What is Medicaid?

Health insurance coverage is an important factor in not only staying healthy but for getting quality health care when needed. In 2019, 28.9 million nonelderly Americans didn’t have health coverage. Seventy-four percent of uninsured adults reported that the cost of coverage was too high and 73% of uninsured workers were not offered health benefits through their employer. Fortunately, Medicaid is a financial assistance program that helps certain groups of people who otherwise have a lack of access to affordable health coverage.

Understanding who is eligible for Medicaid and what it covers can be confusing. This is a general overview to help you understand the purpose of Medicaid, who can benefit from the program, and what it covers.

What is Medicaid?

Medicaid is a health insurance program funded jointly by the state and federal governments. It provides eligible citizens and certain qualified non-citizens with free or low-cost health coverage.

Originally passed into law in 1965, Medicaid has continued to evolve throughout the years to provide quality and affordable health care to additional groups of people. Today, Medicaid is the single largest source of health coverage in the nation, covering 75.9 million enrollees as of May of 2021—an increase of 11.9 million people since February of 2020.

What does Medicaid cover?

Federal law requires that states provide certain mandatory benefits under the Medicaid program, but allows each state to cover additional optional benefits if they choose. These mandatory Medicaid benefits that all states must cover include: 

• Inpatient and outpatient hospital services
• Physician services
• Early and periodic screening, diagnostic, and treatment services
• Nursing facility services
• Home health services
• Rural health clinic services
• Federally qualified health center services
• Laboratory and X-ray
• Family planning
• Nurse midwife care
• Freestanding birth center services
• Transportation to medical care
• Tobacco cessation counseling for pregnant women
• Certain behavioral and mental health services

Like any covered insurance benefit, these Medicaid benefits above are covered when indicated and appropriate, and may be subject to Medicaid managed care provisions, limits to the number of times you can utilize a service, etc.

Medicaid plays an important and unique role in ensuring that millions of adults and children get necessary health care, regardless of socioeconomic factors. It allows these disadvantaged populations to get the quality care they would otherwise be unable to afford or access through other means, making Medicaid an essential part of the nation’s healthcare system.

It’s important to note that only 71% of healthcare providers accept Medicaid. If you are on Medicaid and in need of any of the services listed above, make sure your provider accepts Medicaid.

What isn’t covered by Medicaid?

While there is a broad range of Medicaid benefits, some items aren’t covered. These include:

• Cosmetic surgery that is not medically necessary
• Missed appointments
• Most over-the-counter medications
• Dental care that is not considered medically necessary

Because coverage varies by state, some benefits are considered optional services. Each state has the opportunity to add coverage for these services, or not. Some optional Medicaid benefits include:

• Podiatry
• Eyecare and glasses
• Physical therapy
• Occupational therapy
• Chiropractic care
• Private duty nursing
• Prescription drugs
• Dental care for adults

Who is eligible for Medicaid?

At its inception, Medicaid was designed to provide health coverage to those receiving cash assistance as part of the welfare system. It has since expanded to cover additional groups of people, including: 

• Low-income adults, children, and families
• Qualified pregnant women and children
• People of all ages with blindness or disabilities
• People who need long-term care

The 2010 Affordable Care Act expanded Medicaid eligibility to all individuals younger than 65 with incomes below 133% of the Federal Poverty Level (FPL), as determined by their Modified Adjusted Gross Income (MAGI). MAGI determines an individual’s financial eligibility for medical assistance based on their taxable income and tax filing relationships. This change allowed many more low-income persons to be covered by the Medicaid program. 

There are, however, some individuals with different income eligibility requirements than those set for the Medicaid program. These include people with blindness, a disability, or those aged 65 and older. For these individuals, financial eligibility is determined based on Supplemental Security Income (SSI) budgeting methodology set by the Social Security Administration. 

While federal law defines the mandatory populations and financial thresholds to be covered by the Medicaid program, states have the flexibility to further expand on these eligibility requirements to include additional groups of people, including those considered “medically needy” and individuals with incomes above the mandatory coverage limits. This results in variations from state to state regarding who is eligible for Medicaid coverage. 

What Medicaid is not

While Medicaid does cover a broad range of services, it isn’t all-inclusive. There may still be costs associated with medical care that enrollees will be responsible for paying. There are also restrictions and networks of doctors you’ll be limited to. It’s important to understand the potential for these costs and restrictions and plan accordingly.

Additionally, Medicaid is not only for seniors or unemployed people. People with disabilities account for 15% of Medicaid beneficiaries and children account for 40%. In 2017, 54% of Medicaid beneficiaries were 20 years old or younger and only 7% were 65 or older, according to the Centers for Medicare & Medicaid Services.

Medicare vs. Medicaid

Medicaid provides healthcare coverage to low-income people based on state-determined eligibility. Medicare, on the other hand, is a federal health insurance program serving individuals aged 65 and over, as well as people younger than 65 with certain disabilities.

While Medicare and Medicaid eligibility requirements differ, there is overlap for some qualifying beneficiaries. Approximately 12 million people are dually eligible for Medicare and Medicaid, although, not everyone who is dually eligible is enrolled in Dual Eligible Special Needs Plans (D-SNPs).

Dual plans combine the benefits of Medicaid and Medicare to help individuals that qualify for both programs pay for their premiums or out-of-pocket medical expenses. Additionally, there are some benefits that Medicaid covers but Medicare does not, including dental care, optometry services, and nursing home care. 

What is CHIP?

The Children’s Health Insurance Program (CHIP) was passed in 1997 to provide health coverage to children of families that exceed the normal Medicaid financial eligibility requirements but are unable to afford private health coverage.

CHIP works closely with its state’s Medicaid program to provide low-cost health insurance to 6.9 million children as of May of 2021. While CHIP benefits do vary from state to state, all states provide at least the mandatory benefits, including:

• Routine check-ups  
• Immunizations
• Doctor visits
• Prescriptions 
• Vision and dental care
• Inpatient and outpatient hospital care
• Laboratory and X-ray services
• Emergency services

While some of these services are free, there may be copayments for others. Some states may also charge a monthly premium for coverage under the CHIP program. 

How to apply for Medicaid

There are two ways to apply for Medicaid. You can either apply through the Health Insurance Marketplace or your state’s Medicaid agency. Some people are also sometimes deemed automatically eligible, such as those on supplemental security income.

While initial enrollment for Medicaid and CHIP can be done year-round and people in managed Medicaid plans can change plans once per month, you should take into account the open enrollment period for certain non-Medicaid health insurance plans, especially for individuals who are near their state’s income eligibility threshold for Medicaid. 

Some people have other health plan coverage in addition to Medicaid. In most cases, the other health insurance is required to act as the “primary payer” and pay for the initial costs. Medicaid will then act as the “secondary payer” to help cover the remaining costs, although it may not cover the entire remaining amount.

If throughout the year your income exceeds your state’s Medicaid eligibility threshold or you lose Medicaid coverage for any other reason, you will qualify for a Special Enrollment Period. During the Special Enrollment Period, you will be able to enroll in a health insurance plan through the Affordable Care Act marketplace outside of the normal open enrollment window.  

How to save money on Medicaid-related costs

While Medicaid does provide many people with free health coverage, each state is given the flexibility to charge certain groups with low-cost deductibles, premiums, and copayments.

There are additional resources that can help you save money on Medicaid-related costs. Some of these resources include:

• WIC: Special nutrition services for pregnant women, new mothers, infants, and children up to age 5 provide families with the resources they need to help ensure a healthy start. WIC may help cover some medical-related costs like specialty formula, breastfeeding supplies, and various tests.
• Families USA: This non-profit agency makes it easy to find out if you could get help paying for your healthcare coverage, prescription drugs, dental care, and more. The program is free and personalized to your specific needs. There are also many other non-profit agencies and government agencies with similar resources.
• SingleCare: This online program offers discounts on medications. Compare pharmacy prices, get a free discount card, and save up to 80% on your medications at more than 35,000 nationwide pharmacies. SingleCare can help cover medication costs that Medicaid may not cover. Get your free prescription discount card here.

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