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How Does Medicaid Work?

Medicaid is the health care system in the United States that provides coverage for certain low-income, blind and disabled people.  Medicaid is funded by both federal and state dollars, and every state has different rules about who is eligible and which services are covered.  Since 1982, all 50 states have participated in Medicaid, and many of them have expanded Medicaid coverage since the launch of the Affordable Care Act (Obamacare) in 2010.

The majority of Medicaid services in most states are provided at no cost to the recipient; payment is made directly by the state to the doctors, pharmacies, hospitals and ancillary providers on behalf of the person being treated. In some states there are small cash co-pays for some services.

To find out what benefits and services are covered by Medicaid in your state, the client must work directly with the local benefits office to enroll. Medicaid is typically handled in the same office where other public assistance programs like SNAP (food stamps), job training assistance and cash assistance are administered, often at the county level.

Applying for Medicaid requires submission of a paper or computerized form describing the client’s financial situation, including place of residence and personal/household income and expense scenarios. Claims made on the application must be verified with supporting documentation: lease, pay stubs, copies of bills, etc.

Once the application is completed, there will be a waiting period until it is approved; the local benefits office can estimate how long this will be when they accept the completed application. Upon approval, a Medicaid card will be sent to the applicant.  In some states, Medicaid care will be coordinated by a separate Managed Care Organization (MCO); if this is the case, a separate medical card for the MCO will also be mailed to the applicant. This is the card to be presented at medical appointments and when picking up prescriptions.

Medicaid eligibility must be verified at regular intervals and whenever a recipient’s income, household or expense situation changes.  If eligibility is terminated, the Medicaid and/or MCO cards will no longer be accepted by doctors and other providers.  For this reason, it is important attend all scheduled appointments with the local benefits office and to bring all relevant documentation. If Medicaid is not approved and there is reason to believe that an error has been made, there are appeals procedures available.

Because Medicaid has different rules in every state, benefits only apply in the state where they are applied for and approved.  If a recipient moves across a state line, benefits will not be available until the old state’s Medicaid has been terminated and a new application has been approved.

For individuals who qualify for Medicaid, it is the most cost-effective and accessible plan available.  Now that many states have expanded their Medicaid eligibility guidelines as part of the ACA, individuals who previously would have been limited to a commercial policy may now be Medicaid eligible.  For those who lose their Medicaid eligibility due to improved employment or other status changes, an NHIA agency may be able to assist with locating the best plan for continued, affordable coverage.