What is Medicaid?

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 FY2024, total Medicaid spending was about $918.7 billion, of which roughly 65% 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.

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 $22,025 annually for a single adult in 2026, per HHS poverty guidelines effective January 14, 2026 (verify current figures with your state Medicaid agency, as the FPL updates each January). As of 2026, 41 states plus DC have adopted this expansion, per KFF.

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.

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.

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.

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.

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.

Work requirements and the financing changes together account for nearly 90% of the projected federal spending reductions, per CBO estimates cited by KFF.