What is Medicaid?

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Medicaid Made Clear: What Medicaid is, who Medicaid serves & the history of Medicaid

What is Medicaid?

Medicaid is a federal and state program that provides health care coverage to qualified individuals. 

Medicaid programs are state-run. However, the federal government has rules and regulations under which all states must comply. The federal government also provides at least 50% of the funding for their Medicaid requirements.

Based on federal regulations, states create and run their own Medicaid program to best serve their residents who qualify. States may choose to provide more services than the federal government requires and they may also choose to provide coverage to larger groups of people.

Medicaid provides health care coverage for people who qualify, based on income and assets.

History of Medicaid

Medicaid began as part of the Social Security Act of 1965. The original law gave states the option of receiving federal funding to help provide health care coverage to children whose families have a low income, their caregiver relatives, people who are blind and people who are disabled. Throughout time, the federal government has strengthened the rules and requirements for states administering Medicaid. Through Medicaid expansion some states now extend coverage to other low-income adults.

Who does Medicaid serve?

  • Pregnant women with low income
  • Children of low income families
  • Children in foster care
  • People with disabilities
  • Seniors with low income
  • Parents or caregivers with low income

States may choose to expand eligibility to additional groups, like such as people with low income who may or may not have children

What is the Federal Poverty Level?

The Federal Poverty Level (FPL) accounts for the minimum amount of gross income that a family needs for food, clothing, transportation, shelter and other necessities. The calculation is used to determine eligibility in multiple federal assistance programs. It is recalculated every year.

Each group of people eligible for Medicaid must meet certain FPL eligibility thresholds. 

Introduction to Medicaid

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The Value of Medicaid Managed Care

The History of Medicaid

Medicaid began as part of the Social Security Act of 1965. The original law gave states the option of receiving federal funding to help provide health care coverage to children whose families have a low income, their caregiver relatives, people who are blind and people who are disabled. Throughout time, the federal government has strengthened and expanded the rules and requirements for states administering Medicaid. Through Medicaid expansion some states now extend coverage to other low-income adults.

  • 1965

    Medicaid is established and provides states with the option of receiving federal funding for providing health care services to certain groups.

  • 1967

    Early, Periodic Screening, Diagnosis, and Treatement (EPSDT) comprehensive health services benefit is established for all children receiving Medicaid. 

  • 1972

    Medicaid eligibility for the elderly and people with disabilities was linked to the eligibility for the newly enacted Federal Supplement Security Income (SSI) program.

  • 1981

    Home- and Community- Based Services (HCBS) waivers were established.

  • 1986

    Medicaid coverage for pregnant women and infants (up to 1 year of age) up to 100% of the Federal Poverty Level (FPL) was established as a state option. 

  • 1989

    Medicaid coverage of pregnant women and children (under age 6) up to 133% of the Federal Poverty Level was mandated; expanded EPSDT requirements were established. 

  • 1990

    Federal Medicaid rules required coverage for children ages 6-8 in families under 100% of the FPL. The rules also created the prescription drug rebate program. 

  • 1996

    Temporay Assistance to Needy Families (TANF) replaced a program that linked Medicaid enrollment/termination with the receipt of Welfare cash assistance. 

  • 1997

    The Balance Budget Act of 1997 created the State Children's Health Insurance Program (SCHIP).

  • 1999

    The Ticket to Work Incentives Improvements Act allowed states to cover working people with disabilities up to 250% FPL and charge income-based premiums. 

  • 1999

    The Supreme Court ruled on a case that established expanded civil rights for people with disabilities. They determined that people with disabilities have a qualified right to receive state funded supports and services in the community rather than in nursing homes or other formal settings. 

  • 2010

    The Affordable Care Act was signed, providing states with the option to expand Medicaid to adults who earn up to 138% of the FPL.

  • 2019

    As of February, 2019, 72,232,316 individuals are currently enrolled in Medicaid and CHIP. 

Defining Medicaid Language

Medicaid Definitions 
HCBS Home- and Community-Based Services that are delivered in an individual's home or a community setting like an assisted living facility. 
Low-income 138 percent of Federal poverty level.
Insitutional/Formal setting Things like a nursing home or an intermediate care facility for people with intellectual disabilities.
ABD This is a group that may be eligible for both Medicare and Medicaid. ABD stands for aged, blind, and disabled.
TANF TANF is a federal governement program that is delivered on the state level. Each state receives a lump sum of money that may be used to support single parents of dependent children on a time-limited basis. Each state's eligibility and program work differently.
LTSS Long-term services and supports are provided for Medicaid beneficiaries living with a chronic illness or a person with a disability. 
Waivers States may decide to waive Medicaid regulations to serve certain populations with certain services. 
Examples include providing services to people with intellectual or developmental disabilities, traumatic brain injuries, or serious emotional disturbances. 

For a full list of Medicaid-related terms visit our Medicaid Glossary

Medicaid Facts

Did you know?

When it comes to Medicaid, there is a lot of misinformation and misunderstanding out there. Medicaid provides health insurance coverage to people who may be experiencing low incomes, people with disabilities, and people who are older. Here are some facts about Medicaid.

Medicaid improves the health of children.          

Nearly 67 percent of children under the age of five and covered by Medicaid get a yearly well-child appointment.

Well-child visits are important for the overall health of a child. In addition to providing recommended immunizations to prevent illness, these appointments assess a child’s development. This includes tracking growth, developmental milestones, social behaviors and more.

Kids covered by Medicaid get the care they need and also experience long-term health and economic gains as adults, including better health status, higher educational attainment and higher earnings.

48% of children enrolled in Medicaid had a preventive dental exam in the last year.

Early and routine checkups help prevent cavities and tooth decay which can lead to problems with eating, speaking, playing and even learning.


Medicaid helps pregnant moms give birth to healthy babies.

Medicaid covers 43% of births in the United States.

Pregnant women in the United States continue to experience adverse maternal and birth outcomes. In fact, the rate of preterm births continues to rise and has now reached one in every ten. Low birthweight is also on the rise. Infants born preterm or low birthweight are at an increased risk for experiencing physical disabilities and developmental impairments throughout their lives.

The average cost of medical care for a baby born without complications is $4,550 in the first year.

The average cost of medical care for a premature or low birthweight baby is $49,000 in the first year.

Medicaid supports healthy pregnancies, offering health care and support before, during and after pregnancy for better outcomes.

Source: America’s Health Rankings, 2018 Report

Medicaid provides a short-term safety net for those who are struggling financially.

Of able-bodied adults who are covered by Medicaid expansion, 62% are already working or in school & 12% are looking for work.

Access to health insurance, including Medicaid, directly contributed to cutting poverty by almost one quarter.

The majority of people receiving Medicaid are enrolled in the program for less than 2 years.

Source: Health Affairs, “Estimating the Effect of Health Insurance and Other Social Programs on Poverty Under the Affordable Care Act.”


Medicaid is widely supported.

Polling suggests that Medicaid has broad support across political parties.


What is the difference between Medicaid and Medicare?


  • Provides health insurance to low-income children and some parents, seniors and individuals with disabilities
  • Provides medical care and long-term care coverage
  • Has eligibility rules based on income and categorical criteria
  • Receives state and federal funding
  • Administered on a state level, within federal guidelines



  • Provides health insurance for seniors aged 65 years and older, and for some people with disabilities
  • Provides medical care coverage, but very limited long-term care coverage
  • Has no income limit
  • Receives federal funding collected by payroll deduction 
  • Administered on a federal level 

Dually Eligible

  • Provides health insurance for seniors aged 65 years and older and people with disabilities
  • Provides medical care coverage through Medicare and long-term care coverage through Medicaid
  • Must meet state-set income eligibility standards
  • Funded by both the state and federal government
  • Administered on state level, within federal guidelines
  • Medicaid is considered payer of last resort

Medicaid Eligibility

While Medicaid eligibility is income-based, some people may qualify for Medicaid based on age, availability of financial resources or healthcare needs.

There are five main criteria of Medicaid eligibility:

  • Categorical eligibility  children, parents or caregivers with children, people with disabilities and seniors.
  • Income eligibility — each eligibility category has a different income threshold.
  • Resource eligibility — people with disabilities and seniors with limited income and savings.
  • Immigration status — you must be a legal resident of the U.S. to receive Medicaid benefits.
  • Residency — you must have established residency in the state where you are requesting Medicaid benefits.

Two main groups that are eligible for Medicaid

Healthy, but with low incomes: 

  • Childen
  • Pregnant women
  • Some seniors

People with disabilities or chronic conditions & have low incomes: 

  • People with disabilities
  • Some seniors

What is the Federal Poverty Level?

The Federal Poverty Level (FPL) accounts for the minimum amount of gross income that a family needs for food, clothing, transportation, shelter and other necessities. The calculation is used to determine eligibility in multiple federal assistance programs. It is recalculated every year.

2020 Federal Poverty Guidelines for the contiguous 48 states

People in Household Poverty Guideline
1 $12,760
2 $17,240
3 $21,720
4 $26,200
5 $30,680
6 $35,160
7 $39,640
8 $44,120
For families/households with more than 8 persons, add $4,480 for each additional person.

Each group of people eligible for Medicaid must meet certain FPL eligibility thresholds.

  • Children between 6 and 18 are eligible for Medicaid if their family makes less than 138% of the FPL. If there are three people living in their house the total yearly income would have to be less than $29,974 to qualify for Medicaid.
  • Pregnant women are eligible for Medicaid if their family makes less than 138% of the FPL. If the pregnant woman already had a child, her household size would be 2 people and she would need to make less than $23,791 per year to qualify for Medicaid.
  • Low-income working adults with no children are eligible for Medicaid if their state has expanded eligibility under the Affordable Care Act. In most states, these low-income adults need to make less than 138% FPL or $17,226 per year if they are the only person in their household. 

Source:  https://aspe.hhs.gov/poverty-guidelines

Examples of Medicaid Eligibility

Medicaid – Children of low-income families

JJ is 10 years old and lives in Louisiana with his father and 8-year-old brother. This means there are three people in his household. His mother recently died after battling cancer. His dad is employed as a maintenance worker for a local property management company.

JJ’s dad earns $26,635/year.

JJ and his brother are covered under Medicaid because his dad earns less than $30,288/year.

Pregnant Woman

Tanya is a recently single mother with one child who lives in Texas. She is pregnant and works full-time as a restaurant hostess making the federal minimum wage of $7.25 per hour. She works full-time and earns just over $15,000 a year. Because she has a child, her household size is 2 people.

Her child qualifies for Medicaid because she earns less than 138% of the Federal Poverty Level or $25,365 per year for a 2 person household.

At this time Tanya also receives Temporary Assistance for Needy Families (TANF). TANF is a time-limited benefit program that helps parents or caregivers. Each state determines what benefits are available for those who qualify. In Texas, Tanya can receive a cash benefit to help with things like housing and childcare.

Since Tanya needs to earn less than $33,820 per year to qualify for Medicaid as a pregnant woman, she is also currently covered. However, once her child is born she will not qualify for Medicaid as a caregiver parent in Texas since she makes more than  $3,626 per year, or 17% of the Federal Poverty Level with a household size of 3, and will no longer have health care coverage. Each state sets the Medicaid eligibility level for parents and caregivers of children and that level is approved by the federal government.

If Tanya’s state expanded Medicaid, she would qualify for Medicaid after giving birth since she makes less than $29,435 per year with a 3 person household.

Medicaid Expansion

After working as an administrative assistant at the same company for more than 25 years, Lisa was part of a large lay off due to downsizing. She is currently working at a local grocery store while she is looking for another office position.

She earns the federal minimum wage of $7.25 per hour. She works an average of 35 hours a week, earning just over $1,000 a month.

Lisa qualifies for Medicaid after her state expanded Medicaid eligibility to low-income working adults and she makes less than $17,236 per year.

Example of person needing help with ADLs

Susan is an 80-year-old woman who was living on her own until she fell and broke a hip. Her doctor determined that she should move to a nursing home to recover from surgery. Susan was already on Medicaid due to her low income and small amount of assets and on Medicare because she is over 65 years old.

After recovering from her hip fracture, she was assessed to determine if she needed help with activities of daily living (ADLs). The assessment showed that she needed help dressing, walking from one place to another, using the bathroom and showering. She also needed help remembering to take her medications and eat three meals a day.

Based on the ADL assessment, Susan’s doctors and family agreed that she could no longer live at home and would need to be moved into a nursing facility for her safety.

Dually Eligible

Rebecca is a 35-year-old woman who survived a serious car accident as a child, leaving her with physical and cognitive disabilities. Despite her disabilities, including the requirement to use a wheelchair, Rebecca lives independently with the help of Supplemental Security Income (SSI).

Rebecca has a part-time job at a local manufacturing facility. She earns $13 per hour, equaling roughly $15,600 a year.

Rebecca is a Dual Eligible because she qualifies for coverage under both Medicare and Medicaid. She qualifies for Medicare because she’s permanently disabled and receives disability benefits. She qualifies for Medicaid because she earns less than $4,249 per month.

Gary's Story

Gary Sullivan was a highly driven professional - until his muscular dystrophy prevented him from continuing to work. Find out how Medicaid acts as a safety net for individuals experiencing unexpected life changes. 

Donald's Story 

Medicaid supports individuals like Donald Boone who need long-term support, including those who have an intellectual or developmental disability (I/DD).  Through home- and community-based services, these individuals can gain independence and improve their health outcomes. This not only helps them stay out of care facilities, but it helps them live fuller lives.

This video explores how The Employment & Community First CHOICES program in Tennessee helps individuals with I/DD live more independently. With services to help them find, train for and keep a job, the program helps participants stay healthier, learn new skills, meet new people and build self-confidence through working.

Jennifer's Story 

For members like Jennifer, who was born with spinal muscular atrophy, health care is a daily necessity. But as a college math teacher and advocate for individuals with intellectual and developmental disabilities (I/DD), Jennifer requires care that is both tailored to her needs and her lifestyle. Through integrated care, Jennifer has a team to support her health needs, including a designated case manager and a streamlined process for requesting transportation to appointments. See how care integration has helped keep her out of the emergency room and nursing home settings and made daily independence possible. 

Medicaid Coverage & Benefits

The federal government requires that states provide certain mandatory medical benefits to people who are eligible for Medicaid. States can choose to provide additional, optional benefits.

  • Hospital visits and stay
  • Doctors’ office visits
  • Prenatal care and delivery
  • Nursing home services
  • Home health services
  • Early childhood screening which includes, vision and hearing testing, as well as a comprehensive physical exam, developmental history, appropriate immunizations, laboratory tests, dental care, and health education.
  • Emergency medical transportation

Children's Health Insurance Program (CHIP)

What is CHIP?

CHIP, which stands for Children’s Health Insurance Program, provides low-cost insurance for children whose families do not meet the income eligibility requirements for Medicaid. CHIP may also provide coverage for pregnant women in some states, but does not cover adults caring for children that qualify for CHIP. CHIP is jointly funded by the state and federal government.

CHIP is required to provide some services, but states may decide to cover more services. For example, all well-child doctor and dental visits are free of charge. There may be copayments for other services and some states charge a monthly premium that will never exceed 5% of the family’s total monthly income. Eligibility requirements vary by state.

All CHIP plans cover:

  • Routine check-ups
  • Immunizations
  • Doctor visits
  • Prescriptions
  • Dental and eye care
  • Inpatient and outpatient hospital care
  • Laboratory and x-ray services
  • Emergency services

Early, Periodic, Screening, Diagnosis and Treatment (EPSDT)

What is EPSDT?

Early, Periodic, Screening, Diagnosis and Treatment is a benefit provided by Medicaid to all individuals enrolled in Medicaid under the age of 21. These services are comprehensive and intended to find and prevent health issues.

Services covered include:

  • Screening services
  • Health and developmental history
  • Physical exam
  • Immunizations
  • Laboratory tests
  • Health education
  • Dental
  • Hearing
  • Diagnostic services, if identified by a screening examination
  • Treatment for any identified physical and mental illnesses or conditions

Activities of Daily Living (ADLs) and Instrumental Activies of Daily Living (IADLs)

ADLs and IADLs are terms used for the different levels of support an individual needs to remain in their home and active in the community.


People who need help with Activities of Daily Living (ADL) are individuals who need long-term services and supports to help them maintain a healthy life.

ADLs Include:

  • Personal hygiene
  • Using the bathroom
  • Dressing
  • Feeding themselves
  • Walking or moving from one place to another


People who need help with Instrumental Activities of Daily Living (IADL) are individuals who need long-term supports to help them remain independent and in their home or community setting. They may also be referred to as the ABD population – Aged, People who are Blind, or People with Disabilities.

IADLs Include:

  • Grocery shopping
  • Medication reminders
  • Housekeeping
  • Transportation

Long-Term Services and Supports (LTSS)

LTSS, which stands for Long-term Services and Supports, are the services and support to help people living with a disability or chronic illness with their daily living needs so they are able to remain active in the community. Medicaid covers these services based on the needs of each person. Services can be delivered through home- and community-based services, a nursing home or other similar settings.

An assessment is required by each state to determine which Activities of Daily Living (ADLs) individuals need assistance with. This assessment may be done by a state worker or by a qualified individual that is contracted by the state. Once the assessment is completed, an appropriate setting for care is determined by the assessment and then chosen by the individual and any health care decision makers in their life.

A separate assessment may also be done to determine a person’s ability to complete Instrumental Activities of Daily Living (IADLs). After this assessment is completed, an individual would then select and hire a personal care attendant or company to help them complete these tasks in a home- or community- based setting.

Home- and Community-Based Services (HCBS)

What is HCBS?

Home- and Community-Based Services (HCBS) are services provided to Medicaid beneficiaries in their own homes or communities. These programs serve a variety of targeted population groups, including people with intellectual or developmental disabilities, physical disabilities and/or mental illness. They are designed to help people live on their own rather than in a costly facility.

HCBS services include:

  • Personal care like showering
  • Transportation services
  • Skilled nursing care
  • Occupational, speech and physical therapy
  • Dietary management
  • Home-delivered meals
  • Home chores


Who delivers HCBS?

Some Home- and Community-Based Services (HCBS) services like skilled nursing care and occupational, physical or speech therapy are delivered by qualified and, in some cases, licensed professionals.

Other services that are offered to keep people in their homes or communities are delivered by family members or other people who already provide support to an individual. These may include completing chores around the house and making meals. If an individual does not have family that is able to provide these services, a paid caregiver can also help an individual with these tasks.


What are Waivers?

States may waive certain rules of Medicaid to cover specific populations with specific services. These are called Medicaid Waivers.

Examples of Medicaid Waiver coverage:

  • Intellectual and Developmental Disabilities
  • Mental Health
  • Traumatic Brain Injuries
  • Substance Use Disorders

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