What is Medicaid? (Everything You Need to Know in 2025)

What is Medicaid? Medicaid programs provide essential healthcare coverage to people who otherwise couldn’t afford it. It’s available to Americans of all ages, and nearly half of all Medicaid beneficiaries are children. 

Medicaid pays for doctor’s visits, hospital stays, prescriptions, and vaccines. Your income must be at or below 133% of the federal poverty level (FPL), but each state has different parameters. You may still be eligible where you live, so don’t hesitate to apply.

Unsure what Medicare covers? Call (855) 634-0435 now to connect with a licensed insurance agent who can explain your options clearly.

Keep reading to understand how to qualify for Medicaid coverage and how to sign up for Medicare. Compare health insurance plans today with our free tool above.

How Medicaid Works

Medicaid insurance is a government-funded program that makes healthcare more affordable. To qualify for Medicaid, your income must be at or below 133% of the federal poverty level. 

Who can get Medicaid? Anyone with low income, including children and pregnant women, elderly adults, and people with disabilities. On the other hand, Medicare is typically for people 65 or older, or those under 65 with certain disabilities.

What Medicaid Covers

What are the four types of Medicaid? Medicaid plans are designed for four groups of people: children, adults with disabilities, seniors, and nondisabled adults. Each plan provides comprehensive health insurance coverage for:

• Doctor’s visits and specialist care
• Prescriptions and vaccinations
• Hospital stays and nursing home care
• Dental and vision care

Medicaid services don’t cover a private room in a hospital unless it’s medically necessary, and plans do limit some prescription drug coverage. Only medications listed on the state-approved formulary are covered, so check with your local Medicaid office to ensure the medicine you need is on the list.

Learn More: What is Medicare Advantage?

Medicaid insurance will also not cover cosmetic or elective surgeries or any medical care provided outside of the U.S.

How to Qualify for Medicaid

You have to prove your income to the Medicaid office when you enroll. Include one or more of these documents as proof you meet Medicaid income limits:

• Pay stubs
• Bank or pension statements
• Tax returns
• Social Security benefits letter

Each state defines the income requirements for Medicaid services. For instance, you may qualify at 100% of the FPL where you live. Medicaid income limits will vary by state, so contact your state Medicaid office. Visit Medicaid.gov to check the requirements where you live.

A self-declaration of income form or a written statement from an employer may work if you can’t provide other proof of income.

You may also be wondering about Medicare eligibility. Check out our expert guide titled “Who is eligible for Medicare?” to learn more.

Cost of Medicaid

Medicaid covers most healthcare and emergency services. Beneficiaries never pay for emergency medical care, preventative care for children, or family planning services.

Is Medicaid free? Yes, but state Medicaid can require copayments and coinsurance on other services. This table breaks down the maximum out-of-pocket cost by income level:

Medicaid Copays by Federal Poverty Levels (FPL) & Medical Services

The federal government caps how much state Medicaid offices can charge, and out-of-pocket costs depend on income level. In general, if you have any out-of-pocket costs, you can expect your deductible to be $2.65 and any copayment to be $4 or less.

Read More: How much does Medicare cost?

Medicaid vs. Medicare

What is Medicare? Medicare vs. Medicaid serves different groups of people and has different funding sources. For instance, Medicare is fully funded by the federal government, while states are responsible for a portion of their Medicaid programs. Learn more in our expert guide to Medicare.

Access to Medicare is limited to older Americans over 65. Certain diagnoses can qualify younger people for Medicare, but Medicare doesn’t have income limits like Medicaid. Medicaid, on the other hand, doesn’t have any age or health requirements.

Medicaid eligibility also comes with perks like Medicare Savings Programs. These plans help cover some of Medicare’s deductibles, coinsurance, and copayments, as well as prescription drugs. If you’re enrolled in Medicaid, you qualify for:

• Qualified Medicare Beneficiary Plus (QMB+) Program: Covers Medicare Part A and Part B out-of-pocket costs, plus full Medicaid benefits.
• Specified Low-Income Medicare Beneficiary Plus (SLMB+) Program: Covers Medicare Part B premiums and provides full Medicaid benefits.

Research these savings programs and compare companies when you sign up for Medicare to lower your healthcare costs.

History of Medicaid

Medicaid was created as a part of the Social Security Amendments in 1965 to provide affordable and uniform medical care to Americans who couldn’t afford commercial healthcare plans from private companies. 

What is Medicaid expansion? The Medicaid expansion of 2010 came with the passing of the Affordable Care Act. It lowered Medicaid income limits and eligibility requirements. However, states can still choose to keep Medicaid income limits at previous levels but won’t receive as much federal funding.

While Medicaid focuses on low-income individuals, Medicare offers essential coverage, like Medicare Part D, to seniors and people with disabilities.

What You Need to Know About Medicaid Coverage

What is Medicaid? Medicaid insurance is a state and federally-funded program aimed at providing accessible healthcare to low-income individuals.

The important things to know about Medicaid is your income must be at or below 130% FPL to be eligible, and you still might be responsible for some out-of-pocket costs. Read how to finance what your health insurance won’t cover if you’re worried about premiums or other costs.

Medicaid covers various medical services, such as doctor’s visits, hospital stays, prescriptions, and vaccinations. Some limitations apply, such as private hospital rooms and elective surgeries, but dental and vision are included. 

Not to be confused with Medicare, which is a federal program available to those over 65 or with certain disabilities, Medicaid covers eligible citizens of all ages. However, we can still help you compare coverage options for Medicare Advantage vs. Original Medicare.

Ready to compare health insurance quotes? Simply call (855) 634-0435 to discuss your options with a licensed insurance agent, or enter your ZIP code into our free comparison tool to find top-rated plans near you.