Understanding health insurance benefits for low-income individuals and familiesUpdated February 21, 2023
Medicaid is a national health program operated as a federal-state partnership to ensure that the most vulnerable residents of the United States have access to medical care when they need it. Founded in 1965 under the original Medicaid law, Medicaid now helps provide health coverage for one in five Americans. Medicaid standards are largely set at the federal level, while each state has the option to administer its respective program in the way it sees fit. This results in quite a bit of variability in program administration across the country.
9 Important Facts About Medicaid
- What Is Medicaid?
- What Does Medicaid Cover?
- Medicaid Expansion
- How to Qualify for Medicaid
- How to Apply for Medicaid
- How to Appeal If Denied
- Using Your Medicaid Card
- Medicaid vs Medicare
- Other Subsidized Health Insurance Programs
Medicaid aims to ensure that low-income households across America have access to reliable and affordable health care. As recently as 2018, Medicaid made access to health care possible for more than 73 million American residents. Since most Medicaid enrollees cannot afford private health coverage, the Medicaid program helps level the playing field, giving low-income individuals the benefit of health care that is comparable to those who have access to private insurance.
While navigating the intricacies of each state’s program can feel overwhelming, there are some facts about the program that are important to understand.
What Is Medicaid?
Medicaid plays an important role in the U.S. healthcare system, making it possible for low-income households to access reliable and affordable medical care. Medicaid is the primary source of long-term care coverage for most Americans and the program finances roughly one-fifth of all health care spending across the nation. Thanks to contributions from Medicaid, many essential health care professionals and services, such as nursing homes, community health centers, doctors, nurses, and hospitals, have the cash flow they need to operate successfully.
Medicaid is a federal program overseen by the Centers for Medicare and Medicaid Services (CMS), though the details of each state’s specific program are administered at the state level – much like other programs, such as food stamps. Medicaid is one of the nation’s most comprehensive federal-state partnerships.
What Does Medicaid Cover?
Depending on a state’s particular program and structure, Medicaid covers a wide variety of health care services, with a special focus on those considered the most basic and comprehensive. As stipulated under the Affordable Care Act, any Medicaid policy in any state must cover, at minimum, the following health care services:
- Physician services
- Certified pediatric and nurse practitioner services
- Hospital services – both inpatient and outpatient
- Home health care services
- EPSDT: Early and Periodic Screening, Diagnostic and Treatment Services
- Nursing facility services
- Federally qualified health center services
- Nurse midwife services
- Laboratory and X-ray services
- Family planning services
- Rural health clinic services
- Tobacco cessation counseling for pregnant women
- Freestanding birth center services (when licensed)
- Transportation to medical care
States have the option of covering additional optional services, which may include many of the following:
- Prescription drugs
- Optometry services
- Physical therapy
- Occupational therapy
- Private duty nursing services
- Clinic services
- Hospice services
- Respiratory care services
- Speech, hearing, and language disorder services
- Personal care
- Chiropractic services
- Dental care services
- Podiatry services
- Case management
- Services for individuals age 65 or older in an institution for mental disease
- Services for an intermediate care facility for individuals with intellectual disability
- State Plan Home and Community Based Services – 1915 (i)
- Self-directed Personal Assistance Services – 1915 (j)
- Community First Choice Option – 1915 (k)
- Tuberculosis-related services
- Inpatient psychiatric services for individuals under age 21
- Other services approved by the Secretary, including services furnished in a religious nonmedical health care institution, emergency hospital services by a non-Medicare certified hospital, and critical access hospital (CAH).
- Health Homes for Enrollees with Chronic Conditions – Section 1945
- Other practitioner services
- Other diagnostic, screening, and rehabilitative services
It’s not uncommon to see these services covered in various combinations, depending on a state’s particular program structure. Some services are not covered by Medicaid, including the following:
- Over-the-counter drugs, home remedies, food supplements, nutritional items, vitamins, or alcoholic beverages except for certain items which are prescribed by a doctor
- Broken or missed appointments
- Organ transplants without prior approval
- Computers, computer hookups, or printers, unless for assistive communication devices
- Procedures for implanting an embryo
- Cosmetic surgery
- Custodial care
- Health services that are not documented in the recipient's medical record
- Self-help devices, exercise equipment, protective outerwear, personal comfort items or services, and environmental control equipment
- Items or services which have been determined by the DHS Medical, Optometric or Dental consultant or the peer review organization to not be medically necessary
- Items or services provided by immediate relatives or members of the recipient's household
- Medical equipment and supplies for an individual in a nursing facility, swing bed, or ICF/MR
- Services for individuals over 21 and under 65 in the state hospital, a public institution, or an institution for mental disease
- Procedures and services to reverse sterilization
- Vocational training, educational activities, teaching, or counseling
- Record keeping, charting, or documentation related to providing a covered service
- Reports required solely for insurance or legal purposes
- Drugs and/or biologics that the federal government has classified as less than effective (Desi drugs)
- Services, procedures, or drugs which are considered experimental by the US Department of Health and Human Services or another federal agency
Under the Affordable Care Act, states were originally mandated to expand Medicaid eligibility to include any applicant that earned less than 138% of the Federal Poverty Level (FPL). However, that portion of the ACA was overturned by the Supreme Court in 2012, which gave states the freedom to choose their own expanded Medicaid coverage or exclude optional services altogether.
Whether your state has chosen to expand Medicaid coverage may determine whether you qualify for its Medicaid program. If your state features expanded Medicaid coverage, you will be able to qualify for Medicaid based solely on your household income. However, if your state has opted not to expand Medicaid coverage, eligibility requirements may include household income, disability, household size, and other factors which will vary from state to state.
As of 2021, the following states have declined Medicaid expansion.
- North Carolina
- South Carolina
- South Dakota
If your state is listed here, you should contact your local Medicaid office to find out more about how your state’s failure to expand Medicaid coverage affects your chances of qualifying for your state’s particular program.
It’s worth noting that in states opting to expand Medicaid coverage, the numbers show a dramatic decrease in both the number of adults and the number of children without health care coverage. Nearly 10 million Americans have gained health coverage under Medicaid expansion, which includes federal funding support. Additional research shows that Medicaid enrollees are much less likely than those without insurance to postpone necessary care because of the related costs.
How to Qualify for Medicaid
While specific eligibility requirements vary from state to state, there are some eligibility requirements set forth at the federal level. For example, federal law requires that certain vulnerable groups be eligible for Medicaid – these include qualified pregnant women, dependent children, low-income households, and anyone receiving Supplemental Security Income (SSI). These groups are classified as mandatory Medicaid eligibility groups under the ACA.
Each state has the option to institute Medicaid coverage for other groups, which often include children who are in foster care and patients who receive home-based and community-based services.
Some groups also can be classified as medically needy if they make too much money to qualify for Medicaid, yet need essential medical services and care. These individuals may be provided coverage but charged additional fees based on a percentage of earned income.
Successful applicants must also be residents of the state in which they are applying and be able to show either proof of citizenship or documentation of lawful U.S. residence if they are not U.S. citizens. Medicaid eligibility requirements can vary so widely from state to state, so it’s important to check with your local Medicaid office for details about your state’s program.
How to Apply for Medicaid
Although eligibility criteria can range widely depending on your state, the basic application process for the Medicaid program is roughly the same. You can apply online, in person, or by mail. If you don’t have Internet access or don’t want to apply online, you can call 877-267-2323 to request that a paper application be mailed to you.
A very helpful tool in this process is the healthcare.gov website, so start there first. You’ll be able to complete a quick screening questionnaire that will give you a good idea of whether you are likely to be approved for Medicaid benefits. Based on this outcome, the site will direct you toward the next steps for applying for your state’s program. You can usually do so on healthcare.gov. If your state has its own Medicaid portal, you will be directed to the right place to complete and submit a formal application.
To apply, you may need to access and/or provide copies of any of the following:
- Birth certificate for each member of your household
- Social Security card/number for each member of your household
- Bank statements
- Pay stubs or other employment documentation for all employed members of your household – this also may include 1099s, W-2s, or other wage/tax statements
- Tax bill for your home
- Other documentation as required by your state
It’s also important to note that with Medicaid, there is no official open enrollment period. You are welcome to apply for benefits at any time. Once you’ve submitted your application, you can expect to hear back with a decision between 45 and 90 days, depending on the complexity of your situation and documentation.
How to Appeal If Denied
Not every Medicaid application is immediately accepted. If reviewers determine that your application does not meet all Medicaid eligibility requirements for your state, you will receive a formal denial notice. Make sure to read it very carefully, because it will outline all the reasons that reviewers found your application ineligible.
It’s not uncommon for many Medicaid applications to be rejected simply because the application was incomplete. Others may be denied because the applicant legitimately does not qualify. You can always apply again for Medicaid benefits if your circumstances change in such a way as to support your claim.
If you disagree with the decision or can provide additional documentation, your denial notice will include instructions for filing an appeal. In most states, applicants have around 45 days to appeal a decision, but that timeline can vary between 30 to 90 days. Since appeal processes are different from state to state, this denial notice will be your best resource for knowing the appropriate steps you should take – and when. You can also reach out directly to your local Medicaid office to find out more about the appeal process in your state.
Some states may ask that you fill out a pre-existing form to begin your appeal, while others may request an original letter be mailed. In these cases, your letter will need to include your full legal name, contact information, a copy of your denial notice, and a detailed listing of your reasons for appealing.
Once your state’s Medicaid office has received your appeal request, you will be scheduled for a fair hearing. This is your chance to describe your situation and your reasons for appealing your denial. Some applicants may retain an attorney at this point for help during the appeals process.
Using Your Medicaid Card
Approved Medicaid enrollees will receive a Medicaid card in the mail. You should keep this in a safe place and use it exactly as you would use a private insurance card – it proves to health care providers that you have insurance to cover service-related costs. Just as with a private insurance card, you will need to present your Medicaid card any time you request medical services.
Your card generally will include your name, state, health plan, and Medicaid ID number. If your Medicaid card is lost, stolen, or damaged, you should contact your state Medicaid office immediately and request that they send you a new card. Treat a lost Medicaid card just like you would a lost debit or credit card.
Medicaid vs Medicare
Medicaid and Medicare are both federally-funded healthcare programs – but even though they sound alike, they serve very different constituents. While Medicaid exists primarily to provide health care support for America’s low-income populations, Medicare is designed to provide health benefits for Americans over age 65 through Social Security. Medicare also offers health coverage for some patients with End-Stage Renal Disease.
While Medicaid eligibility is primarily based on household income, Medicare is geared toward older Americans, or Americans with disabilities, regardless of income. Unlike Medicaid, which varies from state to state, Medicare is administered solely by the federal government and operates the same way in all U.S. states and territories.
Despite these differences, it is not uncommon for some individuals to meet eligibility requirements for both programs simultaneously. In these cases, they can enjoy dual eligibility and receive benefits from both programs. Individuals can be classified as either “full” or “partial” dual enrollees. Partial dual enrolled are typically fully eligible for Medicare coverage but only partially qualified for Medicaid coverage.
For dual-eligibility patients, Medicare typically covers the lion’s share of a patient’s medical expenses. Federal law stipulates that Medicaid always be the payer of last resort. In some cases, Medicaid can cover gaps in services that Medicare will not pay for.
Other Subsidized Health Insurance Programs
In addition to Medicaid, low-income individuals and families have access to other subsidized health insurance programs at both the state and federal levels.
Children's Health Insurance Program (CHIP)
CHIP provides state-level assistance to low-income households that earn too much to qualify for Medicaid benefits. The goal of CHIP is to ensure that children have access to the vital health care services they need to grow up healthy. Individual states are responsible for setting eligibility criteria and for administering their programs, so you’re likely to see differences from state to state.
However, all states provide basic comprehensive health coverage that includes all the services listed below:
- Routine check-ups/well-child visits
- Regular immunizations
- Doctor visits
- Prescription drugs
- Vision and dental care
- Inpatient and outpatient hospital care
- Laboratory and X-ray services
- Emergency services
Basic Health Programs
For those who don’t qualify for Medicaid assistance, affordable health coverage is still available through the Health Insurance Marketplace at healthcare.gov. Within the healthcare marketplace, you’ll find a wide variety of plans that offer different combinations of benefits. However, all plans sold through the marketplace must cover the following 10 essential health care services, as stipulated in the Affordable Care Act:
- Emergency health care services
- Outpatient care received without being admitted to a hospital – also known as ambulatory care
- Prenatal, maternity, postnatal and newborn care – birth control and breastfeeding coverage also are included
- Prescription drugs
- Hospitalization, including surgeries and any overnight stays
- Laboratory services
- Preventive care, including chronic disease management and wellness services
- Any rehabilitative services and/or devices that help people with injuries, disabilities or chronic conditions gain or recover mental and physical skills
- Mental health and substance abuse services, including behavioral health treatment, counseling, and psychotherapy
- Pediatric health care services, including dental and vision care
While these are the most essential health services, they may not meet all your medical needs. You may find plans with additional features and broader levels of health coverage within the healthcare marketplace, so make sure to carefully examine your options before choosing a plan.
Medicaid Health Coverage
Medicaid is an effective federal-state partnership that ensures America’s most vulnerable residents have access to essential health care services. Covering one in five Americans, Medicaid plays a vital role in American health care.
Medicaid covers nearly half of all births in any given state; 83% of medical care for low-income children; 48% of medical costs for children with special health care needs; and 45% of health care expenses for non-elderly adults with disabilities – including developmental disabilities such as autism, physical disabilities, traumatic brain injury, serious mental illness, and Alzheimer’s disease. Medicaid also covers the cost of long-term care for most residents of nursing homes.
If you think you may qualify for Medicaid assistance, act today to learn more about program guidelines in your state.