What Is Medicaid? A Guide to Eligibility and What Medicaid Covers

Medicaid as the Healthcare Safety Net

Medicaid is the largest health insurance program in the United States — bigger than Medicare in enrollment, covering roughly 80 million people across the country. For seniors, people with disabilities, low-income families, and children, Medicaid is often the difference between accessing healthcare and going without.

But Medicaid is also one of the most confusing programs in American health policy. It's jointly run by the federal government and the states, which means the rules — who qualifies, what's covered, how to apply — vary significantly depending on where you live. Here at LifeHelm, we'd rather you understand what Medicaid is, who it's for, and whether you might qualify, before you need it.

What Medicaid Is (and How It Differs from Medicare)

Medicaid and Medicare get confused constantly. They're both federal programs, both pay for healthcare, and they have similar-sounding names. They're also very different:

• Medicare is age-based (65+) or disability-based. Federal program, same rules everywhere. Not income-tested.

• Medicaid is income-based (and sometimes asset-based). Jointly funded by the federal government and states, with each state running its own version. Rules vary by state.

Many seniors qualify for both — this is called "dual-eligibility" — and the two programs work together to cover what the other doesn't. More on that below.

Who Qualifies for Medicaid

Medicaid has several distinct eligibility pathways, each with its own rules. The main ones:

Children, Pregnant Women, and Parents

Medicaid (or its companion program CHIP) covers most low- and moderate-income children up to at least 138% of the Federal Poverty Level (FPL), with many states going much higher — some cover children up to 200% or even 300% FPL. Pregnant women are typically covered at 138%–213% FPL, depending on state. Parents and caretaker relatives may qualify at different thresholds depending on whether the state has expanded Medicaid.

ACA Medicaid Expansion (Adults under 65)

Under the Affordable Care Act, states have the option to expand Medicaid to cover all adults up to 138% of the Federal Poverty Level. As of 2026, 41 states plus the District of Columbia have adopted Medicaid expansion. Ten states have not: Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming.

In non-expansion states, low-income adults without dependent children often fall into a "coverage gap" — they earn too much for traditional Medicaid but too little to qualify for Marketplace subsidies. An estimated 1.4 million Americans are in this gap, most of them in the South.

Seniors, Blind, and Disabled (ABD Medicaid)

For people 65 and older, those who are blind, and people with disabilities, Medicaid uses a separate set of rules — often called "Aged, Blind, and Disabled" (ABD) or non-MAGI Medicaid. These rules typically include:

• Lower income limits — often tied to the SSI Federal Benefit Rate ($994/month for an individual in 2026) or Federal Poverty Level ($1,330/month for an individual)

• Asset limits — typically around $2,000 for an individual (varies significantly by state and program)

• Medically needy or spend-down options in many states for applicants whose income is too high for standard ABD Medicaid but who have significant medical expenses

If you receive SSI, you're typically automatically eligible for Medicaid in most states. People with Medicare and limited income may also qualify for help paying Medicare premiums through Medicare Savings Programs (MSPs), which are administered through state Medicaid agencies.

Long-Term Care Medicaid

This is the pathway most relevant to families dealing with aging parents or planning for their own potential nursing home or in-home care needs. Long-term care Medicaid covers nursing facility care and many home- and community-based services (HCBS) that Medicare does not.

Income limits for long-term care Medicaid are typically set at 300% of the SSI Federal Benefit Rate:

• Single applicant 2026 limit: $2,982/month (up from $2,901 in 2025)

• Married, both applying 2026 limit: $5,964/month

Asset limits are strict and Medicaid uses a 5-year look-back on asset transfers — meaning gifts or transfers within 5 years of application can disqualify or delay coverage. Long-term care Medicaid planning is its own discipline; if you or a family member may need long-term care, talk to an elder-law attorney long before you actually need to apply.

2026 Income Limits at a Glance

For the 48 contiguous states and DC (Alaska and Hawaii have higher thresholds):

• 100% Federal Poverty Level (single): $15,960/year ($1,330/month)

• 100% Federal Poverty Level (family of 4): $33,000/year

• 138% FPL (expansion threshold, single): approximately $22,025/year ($1,835/month)

• 138% FPL (expansion threshold, family of 4): approximately $45,540/year ($3,795/month)

• 2026 SSI Federal Benefit Rate (single): $994/month

These are the base thresholds. Your state may use a different percentage, may apply a 5% income disregard, may have separate asset rules, and may have its own medically needy pathways. Verify with your state Medicaid agency or healthcare.gov.

What Medicaid Covers

All state Medicaid programs are required to cover a core set of services. Many states cover additional optional benefits. Required services include:

• Inpatient and outpatient hospital services

• Physician services and certified nurse practitioner services

• Laboratory and X-ray services

• Nursing facility care for adults 21+

• Home health services

• EPSDT (Early and Periodic Screening, Diagnostic, and Treatment) for children

• Family planning services

• Federally qualified health center (FQHC) and rural health clinic services

Most states also cover prescription drugs, dental care, vision care, physical therapy, and hospice — most of which are optional under federal rules but offered by virtually every state.

Medicaid for Seniors — The Long-Term Care Reality

Here's a fact that surprises most retirees: Medicaid — not Medicare, not private insurance — is the largest payer of long-term care in the United States. About 70% of people in U.S. nursing facilities have their care paid by Medicaid.

Medicare covers short-term skilled nursing facility stays (up to 100 days, with limits) following a qualifying hospital stay. Beyond that, Medicare does not pay for custodial long-term care — help with bathing, dressing, eating, and so on. That's exactly the kind of care that becomes necessary for many older adults eventually.

If a person needs ongoing care and can't pay out of pocket, the options narrow quickly: long-term care insurance (if purchased earlier), VA benefits for qualifying veterans, or Medicaid after spending down assets to state-set limits. This is why Medicaid planning is a major component of elder-law practice.

Dual-Eligibility: Medicare and Medicaid Together

If you have Medicare and your income and assets are low enough, you may also qualify for Medicaid — making you "dually eligible." Medicaid then pays for things Medicare doesn't, including:

• Long-term nursing home or home-based care

• Medicare Part B premiums and cost-sharing (through Medicare Savings Programs)

• Dental, vision, and hearing services not covered by Original Medicare

• Prescription drugs (with reduced cost-sharing under the Extra Help program for Part D)

About 12 million Americans are dually eligible. If you're on Medicare with limited income and you're not enrolled in Medicaid, it's worth checking — many people who qualify don't know they do.

Recent Changes and What's Coming

The 2025 budget reconciliation law (signed July 4, 2025) made significant changes to Medicaid that will roll out in coming years:

• Federal work requirements for Medicaid expansion adults — 80 hours/month of qualifying activity (work, school, training, or community service) required to maintain coverage. Federal effective date is January 1, 2027, though some states are implementing earlier (Nebraska May 2026, Montana July 2026).

• Reductions in federal Medicaid funding — KFF estimates that combined changes will increase the number of uninsured Americans by approximately 7.5 million by 2034.

These changes are evolving. Verify current rules with your state Medicaid agency before making coverage decisions.

The Bottom Line

Medicaid is more nuanced and more consequential than most people realize until they need it. For seniors specifically:

• Medicaid is the primary payer of long-term care in the U.S. — Medicare is not

• Eligibility for seniors uses ABD (Aged/Blind/Disabled) rules with both income AND asset limits

• If you qualify for both Medicare and Medicaid, the combination fills almost every coverage gap

• Rules vary substantially by state, so always verify with your state's Medicaid agency

If you think you or a family member might qualify, the next step is the actual application process — covered in our companion post on how to apply for Medicaid coverage.

Here's to a clearer view of the healthcare safety net that millions of Americans depend on.

Sources

• Centers for Medicare & Medicaid Services, Medicaid program eligibility guidelines. medicaid.gov

• U.S. Department of Health and Human Services, 2026 Federal Poverty Guidelines (published January 13, 2026). aspe.hhs.gov/poverty-guidelines

• KFF, "Medicaid Eligibility Levels for Older Adults and People with Disabilities (Non-MAGI) in 2026" (March 2026). kff.org

• KFF, state-by-state Medicaid expansion status and income eligibility tables. kff.org/medicaid

• Social Security Administration, 2026 SSI Federal Benefit Rate. ssa.gov/oact/cola/SSI.html