Two of the biggest public health coverage paths in the US are Medicaid and the ACA marketplace. They are designed to fit together, but the seam between them is where most confusion happens.
Here is how to figure out which one you actually qualify for, and what to do if you cross between them mid-year.
The income line
For most adults under 65, the dividing line is the federal poverty level (FPL). The FPL numbers are set each year by HHS and depend on household size.
In states that expanded Medicaid under the ACA, adults qualify for Medicaid up to 138 percent of FPL.
In states that did not expand Medicaid, the rules are stricter for non-disabled, non-pregnant adults without dependent children. Many such adults do not qualify for Medicaid no matter how low their income is.
Above the Medicaid threshold, the marketplace takes over with premium tax credits. The credit phases out at higher incomes. The exact phase-out has changed in recent years, so check HealthCare.gov for the current cliff.
Expansion vs non-expansion states
Most states have expanded Medicaid. The list of non-expansion states has shrunk over time, but it is still nonzero. The Medicaid.gov state profile page has the current list.
If you are in an expansion state, your household income compared to FPL is what matters.
If you are in a non-expansion state, you may face the coverage gap. Some adults earn too much for the state old Medicaid rules but too little for marketplace credits. Many in the gap pay a marketplace premium out of pocket, accept a short-term plan with its limitations, go without coverage, or qualify under specific carve-outs (pregnancy, severe disability, dependent children with very low income).
CHIP for kids
The Children Health Insurance Program covers kids whose families earn too much for Medicaid but not enough for unsubsidized marketplace plans. Income limits for CHIP are higher than Medicaid and vary by state.
A common pattern: parents are on a marketplace plan with a premium tax credit. The kids are on CHIP. The application is one process, but the coverage is two programs.
What happens when income changes
The marketplace and Medicaid eligibility get checked at different times.
Marketplace eligibility is checked when you apply and reconciled annually on your tax return.
Medicaid eligibility is checked when you apply and at renewal, usually annually. After the pandemic continuous-enrollment period ended in 2023, states resumed regular Medicaid renewals (sometimes called Medicaid "unwinding"). Millions of people were re-evaluated, and many lost coverage either because they no longer qualified or because of paperwork issues.
If your income goes up and you no longer qualify for Medicaid:
The state will end your Medicaid coverage at the end of the relevant month.
You get a Special Enrollment Period for marketplace coverage with 60 days to enroll.
Be careful with the timing. There can be a gap if you do not act fast.
If your income goes down and you might now qualify for Medicaid:
You can apply for Medicaid any time. Medicaid does not have an annual Open Enrollment.
If you are on a marketplace plan, applying for Medicaid does not automatically end the marketplace plan. You may need to cancel marketplace coverage to avoid paying for two.
If you take advance premium tax credits while also eligible for Medicaid, the IRS may claw the credits back at tax time.
A worked example
Single adult, expansion state, two scenarios.
January-April. Working part-time, income around 130 percent of FPL. Eligible for Medicaid.
May. Promoted to full-time, income jumps to around 180 percent of FPL. Now over Medicaid eligibility.
The state Medicaid agency learns of the income change either through state data systems or a renewal. Medicaid ends.
The person has 60 days from the Medicaid end date to enroll in a marketplace plan with a premium tax credit.
If the person delays, they may have no coverage in the gap. The marketplace SEP closes after 60 days, and Open Enrollment is far off.
A non-expansion-state scenario
Single adult in a non-expansion state. Income at 80 percent of FPL.
Not eligible for that state Medicaid because they do not have dependents and are not disabled, pregnant, or otherwise qualifying.
Not eligible for marketplace premium tax credits because their income is below the marketplace floor (which has been 100 percent of FPL for the credit unless temporary expansions apply).
This is the coverage gap. Options:
Check whether they qualify under any specific state-level program (pregnancy coverage, family planning, refugee programs, breast and cervical cancer treatment programs).
Look at community health centers (FQHCs) for sliding-scale primary care.
Apply for a marketplace plan at full price if affordability allows.
Look for charity care at hospitals for unforeseen events.
How to apply
You can apply for Medicaid through:
Your state Medicaid agency directly. The Medicaid.gov state profile page links to each one.
HealthCare.gov or your state marketplace, which forwards your application to Medicaid if you appear eligible.
Local social services offices, community health centers, and ACA-certified assisters.
Medicaid processing times vary. Some applications are decided in days. Others take weeks, especially if documentation is incomplete. Marketplace decisions are usually faster.
Common pitfalls
Assuming Medicaid will cover retroactively. Some states grant up to 90 days of retroactive Medicaid for the period before you applied. Others do not, or limit it. Do not count on retroactive coverage for current bills.
Not reporting income changes. Marketplace consumers are required to report income changes mid-year. Not doing so can lead to overpaid credits and a tax-time surprise.
Letting Medicaid renewal lapse. After 2023, paperwork-driven Medicaid terminations have been common. Open every letter from the state agency. Many of these were reinstated when the paperwork was sent in.
Double coverage. Being enrolled in both Medicaid and a marketplace plan is usually a mistake. Cancel one.
What to do next
Find out whether your state expanded Medicaid (the state Medicaid agency website will say).
Use the savings estimator on HealthCare.gov with your real numbers. The system will tell you if you fall in the Medicaid range.
If you are near a boundary or your income varies, set up a calendar reminder to check your status every few months.
For related context, see premium tax credit income and Open Enrollment deadlines.
Sources
Frequently asked questions
Can I be on Medicaid and a marketplace plan at the same time?
Generally no. If you qualify for Medicaid, you are not eligible for premium tax credits on the marketplace. Having a marketplace plan while also on Medicaid usually means you must pay full price for the marketplace plan.
What happens if my income goes up mid-year?
If you lose Medicaid eligibility, you get a Special Enrollment Period for marketplace coverage. Apply within 60 days.
Does Medicaid expansion matter?
Yes. In expansion states, adults can qualify for Medicaid up to 138 percent of the federal poverty level. In non-expansion states, adults often have to be much poorer or have specific circumstances to qualify.
What is the 'coverage gap'?
In non-expansion states, some adults earn too much for Medicaid but too little to qualify for marketplace premium tax credits. They fall in a coverage gap with no affordable option.