Medicaid vs. Marketplace Insurance: Which One Are You Eligible For?
When you need health insurance and do not get it through an employer, you generally have two options: Medicaid (if your income is low enough) or a private plan through the ACA marketplace (with potential subsidies). But figuring out which one you qualify for is not always straightforward. It depends on your income, your household size, and critically, whether your state has expanded Medicaid.
This guide breaks down the differences between Medicaid and marketplace insurance, explains the income thresholds, and helps you determine which path is right for your situation.
Medicaid vs. Marketplace: Quick Comparison
| Feature | Medicaid | ACA Marketplace |
|---|---|---|
| Cost | Free or very low cost | Monthly premiums (subsidies may apply) |
| Eligibility | Income-based (up to 138% FPL in expansion states) | Open to anyone; subsidies for 100-400% FPL |
| Deductibles | None or minimal | $500 - $9,200+ depending on plan |
| Copays | None or minimal | Varies by plan tier |
| Provider Network | Limited to Medicaid-accepting providers | Varies by plan; generally broader |
| Enrollment | Year-round | Open enrollment period (Nov-Jan) or qualifying event |
| Managed by | State government | Private insurance companies |
The Income Thresholds: Where the Line Is
The most important number to know is 138% of the federal poverty level (FPL). In states that have expanded Medicaid under the ACA, this is the dividing line between Medicaid and marketplace coverage:
2026 income thresholds at 138% FPL: approximately $21,420 for an individual, $29,004 for a family of 2, $36,588 for a family of 3, and $44,172 for a family of 4. Below these amounts, you qualify for Medicaid in expansion states. Above them, you move to marketplace coverage with potential subsidies.
Here is how the income brackets break down:
- Below 138% FPL (expansion states): You qualify for Medicaid. Coverage is free or nearly free.
- 100% to 400% FPL: You qualify for marketplace subsidies (premium tax credits) that reduce your monthly premium.
- 100% to 250% FPL: You also qualify for cost-sharing reductions (CSR) on Silver plans, which lower your deductibles and copays.
- Above 400% FPL: You can buy marketplace insurance at full price with no subsidy (the "subsidy cliff" -- read more about it here).
The Medicaid Expansion: Why Your State Matters
The ACA originally required all states to expand Medicaid to cover adults earning up to 138% FPL. However, a 2012 Supreme Court ruling made expansion optional for states. As of 2026, 40 states and Washington, D.C. have expanded Medicaid, while 10 states have not.
States That Have Expanded Medicaid (40 + D.C.)
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Dakota
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Washington, D.C.
States That Have NOT Expanded Medicaid (10)
- Alabama
- Florida
- Georgia
- Kansas
- Mississippi
- South Carolina
- Tennessee
- Texas
- Wisconsin*
- Wyoming
*Wisconsin has not formally expanded Medicaid but covers adults up to 100% FPL under a waiver, partially closing the gap.
The Coverage Gap: A Serious Problem
In states that have not expanded Medicaid, there is a group of people who fall into what is called the "coverage gap." These are adults who earn too much to qualify for their state's traditional Medicaid (which often covers only specific groups like pregnant women, children, or people with disabilities) but too little to qualify for marketplace subsidies (which start at 100% FPL).
The coverage gap affects an estimated 1.5 million Americans. If you live in a non-expansion state and earn less than about $15,520 per year as an individual, you may be too poor for marketplace subsidies but not eligible for Medicaid. This is one of the most significant gaps in the American health care system.
If you are in the coverage gap, your options are limited:
- Community health centers: Federally qualified health centers (FQHCs) provide primary care on a sliding-fee scale based on income.
- Hospital charity care: Nonprofit hospitals are required to offer financial assistance programs.
- State or local programs: Some counties and cities offer their own health coverage programs for low-income residents.
- Free clinics: Volunteer-run clinics provide basic care at no cost in many communities.
How to Determine Your Eligibility
Follow these steps to figure out whether you should be looking at Medicaid or marketplace coverage:
- Estimate your household income for 2026. The ACA uses modified adjusted gross income (MAGI), which includes wages, self-employment income, Social Security, investment income, and most other taxable income.
- Determine your household size. This includes you, your spouse (if filing jointly), and any dependents you claim on your taxes.
- Check your state's expansion status. Use the lists above to see whether your state has expanded Medicaid.
- Compare your income to the FPL thresholds. If you are below 138% FPL in an expansion state, apply for Medicaid. If you are between 100% and 400% FPL, apply through the marketplace for subsidized coverage.
When you apply through HealthCare.gov or your state marketplace, the system will automatically check your Medicaid eligibility. If you qualify for Medicaid, you will be redirected to your state's Medicaid program. If not, you will see marketplace plans with your subsidy amount applied.
When Marketplace Insurance Is Better Than Medicaid
Medicaid is free, so it might seem like the obvious choice. But there are situations where marketplace coverage may actually be preferable:
- Provider access: Not all doctors accept Medicaid. If your preferred doctor or specialist does not participate in Medicaid, a marketplace plan with a broader network may be worth the cost.
- Fluctuating income: If your income varies month to month (common for freelancers and gig workers), you may bounce between Medicaid and marketplace eligibility. Marketplace coverage can provide more stability.
- Plan choice: Marketplace plans come in multiple tiers with different deductible and copay structures. Medicaid benefits are standardized by the state with less flexibility.
That said, for most people with incomes below 138% FPL, Medicaid provides excellent coverage with minimal costs. The lack of premiums, deductibles, and copays makes it hard to beat financially.
Check Your Options
The fastest way to see where you fall is to enter your details into a subsidy calculator. You will see whether you are in the Medicaid range, the subsidy range, or above the subsidy cliff, and get an estimate of what your monthly costs would be.
Find Out What You Qualify For
Enter your income, age, state, and household size to see whether you qualify for Medicaid, marketplace subsidies, or both. Get your estimated monthly premium in seconds.
Check Your Subsidy →The Bottom Line
If your income is below 138% of the federal poverty level and you live in one of the 40 expansion states, Medicaid will provide you with comprehensive coverage at little to no cost. If your income is higher, marketplace insurance with premium tax credits can make coverage affordable. The critical thing is knowing where you fall on the income scale and whether your state has expanded Medicaid.
If you are in one of the 10 non-expansion states and earn below the poverty line, you may unfortunately fall into the coverage gap. In that case, community health centers, hospital financial assistance programs, and local clinics are your best resources until your state expands coverage or federal policy changes.