Medicaid
Medicaid is a joint federal and state program that provides health coverage to people with limited income and resources. Unlike Medicare, which is age- and disability-based, Medicaid eligibility is determined by financial need under rules that vary from state to state.
Medicaid was created alongside Medicare in 1965 as a needs-based health program. The federal government sets minimum standards and shares the cost with the states, but each state administers its own program, sets eligibility thresholds within federal limits, and decides which optional benefits to cover. That is why Medicaid names, income limits, and covered services differ across the country.
Eligibility rests on financial need, usually measured against a percentage of the federal poverty level, and in some categories on asset limits as well. Traditional eligibility groups include low-income children and pregnant women, parents and caretakers, people with disabilities, and low-income seniors. States that adopted the Affordable Care Act expansion also cover low-income adults without dependent children. Applicants may be required to "spend down" income on medical costs to qualify.
Beyond acute care, Medicaid is the single largest payer of long-term care in the United States, covering nursing facility and home- and community-based services that Medicare does not. People who qualify for both programs — "dual eligibles" — use Medicare as primary coverage, with Medicaid picking up premiums, cost sharing, and services Medicare leaves out. Because of this, Medicaid planning is a recurring topic in long-term care insurance discussions.
On state life and health insurance licensing exams, the central task is distinguishing Medicaid from Medicare and Medigap: Medicare is federal and tied to age 65 or disability, Medigap is private coverage that fills Medicare gaps, and Medicaid is need-based and state-administered. Medical billing and assisting certifications such as the CCMA test the same distinction from the claims side, including coordination of benefits when a patient is covered by both programs.
Key takeaways
- Medicaid is a joint federal-state program providing health coverage based on financial need.
- States administer their own programs, so eligibility rules and optional benefits vary.
- Medicaid is the largest payer of long-term care services in the United States.
- Dual eligibles receive Medicare as primary coverage with Medicaid covering cost sharing and additional services.
- Licensing and medical billing exams focus on telling Medicaid, Medicare, and Medigap apart.