Medicaid — Health Insurance for The Poor

For the unknowing, Medicaid is an “entitlement program” that provides health care for people with low incomes, limited resources, or certain disabilities.

The concept of Medicaid came about so that the government could provide assistance to financially-strapped families to help them pay of a portion of their medical bills.

It is often described as a “means-tested” program — where applicants are screened for their eligibility and because it is an entitlement program, everyone who is eligible has a right to enroll in Medicaid coverage.

For many poor and low-income children and families — the group who are least likely to be insured, Medicaid is the only available source of free health insurance coverage.

Understanding Medicaid

Medicaid is essentially a state as well as federal scheme, wherein states and federal government jointly fund it, while the state authorities manage it. Its primary goal is to assist low income families to pay their medical bills.

This scheme was introduced in the year 1995 and since then, it has been helping the poor get medical benefits that they wouldn’t have been able to afford without it.

Each state operates its own Medicaid program within federal guidelines — each with a different income level required to qualify for the same, higher in some and lower in others.

Medicaid Eligibility

The Affordable Care Act (widely known as “Obamacare”) creates a national minimum eligibility standard of 133% of the federal poverty level (FPL), but some states choose not to adopt the Medicaid expansion under the ACA.

Before the ACA, Medicaid served only children, parents, pregnant women, people with disabilities and seniors; it’s now available to any adult, between the ages of 19 and 65, with income below the predetermined threshold.

However, among the 19 states not currently expanding Medicaid, the average eligibility threshold remains low at 47% or about $7700 for a single mother with a child,1 with only two (2) states — Maine and Tennessee covering parents with incomes at or above poverty.

If your state is expanding Medicaid, you’ll probably qualify for Medicaid coverage, if your income is below $22,400 for a family of 2. See this chart for income limits for different family sizes.

If your state hasn’t expanded Medicaid, you may be eligible for subsidies to buy a private health insurance plan in the Marketplace, if your income is between 100% – 400% of the federal poverty line — for a family of two, that’s an income between $16,240 and $64,960.

One of those subsidies for those who buy insurance through Marketplace is the Premium Tax Credit. It is designed so that individuals and families spend no more than a certain percentage of their income on health insurance.

For example, families with incomes up to 133% of the federal poverty level are expected to contribute no more than 2% of their income toward their monthly premiums.

While those earning between 300-400% of the federal poverty level pay no more than 9½ percent of their income (see the table below for details).

% of Poverty Line Contribution as a % of income Maximum Monthly Contribution2
Up to 133% 2% of income $40-$53
133-150% 3-4% of income $79-$119
150-200% 4-6.3% of income $119-$250
200-250% 6.3-8.05% of income $250-$400
250-300% 8.1-9.5% of income $400-$566
300-350% 9.5% of income $566-$661
350-400% 9.5% of income $661-$755

Remember, federal poverty level changes every year, and is based on your income and family size. If your family’s income goes down or your household size goes up during the year, you may be eligible for an increase in subsidy.

How Do I Apply for Medicaid?

Regardless of whether or not your state has expanded Medicaid, you should apply for coverage to see if you qualify. If you choose not to buy, there’ll be a fee for not having health insurance.3

Either way, everyone is required by law to have minimum health insurance coverage or else pay a tax penalty — the greater of $695 per adult (or $347.50 per child under 18) or 2.5% of your income.

To find out if you and your family qualify for Medicaid, CHIP, or a private insurance plan with a single application, create an account online at — the official health insurance marketplace.4

How the Marketplace Works?


First, you’ll provide some information about you and your family, including your income, household size, and more.


Next you’ll see all the plans and programs you’re eligible for and compare them side-by-side. You’ll also find out if you can get lower costs on monthly premiums and out-of-pocket costs.


Choose the plan that meets your needs and enroll. Coverage starts as soon as January 1st the following year.
The last day to enroll in 2018 coverage is January 31, 2018.5

You can also call 24/7 Marketplace helpline at 1-800-318-2596 for specific information about enrolling in Medicaid, eligibility, coverage and services for your state.

The Affordable Care Act has indeed made health insurance more affordable and accessible for millions of uninsured Americans across the country, including 7 million women who were previously without health care coverage.6

Additionally, by expanding Medicaid to low-income parents, particularly single mothers, states can ensure that their children are receiving the health care services they need, such as well-child visits and preventive services.

  1. Kaiser Family Foundation, Median Medicaid/CHIP Eligibility Thresholds as a Percent of the Federal Poverty Level, April 2014
  2. Expected monthly contribution for a family of four. The figures will be lower for a family of two.
  3., The fee for not having health insurance.
  4. The Spanish-language portal to the federally run exchanges is
  5. Important Medicaid Enrollment Dateline
  6. Source: NLWC, What the Medicaid Eligibility Expansion Means for Women