What is 'Medicaid'

Medicaid is a healthcare program that assists low-income families or individuals in paying for long-term medical and custodial care costs. Medicaid is a joint program, funded primarily by the federal government and run at the state level, where coverage may vary.

Medicaid is available only to individuals and families who meet specified criteria. Recipients must be legal permanent residents or citizens of the United States and may include adults with low income, their dependents, and people with specified disabilities.


Medicaid is a government-sponsored insurance program for individuals of any age whose resources and income are insufficient to cover healthcare. In the United States, it is the largest source of funding for health-related services for low-income people. Funded jointly by state and federal governments, but mainly by the latter, Medicaid is managed at the state level. The program was authorized by the Title XIX of the Social Security Act, which also created Medicare. The bill was signed into law in 1965 by President Lyndon B. Johnson.

Every state has significant leeway in determining who is eligible for the program, as well as the right not to participate in the program. In early January, Reuters reported that the Trump administration is allowing U.S. states to move toward "imposing work or job training requirements on people as a condition for obtaining health insurance under the Medicaid government program for the poor." These requirements have not been imposed before. 

It is possible to determine eligibility for Medicaid in one of two ways. One way is to fill out an online application through the Health Insurance Marketplace website. An alternative way to apply is directly through one's state’s Medicaid agency, with contact information available through Healthcare.gov.

Once a person is deemed eligible for Medicaid, he or she may receive free healthcare and related services from any medical provider that accepts the program.

Medicaid & the Patient Protection and Affordable Care Act (PPACA)

Most often referred to as the Affordable Care Act (ACA) and colloquially deemed “Obamacare,” this statute was signed into law by President Barack Obama in 2010. The law states that all legal residents and citizens of the United States with incomes up to 133% of the poverty line qualify for coverage in Medicaid-participating states. While the law has worked to expand both federal funding and eligibility for Medicaid, the U.S. Supreme Court ruled that states are not required to participate in the expansion in order to continue receiving already established levels of Medicaid funding.

Table depicting the 2017 Status of State-by-State Decisions on Medicaid Expansion

As of November 2017, according to the Henry J. Kaiser Family Foundation, the District of Columbia and 33 states had expanded Medicaid. They are: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and West Virginia.

The remaining 18 states, as of 2017, have chosen not to participate in the Medicaid expansion.

  1. State Medicaid Program

    Health initiatives managed by state governments in conjunction ...
  2. U.S. Centers for Medicare and Medicaid ...

    The U.S. Centers for Medicare and Medicaid Services (CMS) administers ...
  3. Children’s Health Insurance Program ...

    A medical coverage source for individuals under age 19 whose ...
  4. Custodial Care

    Custodial care is non-medical care recommended by a medical professional ...
  5. Elder Law

    Elder law is a legal specialty focusing on the rights and needs ...
  6. Special Needs Trust

    A legal arrangement and fiduciary relationship that allows a ...
Related Articles
  1. Managing Wealth

    Medicaid and Nursing Homes: A Quick Guide to the Rules

    Medicaid can cover the costs of a long-term healthcare facility, if you qualify. But that's a big if.
  2. Financial Advisor

    Qualifying for Medicaid: How to Better Your Chance

    Getting started on Medicaid can be very difficult, so here are four steps that should increase your chances of getting accepted into the program.
  3. Retirement

    Top 5 Strategies To Pay For Elder Care

    The cost of a nursing home, assisted living facility or home care can be ruinous. Try these routes to help seniors qualify for Medicaid and pay the bills.
  4. Insurance

    What If Obamacare Is Repealed?

    During the campaign, Donald Trump promised to repeal Obamacare. If, as president, he follows through, how will that affect Americans?
  5. Investing

    Protect Your Home From Medicaid Liens

    Plan ahead for long-term care needs to protect your home and your estate.
  6. Insurance

    Tips for Finding Affordable Health Insurance

    One of the easiest ways to save money is to compare health plans sold on an exchange and those sold directly through an insurer.
  7. Financial Advisor

    Considerations For Long-Term Care Coverage

    Medical and financial health determine whether long-term care insurance will pay off.
  8. Insurance

    Cutting Your Cost for Marketplace Health Insurance

    Here's how you may be able to lower your costs for health insurance coverage in 2016 though the Health Insurance Markerplace.
  9. Financial Advisor

    How Much Medicaid and Medicare Cost Americans

    Medicaid & Medicare cost Americans plenty out of their paychecks. But how much, really? And what does that money buy?
Hot Definitions
  1. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  2. Entrepreneur

    An Entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture. ...
  3. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  4. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  5. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  6. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
Trading Center