Medicaid—What Is It?
As a Registered Nurse and freelance medical writer, Elizabeth has been helping people navigate the complexities of their health insurance and the healthcare system for more than 25 years.
Updated June 28, 2015.
Definition of Medicaid
Medicaid is a social welfare program of government-provided health insurance for low-income people in the United States.
Medicaid and Medicare were both created by the Social Security Amendments of 1965 as part of President Lyndon B Johnson’s Great Society program.
Who Gets Medicaid?
Medicaid eligibility varies from state to state. Just because you qualify in one state, doesn’t mean you’ll qualify in another state. You must be a citizen of the United States or legally residing in the United States.
All states cover certain groups of people in order to receive federal Medicaid funds. These groups include children, pregnant women, parents of young children, the elderly, and the disabled.
States may choose to cover additional groups, but they don’t have to.
In addition to being part of an eligible group, you may have to meet income requirements to get Medicaid. Often, income requirements are based on federal poverty level. For example, states must offer Medicaid to children less than 6 years old with family incomes less than 133 percent of FPL. FPL changes each year. Find out what it is now .
In some cases, there may also be resource limits for eligibility. For example, a person could meet income guidelines because they don’t make very much money, but because they have more savings than is allowed by the resource guidelines, they’re not eligible for Medicaid.
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In many states, those receiving Supplemental Security Income. SSI, automatically qualify for Medicaid.
Learn more about Medicaid and who's eligible in your state .
Medicaid Eligibility and the Affordable Care Act
The Affordable Care Act expanded Medicaid eligibility making it easier for people to qualify. However, some states didn’t want to offer Medicaid coverage to more
people. The Supreme Court ruled that the federal government couldn’t force those states to expand their Medicaid coverage.
The result is that some states cover everyone with incomes below 138 percent of federal poverty level, and some states stick to the older, more complicated rules only covering people in certain eligible groups, like pregnant women and the disabled, meeting income and resource guidelines.
Find out if your state participates in the ACAs Medicaid expansion, or sticks with the old rules.
What Does Medicaid Cover?
Although Medicaid must cover certain basic healthcare services in all states, each state decides what additional things Medicaid will cover in that state. You can learn what benefits must be provided, and what benefits are optional here .
How Is Medicaid Funded?
Between 50 and 75 percent of each state’s Medicaid costs are paid by the federal government. Each state is responsible for coming up with the rest of the funding for its Medicaid program.
The percentage of Medicaid costs the federal government pays is called the Federal Medical Assistance Percentage. The FMAP varies from state to state based on the average income of state residents. States with high per capita incomes get a lower FMAP than states with low per capita incomes. The FMAP for each state is adjusted every three years and can be found here .
The federal government contributes more funds to states that comply with the ACA by expanding Medicaid coverage to everyone with an income less than 138 percent of FPL. For these states, the federal government initially covers 100% of the cost of Medicaid coverage for the people made eligible by the ACA’s Medicaid expansion. This percentage diminishes to 90% by 2020.
Who Runs Medicaid?
Each state administers its own Medicaid program following federal guidelines and with federal oversight from the Centers for Medicare and Medicaid Services. CMS is part of the Department of Health and Human Services .
Where can I get more information?Source: healthinsurance.about.com