Medicaid Eligibility Expansion

Under the Affordable Care Act, states may expand Medicaid eligibility to cover adults without dependent children if their incomes are at or below 138 percent of the federal poverty level. States choosing this option receive enhanced federal funds to pay for it. As of early 2023, all but ten states have opted to expand care to this group. This option eliminates an asset test for determining eligibility. Instead, it uses a modified adjusted gross income standard to determine income eligibility. Modified adjusted gross income (MAGI) is defined as an individual’s or a couple’s gross income (for federal tax purposes), with adjustments that add back certain deductions such as foreign income and tax-exempt interest. 

When people who qualify for Medicaid under the expansion option become eligible for Medicare, they are required to give up their Medicaid expansion coverage. However, some of them will still be eligible for coverage under Traditional Medicaid rules because they meet a state’s income and asset requirements. Others may be able to get help with their Medicare cost-sharing obligations through one of the Medicare Savings Programs, commonly referred to as MSPs (see also Medicaid Assistance for Medicare Beneficiaries with Low Incomes). Thus, individuals with low incomes who are transitioning from the Medicaid expansion into Medicare must receive timely outreach and education so that they are aware of and can gain access to these important benefits.