An older adult man smiles at the camera with a younger woman doctor in the background.
Medicaid is a program that provides health care and long-term care coverage for low-income individuals. Learn more about Medicaid here. Photo Credit: iStock.com/fizkes

Medicaid is a jointly run federal and state program that ensures that low-income individuals can have access to necessary health care and long-term care. Medicaid is the largest payor for health care in the country and provides a wide range of preventive, critical, and supportive services to its enrollees, who might not otherwise be able to afford health care. This article explains what Medicaid is, including its key services, basic eligibility requirements, how it differs from Medicare, and how to apply.

What is Medicaid?

Medicaid is a program that covers the cost of comprehensive health services and, in most states,  additional community-based services to help individuals maintain a healthy life. Each state runs its own program but must comply with regulations set by the federal government’s Centers for Medicare and Medicaid Services (CMS). Funding comes from both federal and state governments. 

State health departments determine who is eligible to enroll, define the covered services, pay health care providers for those services, and monitor different aspects of the program to ensure compliance with state and federal rules. States use sophisticated eligibility and claims payment systems to complete all the functions needed to administer their programs.

Most states use managed care companies such as Blue Cross Blue Shield, Aetna, and UnitedHealthcare to deliver their services to the state’s Medicaid enrollees. This enables the enrollee to have a single point of contact for help with services and provides access to a wide array of providers participating in the plan. States that do not use managed care require their enrollees to independently seek out a Medicaid-enrolled health care provider, a method commonly referred to as fee-for-service (FFS). States may also use a combination of managed care and FFS to provide services.

Who is eligible for Medicaid?

Each state sets its own eligibility criteria, but individuals qualify for Medicaid based on their income, assets, and family size. The program prioritizes families and parents with children, pregnant people, low-income older adults, and people with disabilities. States that have expanded their Medicaid programs due to the Affordable Care Act allow incomes of up to 138% of the federal poverty level, which in 2024 is about $20,000 per year for a family of one or about $27,000 per year for a family of two.

Some people qualify for both Medicare and Medicaid and are referred to as dually eligible. These people are required to use their Medicare benefits before using Medicaid unless the service is only covered by Medicaid.

What does Medicaid cover?

All Medicaid programs must offer a basic slate of services to all people enrolled in the program. Some of the services include:

  • Physician services.
  • Nursing facility services.
  • Inpatient and outpatient hospital services.
  • Rural health clinic (RHC) and federally qualified health center (FQHC) services.
  • Laboratory and X-ray services.
  • Home health services.
  • Family nurse practitioner services.
  • Transportation to medical care.
  • Medication-assisted treatment (MAT) for people with substance use disorders.
  • Routine patient costs of items and services for people enrolled in qualifying clinical trials.

While not required, most state Medicaid programs cover many other vital services, such as:

  • Prescription drugs.
  • Private-duty nursing services.
  • Dental services and dentures.
  • Hospice.
  • Physical and occupational therapy.
  • Prosthetics.
  • Eyeglasses.
  • Personal care assistant services.
  • Home- and community-based services.
  • Services for individuals age 65 or older in facilities called institutions for mental disease (IMD).

In addition to the medical services listed above, Medicaid covers some long-term care services. These Medicaid-covered services are often provided in nursing homes. While assisted living facilities also offer long-term care, only some states allow Medicaid to be a payor for residents of assisted living communities. If a state does, it may leave the decision to each community. If someone may need Medicaid to help pay for care at a facility, it’s a good idea to talk with a representative from any long-term care community about whether they can use Medicaid to help pay for care there. 

Individuals must qualify for these services through various assessments and certifications. They must first be financially eligible for Medicaid and also undergo an assessment by a physician determining that they require a nursing home level of care before admission to a nursing home. 

Many states have Medicaid waiver programs, which allow individuals to receive Medicaid-covered long-term care services while living at home instead of in a facility. These services can include additional home care solutions to help you stay in your home or other residential community setting rather than having to move to an institutional facility to receive care. These services provide assistance with your activities of daily living, like bathing, dressing, and ambulating, as well as instrumental activities of daily living, such as meal preparation, chores, and shopping.

What is the difference between Medicaid and Medicare?

Medicare and Medicaid sound similar but are quite different. Medicare is a health care program administered by the federal government. It is for people 65 and over and some people with disabilities, end-stage renal disease, or ALS. Original Medicare consists of hospital insurance (Part A) and medical insurance (Part B), with additional options for drug coverage (Part D). Medicare Advantage, also known as Medicare Part C, bundles services covered under Part A, Part B, and usually Part D through privately sold health plans. These plans may include additional services not normally covered under original Medicare, like vision, hearing, and dental. 

In contrast, Medicaid is a state and federal health program primarily for individuals of any age with low incomes. Medicaid programs typically provide even more comprehensive health care options. Because Medicaid is managed and operated by individual states, they can design program features that go beyond basic health care services and may tailor those services to meet the unique needs of their citizens.

How do I apply for Medicaid?

You can apply for Medicaid through your state’s Medicaid agency. Most states use electronic application systems, but some still offer paper forms you can print from a website or pick up at a local state office and mail, fax, or email back to the state’s health department. You may be required to include documents such as identification and proof of income when applying. Visit HealthCare.gov to find a link to your state’s Medicaid application.