What is Medicaid?

Last verified: June 2026

What is Medicaid, and how is it structured?

Medicaid is a joint federal-state health insurance program that covers low-income adults, children, pregnant women, elderly adults, and people with disabilities. Congress created it in 1965 through the Social Security Amendments of 1965 (P.L. 89-97), codified as Title XIX of the Social Security Act — the same legislation that established Medicare. As of February 2026, CMS enrollment data shows 67.7 million people covered, making Medicaid the single largest source of health insurance in the United States by enrollment.

That 67.7 million figure reflects the current count after a significant unwinding. During the COVID-19 pandemic, Congress required states to keep people continuously enrolled in exchange for enhanced federal funding; Medicaid/CHIP enrollment peaked at an estimated 109 million in fiscal year 2023, per MACPAC. Enrollment dropped substantially when the continuous enrollment requirement ended in April 2023, but remains higher than the pre-pandemic February 2020 baseline, per KFF enrollment tracking data.

Per MACPAC, Medicaid accounted for about 18.5 percent of all national health care spending in calendar year 2022 and finances over half of the country's long-term care — a role Medicare does not play.

Despite being a single federal program in statute, Medicaid operates as 56 distinct programs in practice — one for each state, the District of Columbia, and the five U.S. territories, per MACPAC. Each sets its own eligibility rules, benefit package, and delivery system within broad federal guidelines. The federal government pays a guaranteed share of costs through a formula called the Federal Medical Assistance Percentage (FMAP), which ranges from 50% to 83% depending on a state's per capita income.

Is Medicaid free?

For most enrollees, Medicaid is free or very low cost. Most children, pregnant women, and people receiving Supplemental Security Income (SSI) pay no premiums and face no cost-sharing at the point of care. States may charge nominal copayments for some services for adults above certain income thresholds, but federal law caps what states can require and prohibits cost-sharing that would prevent someone from getting emergency care.

The program is funded jointly by state and federal governments — not by enrollee premiums. In FY2023, total Medicaid spending was $880 billion, of which 69% came from federal funds, per KFF analysis of CMS data. States cover the remainder through their general revenues, often using financing mechanisms like provider taxes to fund their required share.

Who qualifies for Medicaid?

Eligibility depends on income, age, family status, disability status, and whether your state has expanded the program under the ACA. The Affordable Care Act created a new eligibility pathway for adults under 65 with incomes at or below 138% of the Federal Poverty Level — equal to $21,597 annually for a single adult in 2025, per HHS poverty guidelines (verify current figures with your state Medicaid agency, as the FPL updates each January). As of August 2025, 41 states plus DC have adopted this expansion, per KFF.

• Children from birth through age 18 in households with low to moderate incomes
• Pregnant women, including a postpartum coverage period (at least 12 months in most states)
• Adults ages 19–64 in states that adopted the ACA Medicaid expansion (41 states + DC as of August 2025)
• Adults age 65 and older who meet income and asset requirements
• People with disabilities who receive SSI or meet functional and financial criteria
• People who are “medically needy” — those whose high medical bills reduce countable income below the eligibility threshold
• Former foster care youth up to age 26 in most states

States that have not expanded Medicaid still cover many of these groups under pre-ACA rules, but most adults without dependent children and without disabilities do not qualify in non-expansion states. See the full eligibility guide for income limits and state-specific rules.

Federal requirements vs. state flexibility

Federal law establishes a floor. States must cover certain mandatory populations — children, pregnant women with incomes below 138% FPL, people on SSI — and certain mandatory services: inpatient hospital care, physician services, lab and X-ray, nursing facility care for adults, and home health services, among others. Beyond that floor, states can expand eligibility to additional groups and add optional services, or run a more limited program.

Delivery is also a state choice. A majority of states use managed care arrangements where enrollees are assigned to a health plan that coordinates their services. Others use fee-for-service billing where providers bill Medicaid directly. Many states use both models for different populations. States can further depart from standard rules through Section 1115 waivers, which require the HHS Secretary to determine the waiver advances program objectives.

CMS — the Centers for Medicare & Medicaid Services, within HHS — oversees the program federally, approves state plan amendments, and administers the waiver process. Title XIX of the Social Security Act and a large body of federal regulations govern what CMS can and cannot approve.

What is Medicaid called in each state?

The federal program is called Medicaid, but states frequently operate it under different brand names. These names are state marketing and administrative labels — they don't change what the program is or which federal rules apply. Common examples:

All of these programs are Medicaid. They receive federal matching funds under Title XIX and must comply with the same federal minimum requirements as any other state's program.

How Medicaid differs from Medicare

The names are similar but the programs are structurally different. Medicare is primarily for people 65 and older (plus certain younger adults with qualifying disabilities), regardless of income. Medicaid is primarily income-based, with no age requirement for most populations. Medicare does not cover most long-term care; Medicaid is the dominant payer for nursing home and home-based long-term care in the United States.

What does Medicaid cover?

All states must cover a core set of mandatory services: inpatient and outpatient hospital care, physician services, lab and X-ray, nursing facility care for adults, home health, and federally qualified health center (FQHC) services. States may add optional services — dental care, vision, physical therapy, additional prescription drug coverage, and others — or exclude them.

For anyone under 21, EPSDT — Early and Periodic Screening, Diagnostic and Treatment — requires states to cover any medically necessary service, even if that service isn't listed in the state's adult benefit package. This mandate covers dental, vision, hearing, and developmental services for children and young adults. EPSDT is one of the broadest benefit guarantees in American health law.

See the full Medicaid benefits guide for a breakdown of mandatory vs. optional services by category, and what your state covers.

Major changes to Medicaid enacted in 2025

A federal budget reconciliation law passed in July 2025 includes the most significant changes to Medicaid since the ACA. Per KFF analysis of Congressional Budget Office (CBO) estimates, the law is expected to reduce federal Medicaid spending by $911 billion over 10 years and reduce the total number of people with health insurance by approximately 10 million — three-quarters of which comes from Medicaid cuts.

Other significant provisions restrict provider taxes (used by nearly all states to finance their required share of Medicaid costs), limit state-directed payments to hospitals and nursing facilities through managed care contracts, and increase the frequency of eligibility redeterminations for expansion enrollees. Work requirements and the financing changes together account for nearly 90% of the projected federal spending reductions, per CBO estimates cited by KFF.