Medicaid Expansion

A short explanation of the Affordable Care Act's Medicaid expansion is available on our ACA Basics page. This page provides more information about the Medicaid program and the ACA Medicaid expansion.

Overview
Medicaid is the nation's health insurance program for low-income individuals and families. The ACA calls for a nationwide expansion of Medicaid eligibility, set to begin in 2014. As the law was written, nearly all U.S. citizens under 65 with family incomes up to 133 percent of the federal poverty level (FPL) ($30,675 for a family of four in 2012) will qualify for Medicaid under the expansion. (About FPL; Is it 133 or 138?) This expansion will particularly benefit childless adults, who in more than 40 states cannot currently qualify for Medicaid regardless of their income level. It will also benefit low income parents, who in more than 30 states don't currently qualify even if their children do.

The Medicaid expansion was one of the major provisions at stake in the ACA cases decided by the Supreme Court in June 2012. The Supreme Court upheld the Medicaid expansion, but limited the federal government's ability to penalize states that don't comply. Therefore, where it was originally effectively mandatory for states to expand Medicaid, now it is effectively optional. While some states might not participate in the expansion given this decision, most states are predicted to eventually expand their programs. The CBO predicts that 11 million Americans will gain coverage by 2022 through this provision.

APHA and external resources are listed below.

*****

Public health professionals: Looking for resources to help you educate your community about the Marketplaces and other ACA reforms?

Consumers: Looking for information about how the ACA will affect you?

Go back to the main page of the health reform section of APHA's website for resources and links to the official websites of the ACA and the Health Insurance Marketplaces.

*****

Other frequently asked questions

1. What is Medicaid?

2. What are current (pre-ACA) Medicaid eligibility levels?

3. How will eligibility change under the Medicaid expansion?

4. What is the federal poverty level (FPL)?

5. Is Medicaid eligibility expanding to 133 or 138 percent FPL, and what is MAGI?

6. How will the Medicaid expansion be financed?

7. What other Medicaid provisions are in the ACA?

8. What are the implications of the Supreme Court's ruling on the Medicaid expansion?


1. What is Medicaid?
Medicaid has been the country's health coverage program for low-income individuals and families since 1965. It is jointly administered and funded by the federal government and the states. The federal government sets basic guidelines, and the states have broad authority to modify their Medicaid programs as they see fit, as long as they meet the federal guidelines. (FAQ top)


2. What are current (pre-ACA) Medicaid eligibility levels?
To be eligible for coverage, a person has historically had to satisfy two tests: belonging to a "categorically" eligible group (generally: children, pregnant women, parents, blind or disabled persons, and the elderly); and meeting the financial test set by the state for that group. Prior to the ACA, the federal government already mandated that eligibility levels for children and pregnant women be at least 100-133 percent (see table below), but eligibility levels for parents could be much lower, and states were not required to cover adults without dependent children at all.

3. How will eligibility change under the ACA Medicaid expansion?
Starting in 2014, the ACA makes several key changes regarding Medicaid eligibility:

  • The ACA creates a new eligible group: all adults not already eligible. This especially means that adults without dependent children will no longer be excluded from the program.
  • The ACA expands the minimum income eligibility threshold to 133 percent FPL (effectively 138 percent FPL) for everyone except the elderly and disabled. This is a floor, not a ceiling: if states already had higher thresholds for certain populations, or want to set higher thresholds, that's fine.
  • Under the ACA expansion, the categorical definitions shown in the table below will be less relevant than the difference between "traditionally eligible" and "newly eligible" persons.
    • Those in any population who were already eligible in their state (whether or not they were already enrolled) can be thought of as "traditionally eligible." They will continue to receive the services to which they are already entitled, and states will continue to receive their standard federal contribution for covering them, whether they enroll before or after 2014.
    • Those in any population who were not previously eligible but become eligible under ACA (which will include nearly all childless adults, plus many parents and some children depending on states' current thresholds) can be thought of as "newly eligible." Most importantly, states will receive a much higher federal contribution for covering them. Another important distinction is that newly eligible enrollees will not necessarily be entitled to standard Medicaid benefits packages. However, states must provide them with "benchmark" or "benchmark equivalent" benefits, which will include the same essential benefits that private plans must include in order to be sold in the new insurance exchanges. (Read more about benchmark plans.)

The impact of these changes will vary from state to state, depending on states' current eligibility levels. See below for discussion of other Medicaid provisions in the ACA. (FAQ top)

Table: Medicaid income eligibility thresholds before and after the ACA Medicaid expansion
(FPL income calculations; Is it 133 vs 138?)

Categorical group U.S. minimum threshold pre-ACA, 2009*      State thresholds,  2009: medians, (ranges)   U.S. minimum thresholds under ACA, 2014**     
Children 0-5 133% FPL 235% FPL
(133-300% FPL )
133% FPL
Children 6-19 100% FPL 235% FPL
(100-300% FPL)
133% FPL (note traditional vs new)
Pregnant women 133% FPL 185% FPL
(133-300% FPL)
133% FPL
Working parents State's July 1996 AFDC eligibility level^ 64% FPL
(17-200% FPL)
133% FPL (note traditional vs new)
Non-working parents State's July 1996 AFDC eligibility level^ 38% FPL
(11-200% FPL)
133% FPL (note traditional vs new)
Childless adults Eligibility not mandated. State must apply for waiver to cover this group. 0% FPL
(0% FPL in 46 states; 100-160% FPL in 5 states)
133% FPL (note traditional vs new
Elderly, blind, disabled Receipt of SSI^ 75% FPL
(65-133% FPL)
Receipt of SSI
Sources: Kaiser Family Foundation 1, 2, 3
*State threshold must be at or above the U.S. minimum threshold.
**In states that choose to expand Medicaid, the threshold will be at or above the new U.S. minimum threshold starting in 2014. If a state's threshold was already higher, it may remain so.
^AFDC was Aid to Families with Dependent Children, the cash welfare program replaced by TANF (Temporary Assistance to Needy Families) in the 1996 welfare reform bill. SSI is the Supplemental Security Income program that provides cash assistance to low-income disabled, blind, and elderly persons.
(FAQ top)


4. As a review, what is the federal poverty level (FPL)?
The federal poverty level is the federal government's official threshold for determining whether an individual or family is in poverty, according to their resources and family size and composition. It's an income amount, and if a family's income falls below that amount (if they are "below 100 percent of FPL"), they are considered in poverty. Eligibility for many government programs depends on having an income below 100 percent FPL, or some other level above or below 100 percent. The FPL numbers are part of the federal poverty guidelines, updated each year. The ASPE office within the U.S. Department of Health and Human Services has more information about the FPL, federal poverty guidelines, and the federal poverty thresholds (which are used to count the number of people in poverty, not to determine whether an individual is in poverty). (FAQ top)

Table:
Selected federal poverty level (FPL) thresholds in terms of annual income, 2012

FPL Individual Family of four Relevance                                    
50% $5,585 $11,525 Currently (prior to the ACA Medicaid expansion), parents in 17 states don't qualify for Medicaid unless their incomes are below this threshold. (Eligibility levels for children are higher, so in a given family, children may qualify while parents don't.) In nearly all states, childless adults are ineligible regardless of income.
100% $11,170 $23,050

This is the official poverty threshold, updated each year by the federal government. It varies by family size and composition.

As written in the ACA, persons with family incomes below this threshold are not eligible for subsidies to purchase insurance in the exchanges. In states that don't expand Medicaid, individuals with incomes above their state's current eligibility level, but below 100 percent FPL, will not qualify for anything.

133%

$14,856

$30,675

As written in the ACA, this will be the new minimum eligibility threshold for nearly everyone under 65. However, the effective threshold will actually be 138%. See next line.

138%

$15,414 $31,809 Even though the ACA states that the new threshold is 133%, it will effectively be 138%, because 5% of people's income will be "disregarded." See below for more information.

400%

$44,680

$92,200 This will be the upper limit for eligibility for income-based subsidies for the purchase of private insurance through the new health insurance exchanges.

Income data sources: ASPE, FHCE
These are selected thresholds; other calculations exist for various family sizes and percents of FPL. Also note: these thresholds apply to the 48 contiguous states. Different thresholds exist for Alaska and Hawaii.
(FAQ top)

5. Is Medicaid eligibility expanding to 133 or 138 percent FPL, and what is MAGI?

Some sources state that the new minimum Medicaid eligibility threshold is 133 percent FPL; other sources state it will be 138 percent. Both are correct. The text of the ACA says 133 percent, but the law also calls for a new methodology of calculating income, which will make the effective minimum threshold 138 percent. (Either way, remember that these are minimum thresholds; states can set eligibility thresholds higher, and many already have for certain populations, which means that more people qualify.)


Currently, the system for determining whether someone meets the eligibility threshold is complicated, and varies from state to state. It involves calculations of income and assets, as well as "disregards" of income and assets that vary for different populations. (Disregarding income or assets means not counting it for the purposes of determining eligibility.)

Under the ACA, the system for determining eligibility will be streamlined and unified across the states, and it will be tied to the Modified Adjusted Gross Income (MAGI) tax rules. This system will also be used to determine eligibility for exchange subsidies.

Now, instead of a variety of different income disregards, there will be one standard disregard for most populations: 5 percent. That means that a person's income can be up 138 percent FPL, but since 5 percentage points of her income will be ignored, she will effectively meet the 133 percent threshold. The new MAGI system is also important in terms of what sources of income it counts and doesn't count (importantly, it doesn't count assets), and in how family size is determined.  (FAQ top)

6. How will the Medicaid expansion be financed?
The federal government will finance the great majority of the costs associated with the Medicaid expansion. For the "newly eligible population" (anyone not previously eligible in their state), the federal government will cover 100 percent of costs in 2014-16, and it will always cover at least 90 percent of the costs of this population. States will continue to receive their standard federal contributions for "traditionally eligible" populations. This amount is different from state to state, and averages less than 60 percent. (FAQ top)

7. What other Medicaid provisions are in the ACA?
The questions and answers above provide an overview of the Medicaid expansion that will occur in 2014, as well as the new simplified methodology of calculating income to determine eligibility, using the MAGI tax rules. There is also information above about the federal government's enhanced payments to help finance this expansion, and the fact that newly eligible beneficiaries might be eligible for  or "benchmark equivalent" sets of benefits, instead of traditional Medicaid benefits.

Selected additional Medicaid provisions include: the maintenance of effort (MOE) requirement, enhanced provider payments, incentives to states to cover preventive services at no cost to beneficiaries, a new option for states to expand family planning eligibility without having to apply for a waiver, and Disproportionate Share Hospital (DSH) payment reductions. This short video by the Kaiser Family Foundation provides a useful summary of both the Medicaid expansion, and many of these other provisions. Note that it was created before the Supreme Court's decision affecting the Medicaid expansion. (FAQ top)

8. What are the implications of the Supreme Court's ruling on the Medicaid expansion?
In June 2012, the Supreme Court upheld the constitutionality of the Affordable Care Act, including the Medicaid expansion, but limited the federal government's ability to penalize states that don't implement the expansion. See our Supreme Court Decision page for this information.
 (FAQ top)


Resources:

For more information, visit our Supreme Court Decision page or our Useful Links page.

APHA is continuing to update its health reform website and resources. Please check back as we add new content.

Return to top of page. Return to ACA Basics.