FAQs About Medicaid
What is Medicaid?
Medicaid is one of three federal entitlement programs (along with Social Security and Medicare). Although created by federal law, it is administered by the states. As an entitlement, anyone who meets the eligibility rules is guaranteed coverage.
Medicaid provides two main categories of benefits: healthcare and long-term care. Of the roughly 80 million Americans enrolled, about 94% receive healthcare benefits and 6% receive long-term care. Each category has mandatory services, with states allowed to offer optional services.
Who Is Covered By Medicaid?
Healthcare Medicaid primarily covers people under age 65 whose income falls within a set percentage of the federal poverty level. This includes infants, pregnant women, adults with or without dependent children, and individuals with defined disabilities.
Long-term care Medicaid serves people age 65+ who need help with activities of daily living in settings such as skilled nursing facilities, assisted living, or in-home care. Eligibility is not tied to poverty-level income thresholds but does include asset limits.
How Is Medicaid Funded?
Medicaid is jointly funded by federal and state governments. States budget their expected Medicaid costs and report them quarterly. The federal government reimburses up to 60% of state spending using general tax revenues. States provide the remaining 40%, funded through state revenues and taxes on service providers (e.g., hospitals and nursing homes).
Does The 2025 One Big Beautiful Bill Act Cut Medicaid Funding?
The Act does not reduce Medicaid funding. Medicaid funding remains a permanent federal-state obligation. However, the Act restricts who can qualify for—or afford—healthcare coverage. It projects reducing healthcare enrollment by 10–15 million people over ten years, thus reducing federal reimbursement to the states by $800 billion over the same time period.
The Act makes only modest changes to long-term care Medicaid. Beginning in 2028, states may cap allowable home equity for applicants between $500,000 and $1,000,000. It also shortens retroactive coverage for pre-application medical expenses from three months to one. Additionally, it limits states’ ability to tax care providers to fund optional long-term care services, meaning states may have to find alternative sources of funding for assisted living and in-home care.
Should People Still Apply For Long-Term Medicaid?
Yes. Long-term care Medicaid remains fully active. Delaware has already budgeted for all mandated Medicaid benefits through 2026 and is working to raise funds to cover any projected shortfall in federal reimbursement spending through 2028.Â
Do You Have To Be Broke To Qualify For Long-Term Care Medicaid?
No. Long-term care Medicaid is for individuals who are medically disabled, meaning they need help with at least one activity of daily living. The medical need for care is a mandatory requirement for approval. Financially, applicants must meet asset limits, but the rules allow for significant asset protection when applied correctly. Once approved, Medicaid must cover the individual’s long-term care costs for life.
When Should A Person Apply For Long-Term Care Medicaid?
The time to apply is when the need for care with activities of daily living first arises. This is when a person will still have their life savings. The rules allow for protecting assets as part of the application process. Do not wait until you have spent your life savings to apply for Medicaid. There won’t be any assets left to protect.Â