Medicaid and CHIP

Medicaid is the primary public health insurance program for low-income individuals and families in the United States. It is jointly funded by the federal government and individual states, and each state administers its own program within federal guidelines. The Children’s Health Insurance Program (CHIP) is a related program that covers children in families who earn too much to qualify for Medicaid but cannot afford private insurance. Together, these programs cover a large share of the US population, including many immigrants, pregnant women, children with disabilities, elderly adults, and low-income working families.

How Medicaid is administered

Unlike Medicare, which is a uniform federal program, Medicaid looks different from state to state. Federal law sets minimum requirements — the populations that states must cover, the services that must be included — but states have broad discretion to expand coverage, add benefits, and design delivery systems.

States can also choose to expand Medicaid to cover all adults below a defined income threshold, as permitted by the ACA. Most states have done so; others have not. In states that expanded Medicaid, many low-income adults who would not otherwise qualify have coverage available. In non-expansion states, eligibility for non-disabled adults without children may be extremely limited or nonexistent.

Delivery models also vary: some states use traditional fee-for-service Medicaid, where the state pays providers directly; many states contract with private managed care organizations (MCOs) that coordinate care for enrolled members.

Who qualifies for Medicaid

Federal law requires states to cover certain mandatory groups, including low-income children, pregnant women, parents and caretaker relatives in families below a threshold, individuals receiving Supplemental Security Income (SSI), and people who are aged or have disabilities. Beyond these groups, states may choose to extend coverage to other populations.

For most working-age adults without disabilities, eligibility is income-based and determined using a methodology called Modified Adjusted Gross Income (MAGI). Income limits are expressed as a percentage of the federal poverty level (FPL) and are updated annually by the federal government.

Immigration status is also a factor. Qualified non-citizens (including lawful permanent residents) are generally subject to a waiting period before becoming eligible for federal Medicaid, with exceptions for emergency Medicaid and certain categories such as refugees, asylees, and trafficking victims. Undocumented individuals are generally limited to emergency Medicaid. Some states use state-only funds to provide broader coverage to certain immigrant groups — rules vary significantly by state.

The Children’s Health Insurance Program (CHIP)

CHIP was created to cover children whose families earn too much to qualify for Medicaid but cannot afford private insurance. It fills the gap between Medicaid and private market coverage for children. Income thresholds for CHIP are higher than for Medicaid and are set separately by each state, within federal parameters.

In many states, CHIP is administered as an extension of Medicaid. In others, it operates as a distinct program with different cost-sharing or benefit structures. Many states also use CHIP funds to cover pregnant women who do not qualify for Medicaid pregnancy coverage.

Children enrolled in CHIP receive comprehensive coverage including physician visits, preventive care, dental, vision, and mental health services. Cost-sharing is generally limited and may be waived for very low-income families.

Applying for Medicaid or CHIP

You can apply for Medicaid or CHIP at any time of year — there is no open enrollment period for these programs. Applications can be submitted through your state’s Medicaid agency, through a state Marketplace website, or through healthcare.gov (which screens for both Marketplace and Medicaid eligibility simultaneously).

When you apply, you will need to provide information about household size, income, residency, and immigration or citizenship status. States must determine eligibility within a defined timeframe and must notify applicants in writing of the decision, including appeal rights.

Coverage can sometimes be retroactive. Depending on state rules, Medicaid may cover medical costs incurred before the application date — sometimes going back to the beginning of the month of application or even earlier months. This is called retroactive eligibility and can be important for people who received emergency or hospital care before applying.

Spend-down programs

In some states, individuals whose income exceeds the Medicaid limit may still qualify through a spend-down process. This works similarly to a deductible: you must incur and report medical expenses that reduce your countable income to the Medicaid eligibility level. Once you have spent down to that level, the state pays for remaining covered medical costs for the rest of the benefit period.

Not all states offer spend-down programs. Those that do have different rules about the benefit period and which expenses count toward the spend-down. Contact your state Medicaid agency for information about whether spend-down is available and how it works in your state.

Comparing Medicaid and CHIP

Feature	Medicaid — adults	Medicaid — children and pregnant women	CHIP
Who qualifies	Low-income adults; scope depends on whether state expanded Medicaid under ACA	Low-income children and pregnant women; eligibility is broad even in non-expansion states	Children in families above Medicaid income limit but below CHIP threshold
Income threshold	Up to 138% FPL in expansion states; often very limited for adults in non-expansion states	Up to 138–200%+ FPL for children (varies by state)	Up to 200–300%+ FPL depending on state
Premium	Generally none	None in most states	Low or none; waived at very low incomes
Covered services	Mandatory federal minimums plus state optional services	Comprehensive including EPSDT preventive services	Comprehensive including dental, vision, and mental health
Cost-sharing	Minimal; exempt for children, pregnant women, and emergency situations	Minimal or none	Limited; waived at lowest income levels
Enrollment	Year-round; no open enrollment period	Year-round	Year-round
Application channel	State Medicaid agency website, healthcare.gov, or in-person at local office	Same	Same as Medicaid

What this looks like in practice

Imagine Luis, who arrived in Texas as a lawful permanent resident five years ago. He and his wife have three children ages 3, 7, and 12. Luis works in construction and earns about $38,000 per year for a household of five. Texas has not expanded Medicaid under the ACA, so Luis as an adult without a disability is unlikely to qualify for Medicaid himself.

However, his three children likely qualify for CHIP based on the household income and size relative to the CHIP income thresholds. Luis’s wife is pregnant — federal law requires states to cover pregnant women in Medicaid for prenatal, delivery, and postpartum care. She may qualify for pregnancy Medicaid coverage regardless of Texas’s non-expansion status, depending on the income threshold for pregnant women.

Luis applies through healthcare.gov for the whole household. The system screens each member separately. The children are enrolled in CHIP; his wife is enrolled in pregnancy Medicaid. Luis is not found eligible for Medicaid and is offered Marketplace plans with premium tax credits based on his income.

The result: CHIP premiums for the children are minimal or waived, pregnancy Medicaid is free, and Luis pays a reduced Marketplace premium. Had Luis not known these programs exist, all three children might have gone uninsured. This scenario is common in mixed-status or non-expansion-state families, where different household members qualify for different programs simultaneously.

Step by step: how to apply for Medicaid or CHIP

1. Visit healthcare.gov or your state’s Medicaid or CHIP website. Healthcare.gov screens all household members for Medicaid, CHIP, and Marketplace eligibility simultaneously in a single application.
2. Create an account if you do not have one, or log in to an existing account. You can also call your state Medicaid agency or visit a local office to apply in person or by phone.
3. Provide information on all household members: full names, dates of birth, Social Security numbers or immigration status documentation, and current state of residence.
4. Enter household income — including wages, self-employment income, Social Security benefits, unemployment compensation, and other income sources. Medicaid uses MAGI-based income methodology for most applicants.
5. Submit the completed application. States must determine eligibility within federally defined timeframes — often within a few business days for most applications; up to 45 days for cases involving disability determinations.
6. Watch for a written determination by mail or through your online account. The notice will state the decision for each household member, including which program they are enrolled in, the effective date, and appeal rights if denied.
7. If approved, review your Medicaid or CHIP card and any materials explaining your covered services, your managed care plan assignment if applicable, and how to find in-network providers.
8. If denied or if you believe the decision is incorrect, you have the right to appeal. Request a fair hearing within the timeframe shown on the denial notice — the notice must explain how to appeal.

Documents and terms you’ll see

When applying for Medicaid or CHIP and using your coverage, you will encounter the following terms in application forms, eligibility notices, and program correspondence:

• Medicaid — the joint federal-state health insurance program for low-income individuals and families; administered differently in each state
• CHIP — Children’s Health Insurance Program; covers children whose family income is above Medicaid limits but below a higher state-set threshold
• Federal poverty level — the income benchmark used to set eligibility thresholds; varies by household size and is updated each year by the federal government
• MAGI — Modified Adjusted Gross Income; the income calculation method used for most Medicaid and CHIP eligibility determinations
• Dual eligible — a person who qualifies for both Medicare and Medicaid; coordination rules determine which program pays first and Medicaid may cover Medicare premiums and cost-sharing
• Prior authorization — approval your Medicaid managed care plan may require before covering certain services, procedures, or medications
• Out-of-pocket maximum — the limit on what enrollees can be required to pay in Medicaid cost-sharing; federal rules cap this at a percentage of household income