Medicaid: An Overview

Medicaid are Federal U.S. government-sponsored programs designed to help cover healthcare costs for American citizens. Established in 1965 and funded by taxpayers, these two programs have similar-sounding names, which can trigger confusion about how they work and the coverage they provide.


  • Medicaid is designed for people with limited income and is often a program of last resort for those without access to other resources.


Medicaid is a joint federal and state program that helps low-income Americans of all ages pay for the costs associated with medical and long-term custodial care. Children who need low-cost care, whose families earn too much to qualify for Medicaid, are covered through the Children's Health Insurance Program (CHIP), which has its own set of rules and requirements.

2020 Healthcare Plans

Eligibility and Costs

The federal/state partnership results in 50 different Medicaid programs, one for each state. Through the Affordable Care Act, President Barack Obama attempted to expand healthcare coverage to more Americans by having the Federal government cover most of the cost of Medicaid at the state level for persons with an income level below 133 percent of the federal poverty level. A reports stated: “Because of the way this is calculated, it turns out to be 138 percent of the federal poverty level. A few states use a different income limit.” While 33 states have opted into the program, political efforts to roll back coverage continue.

Those covered by Medicaid pay nothing for covered services. Unlike Medicare, which is available to nearly every American of 65 years and over, Medicaid has strict eligibility requirements that vary by state. However, because the program is designed to help the poor, many states require Medicaid recipients to have no more than a few thousand dollars in liquid assets in order to participate. There are also income restrictions. For a state-by-state breakdown of eligibility requirements, visit and

When Medicaid recipients reach age 65, they remain eligible for Medicaid and also become eligible for Medicare. At that time, Medicaid coverage may change, based on the recipient's income. Higher-income individuals may find that Medicaid pays their Medicare Part B premiums. Lower-income individuals may continue to receive full benefits. (For related reading, see "How Much Medicaid and Medicare Cost Americans")


Medicaid benefits vary by state, but the Federal government mandates coverage for a variety of services, including:

• Hospitalization

• Laboratory services

• X-rays

• Doctor services

• Family planning

• Nursing services

• Nursing facility services

• Home healthcare for people eligible for nursing facility services

• Clinic treatment

• Pediatric and family nurse practitioner services

• Midwife services

Each state also has the option of including additional benefits, such as prescription drug coverage, optometrist services, eyeglasses, medical transportation, physical therapy, prosthetic devices, and dental services.

Medicaid is also often used to fund long-term care, which is not covered by Medicare or by most private health insurance policies. In fact, Medicaid is the nation's largest single source of long-term care funding, which often covers the cost of nursing facilities for those who deplete their savings to pay for healthcare and have no other means to pay for nursing care.