What is Medicaid?
A plain-language guide to the nation's largest public health insurance program — how it works, who it covers, and what benefits it provides.
What is Medicaid?
Medicaid is a joint federal and state government health insurance program that provides medical coverage to tens of millions of Americans who have low incomes or limited financial resources. Unlike Medicare, which is primarily age-based, Medicaid is needs-based — eligibility depends largely on income and household circumstances rather than on how old you are or how long you have worked.
The program was signed into law on July 30, 1965, by President Lyndon B. Johnson as part of the Social Security Amendments of 1965. It was created alongside Medicare under Title XIX of the Social Security Act. Originally, Medicaid was designed primarily to serve welfare recipients, but it has expanded considerably over the decades into a safety-net program covering a broad range of populations.
Today Medicaid serves tens of millions of Americans across all 50 states and the District of Columbia, including children, pregnant women, parents, seniors, and people with disabilities. It is jointly funded by the federal government and the states, with states administering their own programs within federal guidelines. Because each state runs its own version of Medicaid, eligibility rules, covered benefits, and how you apply can vary significantly depending on where you live.
How Medicaid works: federal-state partnership
Medicaid operates as a partnership between the federal government and each individual state. The federal Centers for Medicare & Medicaid Services (CMS) sets broad standards and guidelines — including mandatory eligibility categories, required benefits, and consumer protections — while each state administers its own program, sets eligibility rules within federal minimums, and has flexibility to tailor coverage to its residents.
Funding is shared between the federal government and the states through a formula called the Federal Medical Assistance Percentage, or FMAP. The federal government pays a larger share in lower-income states and a smaller share in higher-income states, but always covers at least 50 percent of costs. This funding structure means the program automatically expands when need increases during economic downturns and shrinks when the economy improves.
Because states have significant flexibility, the program can look very different from one state to another. Some states have expanded Medicaid under the Affordable Care Act to cover more low-income adults; others have not. Income thresholds, covered services, and delivery systems (such as managed care organizations) all vary. This is why the most accurate information about Medicaid eligibility and benefits is always found through your specific state's Medicaid agency.
Who is eligible for Medicaid?
Federal law requires states to cover certain mandatory eligibility groups, while allowing states to extend coverage to additional optional groups. The core mandatory groups include:
- Low-income families with children — Families who meet income thresholds based on the Federal Poverty Level.
- Pregnant women — Coverage for prenatal care, delivery, and postpartum care up to a certain income level.
- Children under 19 — Children in households below applicable income thresholds, with expanded coverage available through CHIP.
- Seniors aged 65 and older — Low-income seniors who meet income and asset requirements, including nursing facility coverage.
- People with disabilities — Individuals receiving Supplemental Security Income (SSI) and others who meet disability criteria.
- Adults in expansion states — In states that expanded Medicaid under the Affordable Care Act, most adults up to 138% of the Federal Poverty Level qualify regardless of family status.
Eligibility rules are complex and depend on your state. For detailed income limits and state-specific criteria, see our Medicaid eligibility guide.
What does Medicaid cover?
Federal law requires all state Medicaid programs to cover a set of mandatory benefits, while also allowing states to offer optional benefits. Mandatory benefits include inpatient and outpatient hospital services, physician services, laboratory and X-ray services, nursing facility care for adults, home health services, Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) for children under 21, family planning, and more.
Optional benefits — which most states cover to some degree — include prescription drugs (covered by all 50 states), dental services, vision services, physical and occupational therapy, and home and community-based services. The extent of optional benefits varies considerably by state. For a complete breakdown of what Medicaid covers, see our Medicaid benefits guide.
Medicaid vs. Medicare
Medicaid and Medicare are often confused because of their similar names and shared 1965 origin, but they are fundamentally different programs. Medicare is a federal health insurance program primarily for people age 65 and older (and certain younger people with disabilities), funded and administered entirely by the federal government. Medicaid is a needs-based program administered jointly by states and the federal government, available to qualifying low-income individuals of any age. Many low-income seniors qualify for both programs simultaneously — these individuals are called "dual eligibles." For a detailed comparison, see our Medicaid vs. Medicare guide.