Key Takeaways
- Medicaid is a federal-state program providing coverage to low-income individuals.
- Eligibility is based on income and assets, with ACA expansion up to 138% of FPL in many states.
- Medicaid covers broad medical services and is the primary payer for long-term care.
- Dual-eligible beneficiaries receive both Medicare and Medicaid benefits.
- Spend-down rules allow eligibility after medical expenses reduce assets or income.
- State programs vary in benefits, eligibility, and administration.
Last updated: December 2025
Medicaid
Medicaid is a joint federal-state program that provides health coverage to low-income individuals and families. Unlike Medicare, which is primarily age-based, Medicaid is a needs-based program that requires applicants to meet income and asset requirements.
Federal-State Partnership
How Medicaid Works
| Aspect | Federal Role | State Role |
|---|---|---|
| Funding | Matches state spending (50-77%) | Pays remaining share |
| Standards | Sets minimum requirements | Can exceed federal minimums |
| Administration | CMS oversight | Day-to-day management |
| Eligibility | Establishes baseline | Can expand coverage |
Federal Matching Rates
| Category | Federal Match (FMAP) |
|---|---|
| Standard Medicaid | 50-77% (varies by state income) |
| ACA Expansion adults | 90% (permanent since 2020) |
| CHIP | Enhanced rate (varies by state) |
Key Point: Wealthier states receive lower federal matching (minimum 50%), while poorer states receive higher matching (up to 77%). This ensures more equitable funding across states.
Medicaid Eligibility
Mandatory Eligibility Groups
| Group | Requirements |
|---|---|
| Low-income families | Meet state income thresholds |
| Pregnant women | Up to 138% FPL (minimum) |
| Children | Up to 138% FPL (minimum) |
| SSI recipients | Automatic in most states |
| Medicare beneficiaries (some) | Low-income Medicare recipients |
Modified Adjusted Gross Income (MAGI)
| Feature | Details |
|---|---|
| Used for | Most Medicaid eligibility determinations |
| Based on | Tax household income |
| Excludes | Assets/resources for most groups |
| Applies to | Children, pregnant women, parents, expansion adults |
Non-MAGI Eligibility (2025)
| Group | Income Limit | Asset Limit |
|---|---|---|
| Aged/Disabled (SSI-related) | ~$967/month individual | $2,000 individual |
| Nursing home care | $2,901/month individual | $2,000 individual |
| Medically needy | Varies by state | Varies by state |
Exam Tip: MAGI methodology does NOT apply to elderly and disabled individuals—they still face asset tests and have different income calculations.
Medicaid Expansion Under ACA
Expansion Overview
| Feature | Details |
|---|---|
| Income threshold | Up to 138% of Federal Poverty Level |
| Target population | Adults ages 19-64 without children |
| Federal funding | 90% permanent federal match |
| State adoption | Optional (41 states + DC as of 2025) |
2025 Federal Poverty Levels
| Household Size | 100% FPL | 138% FPL (Expansion) |
|---|---|---|
| 1 | $15,060 | $20,783 |
| 2 | $20,440 | $28,207 |
| 3 | $25,820 | $35,632 |
| 4 | $31,200 | $43,056 |
Medicaid Covered Services
Mandatory Services
| Service | Description |
|---|---|
| Inpatient hospital | Hospital stays |
| Outpatient hospital | ER, surgery, clinics |
| Physician services | Doctor visits |
| Laboratory/X-ray | Diagnostic testing |
| Nursing facility (21+) | Skilled nursing care |
| Home health | For those qualifying for nursing facility |
| EPSDT | Early screening for children under 21 |
| Family planning | Contraception, counseling |
Optional Services (State Choice)
| Service | Many States Cover |
|---|---|
| Prescription drugs | Almost all states |
| Dental care | Most states (limited) |
| Vision care | Most states |
| Physical therapy | Many states |
| Personal care | Many states |
| Hospice | Most states |
Dual Eligibility (Medicare/Medicaid)
Understanding Dual Eligibles
| Aspect | Details |
|---|---|
| Definition | Enrolled in both Medicare and Medicaid |
| Population | ~13.7 million Americans |
| Income requirement | Must meet Medicaid income limits |
| Primary payer | Medicare pays first for covered services |
Medicare Savings Programs (MSPs) - 2025
| Program | Income Limit (Individual) | Asset Limit | Benefits |
|---|---|---|---|
| QMB | $1,325/month | $9,660 | Pays Medicare premiums + cost-sharing |
| SLMB | $1,585/month | $9,660 | Pays Part B premium only |
| QI | $1,781/month | $9,660 | Pays Part B premium only |
Benefits of Dual Eligibility
| Benefit | Description |
|---|---|
| Premium assistance | Medicaid pays Medicare premiums |
| Cost-sharing help | Medicaid covers deductibles/coinsurance |
| Extra Help (LIS) | Auto-qualified for Part D subsidy |
| Monthly SEP | Can switch plans monthly in 2025 |
Key Point: Dual eligibles automatically qualify for "Extra Help" (Low-Income Subsidy) for Medicare Part D, eliminating or reducing prescription drug costs.
Medicaid Spend-Down
What is Spend-Down?
| Aspect | Details |
|---|---|
| Purpose | Allows over-income individuals to qualify |
| Process | "Spend" excess income on medical bills |
| Works like | Deductible that must be met |
| Period | Usually monthly or semi-annual |
Spend-Down Calculation
| Step | Action |
|---|---|
| 1 | State determines income limit (Medically Needy level) |
| 2 | Calculate person's monthly income |
| 3 | Subtract income limit from actual income |
| 4 | Difference = monthly spend-down amount |
| 5 | Once medical expenses reach spend-down, Medicaid covers rest |
Example
| Item | Amount |
|---|---|
| Monthly income | $1,500 |
| Medicaid income limit | $1,000 |
| Spend-down amount | $500 |
| After $500 in medical bills | Medicaid covers remaining expenses |
Exam Tip: Spend-down allows people to qualify for Medicaid even if their income exceeds limits—they must first pay medical expenses equal to the excess income.
Key Takeaways
- Medicaid is a federal-state program providing coverage to low-income individuals.
- Eligibility is based on income and assets, with ACA expansion up to 138% of FPL in many states.
- Medicaid covers broad medical services and is the primary payer for long-term care.
- Dual-eligible beneficiaries receive both Medicare and Medicaid benefits.
- Spend-down rules allow eligibility after medical expenses reduce assets or income.
- State programs vary in benefits, eligibility, and administration.
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Test Your Knowledge
What is the federal matching rate for Medicaid expansion adults as of 2025?
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B
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D
Test Your Knowledge
Which of the following correctly describes the Qualified Medicare Beneficiary (QMB) program in 2025?
A
B
C
D
Test Your Knowledge
John earns $1,800/month and his state's Medicaid income limit is $1,200/month. What is his spend-down amount?
A
B
C
D