Medicaid vs Marketplace: Which Do You Qualify For?

Medicaid and marketplace plans are both paths to affordable coverage, but they work differently. Your income determines which one you qualify for—and in some states, you might fall into a frustrating gap between them.

The Basic Difference

Medicaid: - Government program for low-income individuals - Free or very low cost (usually $0-$5 copays) - Income limit: Generally up to 138% FPL in expansion states - Enrollment: Year-round (no enrollment periods)

Marketplace (ACA): - Private insurance with government subsidies - Monthly premiums (can be $0 with subsidies) plus deductibles/copays - Subsidies available: 100% to 400%+ FPL - Enrollment: Open Enrollment or Special Enrollment Period

2024-2025 Income Thresholds

Medicaid (Expansion States)

138% Federal Poverty Level

Marketplace Subsidies

Enhanced subsidies through 2025 removed the 400% FPL cap

Which States Expanded Medicaid?

40 states + DC have expanded Medicaid. If you're in an expansion state, adults under 138% FPL generally qualify for Medicaid.

Non-expansion states (as of 2024): - Texas - Florida
- Georgia - Tennessee - Mississippi - Alabama - South Carolina - Kansas - Wyoming - Wisconsin (partial expansion)

The Coverage Gap Problem

In non-expansion states, there's a gap:

• Below 100% FPL: Don't qualify for marketplace subsidies
• Above Medicaid limit: Don't qualify for Medicaid (which covers only specific categories like pregnant women, disabled, children)

Example: Single adult in Texas earning $12,000/year (80% FPL): - Too much income for Texas Medicaid (non-expansion) - Too little income for marketplace subsidies (below 100% FPL) - Falls into the gap - no affordable options

If you're in this situation, check if you qualify for other programs or if your state has since expanded Medicaid.

Comparing Coverage

What If I Qualify for Both?

If your income is near the Medicaid threshold, the marketplace will determine which program you qualify for:

1. Apply on HealthCare.gov
2. System checks Medicaid eligibility first
3. If Medicaid-eligible → Routes you to state Medicaid
4. If not Medicaid-eligible → Shows marketplace plans with subsidies

You generally cannot choose marketplace over Medicaid if you qualify for Medicaid.

When Income Fluctuates

Income changes can shift you between programs:

Income drops below 138% FPL: - You may become Medicaid-eligible - Marketplace will notify you - Transition to Medicaid (usually seamless)

Income rises above 138% FPL: - You'll lose Medicaid eligibility - Triggers Special Enrollment Period for marketplace - Apply within 60 days of Medicaid termination

Tip: Report income changes to both programs within 30 days.

Children and CHIP

Children's Health Insurance Program (CHIP) has higher income limits than adult Medicaid—often up to 200-300% FPL.

Your children may qualify for CHIP even if you don't qualify for Medicaid. Apply through HealthCare.gov or your state's Medicaid office.

Medicaid Pros and Cons

Pros: - ✅ No or very low cost - ✅ No deductibles (usually) - ✅ Comprehensive coverage - ✅ Enroll anytime (no enrollment periods) - ✅ Retroactive coverage (up to 3 months)

Cons: - ❌ Provider network may be limited - ❌ Some doctors don't accept Medicaid - ❌ May require renewal/redetermination annually - ❌ Asset limits in some states for certain groups

Marketplace Pros and Cons

Pros: - ✅ Broader provider networks - ✅ More plan choices - ✅ Can choose metal tier (Bronze, Silver, Gold) - ✅ HSA-eligible plans available

Cons: - ❌ Monthly premiums (even with subsidies) - ❌ Deductibles and copays - ❌ Must enroll during Open Enrollment or SEP - ❌ Must reconcile subsidies at tax time

How to Apply

For both programs, start at HealthCare.gov:

1. Create an account
2. Complete the application
3. Enter household and income information
4. System determines Medicaid vs marketplace eligibility
5. Follow instructions for your program

State-based marketplaces: If your state has its own marketplace (CA, NY, CO, etc.), apply there instead.

What If I'm Denied Medicaid?

If Medicaid denies you:

1. Check the reason - Income? Missing documents? Citizenship?
2. Appeal if incorrect - You have the right to appeal
3. Apply for marketplace - Medicaid denial triggers SEP
4. Keep documentation - Denial letter proves SEP eligibility

Next Steps

1. Estimate your annual income for the coverage year
2. Check your eligibility with our quiz
3. Apply on HealthCare.gov - It determines Medicaid vs marketplace for you
4. Report income changes throughout the year