Is Medicaid Part of the Affordable Care Act?

Medicaid and the Affordable Care Act (ACA) are often discussed together, yet they serve distinct roles within the U.S. healthcare system. Understanding their relationship is crucial for grasping how health coverage has evolved in recent years.

This discussion will explore Medicaid’s integration with the ACA, focusing on coverage relationships, funding mechanisms, income requirements, and the interplay between state and federal responsibilities.

Coverage Relationship

The ACA transformed Medicaid by expanding its coverage to reach a broader segment of the population. Before this expansion, Medicaid primarily served low-income families, pregnant women, and individuals with disabilities. The ACA introduced a new eligibility category, allowing states to extend coverage to adults under 65 with incomes up to 138% of the federal poverty level. This aimed to reduce the uninsured population and close coverage gaps.

To encourage adoption, the federal government initially covered 100% of the costs for newly eligible enrollees, gradually decreasing to 90% by 2020. As of 2025, 39 states, including Washington D.C., have adopted the expansion, though others have not.

The ACA also aligned Medicaid with marketplace plans by requiring states to cover essential health benefits, such as mental health services, prescription drugs, and preventive care. This alignment has simplified transitions between Medicaid and marketplace plans as individuals’ income levels fluctuate.

Funding Mechanisms

Medicaid funding blends federal and state resources. The federal government provides matching funds to states based on the Federal Medical Assistance Percentage (FMAP), which adjusts according to each state’s per capita income, ranging from 50% to 83%. This system accommodates the diverse economic conditions across states, allowing programs to address local needs while receiving federal support.

For the Medicaid expansion population, the ACA introduced an enhanced matching rate, initially set at 100% and now at 90%. This reduced the financial strain on states and incentivized expansion. States that adopted the expansion have reported significant increases in federal funding to cover newly eligible populations.

Maintenance of effort (MOE) requirements ensure states uphold certain eligibility standards and enrollment procedures to receive federal funds. States also have flexibility to experiment with innovative payment and delivery models through Section 1115 waivers, enabling approaches like value-based payment systems.

Income Requirements

Medicaid eligibility under the ACA depends on specific income thresholds. The ACA expanded eligibility to individuals with household incomes up to 138% of the federal poverty level (FPL), which, for 2024, equates to approximately $20,120 annually for an individual and $41,400 for a family of four. These thresholds are adjusted annually for inflation and vary by family size.

Eligibility is determined using Modified Adjusted Gross Income (MAGI), which includes adjusted gross income along with certain tax-exempt interest and foreign income. This aligns Medicaid eligibility with other ACA-related programs, such as marketplace premium tax credits. However, elderly and disabled individuals may qualify under separate criteria not reliant on MAGI.

Medicaid’s income calculations often overlap with other government assistance programs, such as the Supplemental Nutrition Assistance Program (SNAP), simplifying benefit coordination. Additionally, Medicaid’s asset test, applicable to some groups, considers resources like savings and property.

State vs. Federal Roles

The interplay between state and federal roles in Medicaid reflects a balance of responsibilities. States manage Medicaid’s day-to-day administration, tailoring programs to local needs by determining covered services, provider payment rates, and implementing care models. Section 1115 waivers allow states to test new strategies for improving care and controlling costs.

The federal government ensures consistency and equity by setting minimum eligibility and benefit standards, enforcing anti-discrimination policies, and overseeing compliance with regulations through the Centers for Medicare & Medicaid Services (CMS). It also provides financial support through FMAP and enhanced matching rates for expansion populations, ensuring states can maintain their programs effectively.