Medicaid is a joint federal-state health insurance program that covers Americans with limited income, and understanding what Medicaid is and how it works starts with one key fact: the federal government sets minimum standards, but each state runs its own program with different income limits, covered services, and application procedures. Roughly 69 million people were enrolled as of late 2025.1Medicaid.gov. November 2025 Medicaid and CHIP Enrollment Data Highlights Eligible groups include low-income adults, children, pregnant women, elderly adults, and people with disabilities.
Who Qualifies
Eligibility depends on your income, household size, and whether you fall into a covered group. The Affordable Care Act gave states the option to extend coverage to all adults under 65 earning up to 138% of the Federal Poverty Level. As of early 2026, 41 states and the District of Columbia have adopted that expansion.2MACPAC. Medicaid Expansion to the New Adult Group In the remaining states, non-disabled adults without children face much tighter eligibility rules and may not qualify at all.
How your income is measured depends on which group you fall into. For most applicants, including parents, children, pregnant women, and expansion adults, states use Modified Adjusted Gross Income (MAGI), which is based on your tax return and does not count assets like savings or your home. For elderly and disabled applicants, particularly those seeking long-term care coverage, states use older rules that look at both income and assets. In most states, the individual asset limit for long-term care Medicaid is $2,000, not counting your primary residence up to an equity cap that generally falls between $752,000 and $1,130,000. That distinction catches a lot of people off guard: someone who qualifies for regular Medicaid based on income alone may find themselves ineligible for nursing home coverage due to savings.
Automatic Eligibility Groups
Certain groups qualify without a standard income evaluation. Children receiving foster care assistance under Title IV-E are covered automatically, as are Supplemental Security Income (SSI) recipients in most states. Low-income Medicare beneficiaries who qualify for programs like the Qualified Medicare Beneficiary (QMB) program also receive automatic Medicaid enrollment for help with Medicare costs. Pregnant women and children generally have higher income thresholds than other adults.
Non-Citizen Eligibility
Medicaid is available to U.S. citizens and to “qualified non-citizens,” a category that includes lawful permanent residents, refugees, asylees, trafficking victims, and several other groups.3HealthCare.gov. Coverage for Lawfully Present Immigrants Most qualified non-citizens must wait five years after receiving their immigration status before they can enroll, but refugees, asylees, and certain other groups are exempt from that wait.4Medicaid.gov. Eligibility for Non-Citizens in Medicaid and CHIP States also have the option to remove the five-year wait for lawfully residing children and pregnant women. Undocumented immigrants are not eligible for full Medicaid, though federal law does allow payment for emergency medical services regardless of immigration status.
How to Apply
Each state runs its own application process, and most offer several ways to apply: online, by mail, in person at a local office, or by phone. In states that use the federal Health Insurance Marketplace, you can also start a Medicaid application through HealthCare.gov, which will route your information to the state agency.
You will need your Social Security number, proof of income (pay stubs, tax returns, or a letter from an employer), proof of residency such as a utility bill or lease, and documentation of citizenship or immigration status. If you are elderly or disabled and applying for long-term care coverage, your state may also require detailed information about your assets, including bank statements and property records.
Federal rules require states to process most applications within 45 days. Applications based on a disability determination get up to 90 days.5eCFR. 42 CFR Part 435 Subpart J – Eligibility in the States Pregnant women and people with urgent medical needs may receive expedited processing in some states.
Retroactive Coverage
One of Medicaid’s most valuable and least-known features is retroactive coverage. Federal law directs states to pay for medical bills you incurred during the three months before your application date, as long as you would have been eligible during that time and the services are covered by Medicaid.6Office of the Law Revision Counsel. 42 USC 1396a – State Plans for Medical Assistance If you went to the emergency room in January and didn’t apply until March, your January bill could still be covered. Some states have obtained federal waivers eliminating retroactive coverage for certain groups, though pregnant women and infants are typically protected from those waivers.
What Medicaid Covers
Federal law divides Medicaid benefits into mandatory services that every state must provide and optional services states can choose to add. The mandatory list is more extensive than most people realize, and because every state also offers prescription drug coverage (technically optional but universally adopted), Medicaid’s floor of benefits is fairly broad.7Medicaid.gov. Mandatory and Optional Medicaid Benefits
Every state covers:
- Inpatient hospital care, including room, nursing, diagnostic tests, surgery, and intensive care when medically necessary
- Outpatient hospital and physician services such as doctor visits, specialist consultations, routine screenings, and vaccinations
- Laboratory and X-ray services
- Nursing facility services for adults who need long-term institutional care
- Home health services, including nursing and aide services delivered in your home
- Family planning services and supplies
- Nurse-midwife and nurse practitioner services
- Transportation to medical appointments
- Medication-assisted treatment for opioid and substance use disorders
- Tobacco cessation counseling for pregnant women
Common optional benefits that most states provide include dental care, vision services, physical and occupational therapy, mental health counseling, and chiropractic care. Because optional benefits vary significantly, checking your state’s Medicaid website is the only reliable way to know exactly what is covered where you live.
Prescription Drug Coverage
Every state covers outpatient prescription drugs, even though federal law classifies this as an optional benefit.8Medicaid.gov. Prescription Drugs Because states participate in the federal Medicaid Drug Rebate Program, they must cover nearly all FDA-approved medications from participating manufacturers. In practice, this creates a broader formulary than most private plans offer. States do maintain preferred drug lists to control costs, so certain brand-name medications may require prior authorization or a switch to a generic first. Generic drugs are typically covered with minimal or no copayment, and states also cover prescribed over-the-counter items like prenatal vitamins and smoking cessation aids.
Children’s Benefits Under EPSDT
Children enrolled in Medicaid receive an especially broad set of benefits through Early and Periodic Screening, Diagnostic, and Treatment services, known as EPSDT. Under EPSDT, states must provide any medically necessary service that falls within any Medicaid-coverable category, even if the state does not normally cover that service for adults.9Medicaid.gov. EPSDT – A Guide for States: Coverage in the Medicaid Benefit for Children and Adolescents If a child needs speech therapy, specialized equipment, or mental health treatment that isn’t in the state plan for adults, the state still has to provide it. EPSDT also requires regular well-child screenings, dental checkups, hearing and vision tests, and developmental assessments at age-appropriate intervals.
Managed Care
More than three-quarters of Medicaid beneficiaries receive their care through managed care organizations rather than traditional fee-for-service Medicaid. Under managed care, you are assigned to or choose a health plan that contracts with the state, and you receive services through that plan’s network of providers. The covered benefits remain the same, but you will need to use in-network doctors and may need referrals for specialists. The plan itself handles prior authorizations and coordinates your care.
What You Will Pay Out of Pocket
Medicaid’s cost-sharing rules are far more protective than private insurance. Federal law caps total premiums and cost-sharing for a Medicaid household at 5% of family income.10eCFR. 42 CFR Part 447 Subpart A – Premiums and Cost Sharing For individuals with family income at or below 150% of the Federal Poverty Level, copayments for outpatient visits are capped at $4, inpatient stays at $75, and preferred prescription drugs at $4. Non-preferred drugs can cost up to $8. Many beneficiaries, particularly children, pregnant women, and people in institutional care, are exempt from cost-sharing entirely. States cannot deny services to someone who cannot afford a copayment.
Keeping Your Coverage
Medicaid eligibility is not permanent. States must review your eligibility at least once every 12 months through a process called redetermination.11Medicaid.gov. Medicaid and CHIP Renewals and Redeterminations The state will first try to verify your continued eligibility using data it already has, such as tax records and wage databases. If that information is enough, your coverage renews automatically and you receive a notice. If the state needs more information, it will send you a renewal form that you must complete and return within at least 30 days.
This is where most people lose coverage unnecessarily. If you miss the deadline or fail to return the form, the state will terminate your Medicaid. For most beneficiaries, if you submit the form within 90 days of termination, the state must reconsider your eligibility without requiring a new application.11Medicaid.gov. Medicaid and CHIP Renewals and Redeterminations You still face a gap in coverage during that period, so responding promptly to any mail from your state Medicaid office matters.
You are also expected to report changes in your income, household size, or address during the year. States have different reporting deadlines, typically 10 to 30 days after the change occurs.
If You Are Denied
When Medicaid denies your application, reduces your benefits, or refuses to cover a specific service, the state must send you a written notice explaining the reason and telling you how to appeal.12eCFR. 42 CFR 431.220 – When a Hearing Is Required Federal law guarantees your right to a fair hearing before an impartial officer who reviews the agency’s decision. The deadline to request a hearing ranges from 30 to 90 days depending on your state.13Medicaid.gov. Understanding Medicaid Fair Hearings
If you already have Medicaid and the state is cutting or ending a benefit, timing matters enormously. If you request a fair hearing before the effective date of the state’s action, the state must continue your current benefits until a final decision is issued.13Medicaid.gov. Understanding Medicaid Fair Hearings There may be as few as 10 days between the notice date and the effective date. If you wait until after the effective date, you lose that right to continued benefits in most states. One risk to know: if you keep your benefits during the appeal and ultimately lose, some states can require you to pay back the cost of services received while the appeal was pending. Medical records and a letter from your doctor explaining why a treatment is necessary are the strongest evidence you can bring to a hearing.
Long-Term Care Rules Are Different
Medicaid is the primary payer for nursing home care in the United States, and the financial rules for qualifying are significantly stricter than for regular Medicaid. If you or a family member may need long-term care, learning these rules early can save tens of thousands of dollars.
Asset Limits and Spend-Down
To qualify for Medicaid nursing home coverage, most states require that your countable assets fall below $2,000 for an individual, though some states set higher thresholds. Your primary residence is generally exempt as long as its equity is below your state’s limit, which ranges from roughly $752,000 to $1,130,000. If your assets exceed the limit, you must spend down the excess before you qualify. Legitimate spend-down uses include paying medical bills, making home modifications like wheelchair ramps, and prepaying funeral expenses. Keep documentation of every expenditure, because your state Medicaid office will review how you spent the money.
The Five-Year Look-Back Period
When you apply for long-term care Medicaid, the state reviews all asset transfers you made during the previous 60 months. If you gave away money or property for less than fair market value during that window, you face a penalty period during which Medicaid will not pay for your nursing home care.14CMS. Transfer of Assets in the Medicaid Program The length of the penalty depends on the value of what you transferred. Gifting $100,000 to a child three years before applying, for example, could leave you ineligible for months while still needing and owing for nursing home care.
Estate Recovery
After a Medicaid beneficiary who was 55 or older passes away, federal law requires the state to seek reimbursement from their estate for the cost of nursing home care, home and community-based services, and related hospital and drug costs.15Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries States have the option to expand recovery to any Medicaid services. In practice, this often means the state places a claim against the deceased person’s home. Recovery cannot happen while a surviving spouse is alive, or while a child under 21 or a blind or disabled child of any age lives in the home. Some states also offer hardship exemptions. Families frequently learn about estate recovery only after a loved one has died.16Medicaid.gov. Estate Recovery
How Medicaid Works with Medicare and CHIP
About 12 million Americans qualify for both Medicaid and Medicare, a status known as dual eligibility. For these beneficiaries, Medicare is the primary insurer and Medicaid fills in the gaps. Under the Qualified Medicare Beneficiary (QMB) program, Medicaid covers all Medicare Part A and Part B premiums, deductibles, and copayments, so QMB enrollees owe nothing out of pocket for Medicare-covered services.17CMS. Qualified Medicare Beneficiary Program Group Other levels of dual-eligible assistance cover Part B premiums only, or Part B premiums plus a small deductible benefit.18Medicare. Medicaid For prescription drugs, dual-eligible beneficiaries receive coverage through Medicare Part D, with automatic enrollment in the Low Income Subsidy that covers most drug costs.
For children in families that earn too much for Medicaid but not enough to afford private insurance, the Children’s Health Insurance Program (CHIP) picks up the gap. CHIP income limits vary by state, ranging from 170% to 400% of the Federal Poverty Level.19Medicaid.gov. CHIP Eligibility and Enrollment When you apply for Medicaid for your child and the income is above the Medicaid cutoff, most states will automatically evaluate whether the child qualifies for CHIP, so you do not need to file a separate application.
Some states also offer Medicaid waiver programs that provide services like personal care aides, adult day programs, and home modifications for people who would otherwise need to live in a nursing facility. Eligibility, available services, and wait times for these home and community-based waivers vary widely, and many programs maintain waiting lists. Contacting your state Medicaid office directly is the most reliable way to learn what is available where you live.