage depending upon state policy. Minimum income and other eligibility criteria are set by the federal government, and states may opt to cover additional people beyond these federal minimums.
Some individuals who are eligible for Medicaid as a result of their low incomes—and in some cases, high medical expenses—may have other coverage, such as Medicare (among individuals age 65 and older and certain people with disabilities) or private insurance (for example, from a child’s non-custodial parent). In these cases, Medicaid is generally the payer of last resort. That is, the other insurance pays for the expenses it covers and then Medicaid wraps around to provide additional services that are covered by Medicaid but not the primary insurance. Medicaid also pays for certain cost sharing amounts charged to enrollees by their primary insurance. (See the benefits page in this section for discussion of Medicaid’s own cost sharing policies.) This is particularly important for the 20 percent of Medicare beneficiaries who are also enrolled in Medicaid.
At the time of enactment, states that chose to participate in Medicaid were required to provide coverage to all categorically needy individuals who received cash payments under federal assistance programs for the aged, blind, and disabled, and families with dependent children. Each federal assistance program was administered by the states, which often set their income eligibility levels below the federal poverty level (FPL). In addition to covering these mandatory categorically needy individuals under Medicaid, states could choose to cover optional groups of medically needy individuals—those who fell within one of the federal assistance categories (aged, blind, disabled, and families with dependent children) but whose higher incomes made them ineligible for cash assistance and whose medical expenses would be deducted when determining countable income for eligibility purposes.
Until the mid-1980s, eligibility for Medicaid continued to be closely linked to the receipt of cash payments under Aid to Families with Dependent Children (AFDC) programs and Supplemental Security Income (SSI).1 Between 1984 and 1990, however, Congress made a number of changes that expanded Medicaid for pregnant women and children. It created new mandatory and optional eligibility groups for them that were based on income relative to FPL, rather than receipt of cash payments under AFDC. This shift was significant because the FPL exceeded most state eligibility standards for AFDC; in addition, it is increased annually to account for inflation. Mandatory and optional eligibility was also extended to additional low-income individuals age 65 and older, people with disabilities, and families transitioning from welfare to work, among others.
Medicaid also saw changes under the welfare reform law of 1996, which severed the link between Medicaid and cash assistance for families with children. Today, Medicaid eligibility minimums for these families are based on specified income levels—generally equivalent to those that were in effect for AFDC as of July 16, 1996—rather than receipt of benefits under the Temporary Assistance for Needy Families program that replaced AFDC. Other major changes in Medicaid eligibility to date have included creation of the State Children’s Health Insurance Program (CHIP) in 1997 (which has been implemented as a Medicaid expansion in many states) and the expansion of Medicaid eligibility for non-elderly adults under the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended).
Medicaid eligibility today
Medicaid eligibility groups are typically defined by the populations they cover and the financial criteria that apply. Some eligibility groups are mandated by federal law and others may be covered at state option. (Click for state-level detail on income thresholds for major eligibility groups: children and pregnant women; non-aged, non-disabled, and non-pregnant adults; and those age 65 and over and people with disabilities.)
Some people, including most individuals who receive SSI and children who are in foster care, qualify for Medicaid automatically by virtue of their participation in those programs.2 Others must meet financial criteria that vary both by group and among states. For example, pregnant women with incomes at or below 138 percent FPL—or higher in some states—are a mandatory eligibility group.3 However, many states opt to cover additional pregnant women with incomes above mandatory levels.
As noted above, the ACA extended eligibility to adults under age 65 with incomes at or below 138 percent FPL ($16,394 for a single person in 2016) who are not pregnant and do not have Medicare coverage.4 Although technically this is now a mandatory eligibility group, the U.S. Supreme Court ruling in June 2012 effectively made it a state option, and a number of states have not expanded coverage to these individuals.
Beyond creating a new eligibility group for non-elderly adults with incomes up to 138 percent FPL, the ACA made a number of other significant changes to Medicaid eligibility. For all groups, the ACA included a maintenance-of-effort (MOE) provision that prevented states from reducing eligibility below what was in place on the date of its enactment on March 23, 2010. The provision was in effect until 2014 for adults, but continues through FY 2019 for children, regardless of a group’s mandatory or optional status.
Additionally, under the ACA, income eligibility for many individuals, primarily those who are under age 65 and not eligible on the basis of a disability or a need for LTSS, is now based on modified adjusted gross income (MAGI). The goal of the new income counting rules is to coordinate determinations of eligibility with the subsidies for health insurance coverage provided through the exchanges created by the ACA. No asset test applies to individuals whose income eligibility is based on MAGI. However, states may still require an individual’s assets to be below a certain level in order to qualify for Medicaid on the basis of a disability or being 65 or older. The treatment of both income and assets can be complex for individuals in need of LTSS (Walker and Accius 2010). For example, to reduce the amount paid by Medicaid, people receiving LTSS may be required to make a contribution toward the cost of their care that varies by eligibility pathway, community versus institutional status, and presence of a spouse living at home.
In addition to these financial criteria, individuals must meet other requirements in order to qualify for Medicaid. For example, they must be citizens or nationals of the United States or qualified aliens in order to receive the full range of benefits offered under the program.5 Non-qualified aliens (as well as qualified aliens subject to a five-year bar on full benefits) who meet income and all other eligibility criteria for the program can only receive limited emergency Medicaid coverage.7 In addition, individuals in need of LTSS may be required to meet functional eligibility criteria that demonstrate difficulty performing activities necessary for self-care and independent living.
See MACStats for dollar amounts that reflect various FPL percentage for different family sizes, as well as for Alaska and Hawaii, whose FPLs differ.
1SSI was enacted in 1972 to replace federal assistance programs for the aged, blind, and disabled that had previously been administered by the states.
2209(b) states (referencing a section of the Social Security Act) may use criteria that differ from SSI when determining Medicaid eligibility.
3The Omnibus Budget Reconciliation Act of 1989 (P.L. 101-239) set a generally applicable mandatory income eligibility level of 133 percent FPL for pregnant women and infants. However, at the time of enactment,19 states had already opted to cover them at higher levels—which ranged from 150 percent FPL to 185 percent FPL—and their mandatory levels were set at these higher amounts.
4The statute specifies 133 percent FPL, but also requires a disregard equal to 5 percent FPL, for an effective income level of 138 percent FPL.
5U.S. nationals are individuals born in certain American territorial possessions. The term qualified alien was created by the welfare reform law of 1996 (P.L. 104-193). Examples include legal permanent residents, refugees, and asylees. Legal permanent resents entering after August 22, 1996, are generally barred from receiving full Medicaid benefits for five years, after which coverage becomes a state option. However, children and pregnant women who are lawfully present may be covered during the five-year ban at state option.
6Examples of non-qualified aliens include those who are unauthorized or illegally present, as well as students and other nonimmigrants who are admitted for a temporary purpose.