The Difference Between Medicaid and Obamacare

Obamacare is a federal law, but it's also often used to refer to individual market health insurance obtained through the exchanges. Medicaid is government-run health coverage provided to people with limited incomes, and the expansion of Medicaid is a major cornerstone of Obamacare. Since both terms involve health coverage, health care reform, and the United States federal government, they sometimes get conflated. Let's take a look at how Obamacare and Medicaid differ, including who provides the coverage, who's eligible, the enrollment periods, how costs are shared, and more.

Doctor consulting with a patient
FatCamera / Getty Images

Obamacare/ACA Basics

Technically, Obamacare is just a nickname for the Affordable Care Act (ACA). It was initially used in a pejorative sense by opponents of the law, but President Obama embraced the terminology in 2012, and it's been used ever since by both opponents and supporters of the ACA.

Obamacare includes:

  • All the regulatory changes that apply to the individual health insurance market (both on-exchange and off-exchange, all new major medical plans are ACA-compliant)
  • Changes that apply to the small group and large group markets for employer-sponsored plans
  • Medicaid expansion, which is a cornerstone of the ACA
  • The individual mandate and employer mandates (the ACA's "sticks" to encourage people to obtain coverage; both are still in effect, but there is no longer a penalty for non-compliance with the individual mandate unless you're in a state that has its own penalty; there is still a federal penalty for non-compliance with the employer mandate)
  • The premium subsidies and cost-sharing reductions (the "carrots" that make coverage and care more affordable for people who buy policies in the health insurance exchanges)

Although Republican lawmakers and the Trump administration pushed for the repeal of numerous portions of the ACA throughout 2017, the only part of the law repealed was the individual mandate penalty. The Tax Cuts and Jobs Act, enacted in December 2017, eliminated the individual mandate penalty (but not the individual mandate itself) as of January 2019.

While the term "Obamacare" technically encompasses all the ACA, people typically use it to refer to individual market health insurance plans sold in the health insurance exchanges. That's how it'll be used for the rest of this article in a comparison of Obamacare and Medicaid.

The most important difference between Medicaid and Obamacare is that Obamacare health plans are offered by private health insurance companies while Medicaid is a government program (albeit often administered by private insurance companies that offer Medicaid managed care services).

Private Plans vs. Medicaid

Medicaid, the government health insurance program for low-income United States residents, is a social welfare program like SNAP food stamps or Temporary Assistance to Needy Families. As of 2020, more than 76 million Americans were receiving Medicaid benefits, which was an increase of nearly 20 million people, or 33%, since 2013. This increase has been driven largely by the expansion of Medicaid under the Affordable Care Act, but also by the widespread job losses caused by the COVID-19 pandemic.

"Obamacare" plans, obtained via the health insurance exchange in each state, cover more than 10 million people and are private health insurance plans. They're offered by health insurance companies such as:

  • Anthem
  • Kaiser Permanente
  • Molina
  • Cigna
  • Centene

Obamacare health plans are not run by the government but must comply with various state and federal government regulations. 

It's worth noting, however, that more than two-thirds of Medicaid enrollees nationwide are on Medicaid managed care plans, so their insurance is administered by private insurers that also sell commercial insurance to individuals and businesses. Those plans provide Medicaid benefits via a contract with state governments.

This can be confusing to people, and it's compounded by the fact that in most states, the Medicaid program doesn't have "Medicaid" in its name (Apple Health in Washington, for example, and BadgerCare Plus in Wisconsin).

Who Gets Medicaid vs. Obamacare

It’s more difficult to get Medicaid than it is to get an Obamacare health plan.

Who Can Get Obamacare Coverage

If you’re a legal resident of the United States, you can buy an Obamacare private health insurance plan through your state's ACA health insurance exchange as long as you’re not enrolled in Medicare.

Subsidy eligibility: If your income is between 100% and 400% of the federal poverty level (FPL), and you're not eligible for Medicaid, Medicare, or an employer-sponsored plan that provides affordable, comprehensive coverage, you may qualify for a subsidy that helps pay part of your monthly health insurance premiums.

Expanded Medicaid exception: In states with expanded Medicaid, Medicaid is available to people with income up to 138% of the poverty level, so the lower threshold for ACA subsidy eligibility is 139% of the poverty level in those states. As of 2021, Medicaid has been expanded in 36 states and DC, so the lower eligibility level for premium subsidy eligibility is 139% of the poverty level in the majority of the country (as of mid-2021, two additional states—Oklahoma and Missouri—will also expand Medicaid).

Who pays full price: If your income is above 400% of FPL or below 100% of FPL, you won’t get help paying for the health insurance sold on Obamacare exchanges. You can still buy a plan, but you’ll have to pay 100% of the monthly premium yourself.

Legal immigrants: Note that in every state, legally present immigrants with income below the poverty level are eligible for premium subsidies if they're not eligible for Medicaid due to the five-year Medicaid waiting period for recent immigrants.

California exception: In California, state-funded premium subsidies are available to people with household income up to 600% of the poverty level.

New Jersey also has state-funded premium subsidies as of 2021, but they're available to supplement the federal subsidies, and go to the same population of people with income up to 400% of the poverty level.

Who Can Get Medicaid Coverage

The criteria to get Medicaid are strict and vary from state to state.

Income below 138% of poverty level: The original intent of the ACA was that all legal residents with incomes up to 138% of FPL would get Medicaid coverage for free. However, a Supreme Court decision made it optional for states to comply with this part of the ACA.

Coverage gap: As of early 2021, there are 14 states that have not expanded Medicaid coverage to this group (as noted above, this will drop to 12 states as of mid-2021, when Missouri and Oklahoma implement Medicaid expansion). About 2.3 million people in 13 of those states are in what's known as the coverage gap:

  • Their income is below FPL and thus too low for Obamacare subsidies
  • But they're also ineligible for Medicaid

Wisconsin has managed to avoid a coverage gap despite not expanding Medicaid. The state hasn't expanded Medicaid but provides Medicaid to residents with income up to the poverty level.

Who's eligible: If you live in a state with expanded Medicaid coverage, you’re eligible for Medicaid if your modified adjusted gross income is no more than 138% of FPL.

This Medicaid coverage is usually free to you, although some states charge a small monthly premium for coverage for people with income above the poverty level.

If you live in a state without expanded Medicaid coverage, you’ll have to meet the older, stricter eligibility criteria. They vary from state to state but include:

  • Low-income criteria
  • That you belong to at least one vulnerable group (elderly, disabled, blind, children, pregnant women, and parents or adult caregivers of young children)

Example

Say you're a:

  • Childless
  • Non-disabled
  • 30-year-old male
  • Making $10,000 a year

Whether you qualify for Medicaid depends on what state you live in.

State with expanded Medicaid: Eligible because of income criteria (under 138% FPL)

State without expanded Medicaid: Ineligible (in coverage gap) because you don't belong to a vulnerable group. Unfortunately, you'll be in the coverage gap (and thus not eligible for Medicaid or a premium subsidy in the exchange) because your income is under the poverty level.

Enrollment Period Differences

If you're eligible for Medicaid, you can enroll throughout the year.

However, enrollment in Obamacare plans is only available:

  • During the annual open enrollment period OR
  • If you're eligible for a limited special enrollment period (due to loss of insurance, change of marital status, the birth or adoption of a child, etc.)

If you don't have a qualifying life event that triggers a special enrollment period, you’ll have to wait until the next open enrollment period to apply for an Obamacare plan. This is true whether you're enrolling through the exchange or off-exchange; individual/family major medical plans sold outside the exchange are ACA-compliant too and have the same limited enrollment windows.

When Coverage Begins

When you apply for an Obamacare plan during open enrollment (each fall from November 1 to December 15 in most states), the coverage doesn’t take effect until January 1 of the following year.

For example, if you enroll in an Obamacare plan during open enrollment in the autumn of 2021, your Obamacare plan coverage will take effect on January 1, 2022. Your effective date may be different if you apply because of a ​qualifying event, such as the birth of a child.

However, when you're accepted into the Medicaid program, there is no waiting period. Coverage takes effect immediately.

Retroactive Coverage Differences

Insurance plans sold through Obamacare are generally never retroactive, meaning you can't get coverage for anything before the start date of your insurance (there are some exceptions, including coverage for a newborn or newly adopted child, and state-run exchanges can also offer retroactive coverage dates during special enrollment periods, as Maryland has been doing during its COVID-related special enrollment period).

Depending on the circumstances and where you live, Medicaid coverage can be retroactive.

For example, if you’re five months pregnant when you apply for and receive Medicaid coverage, Medicaid may pay for the prenatal care you got during the first four months of your pregnancy, even before you applied for Medicaid.

The Trump administration has approved waiver requests from some states that want to end retroactive coverage under Medicaid, but most states do still offer retroactive Medicaid coverage.

Without retroactive coverage, Medicaid becomes a bit more similar to private health insurance in terms of when the coverage can take effect. However, coverage usually goes into effect on the first day of the month during which you applied, as opposed to the first of the following month—so the coverage can still be retroactive by a few weeks, depending on your enrollment date.

Cost-Sharing Differences

In most instances, Medicaid does not require much in the way of copayments, coinsurance, or deductibles.

Since Medicaid is intended for those with very low incomes, anything other than token small amounts of cost-sharing would be unaffordable to Medicaid recipients and present a potential barrier to care.

On the other hand, Obamacare health plans often come with substantial deductibles, copayments, and coinsurance.

Since a deductible of several thousand dollars can be difficult for people with modest incomes to pay, a cost-sharing subsidy to decrease those expenses is available if you make less than 250% of FPL.

If you make more than 250% of FPL, you're responsible for the full amount of any cost-sharing required by your Obamacare health plan.

Combining Coverage With Medicare

It’s perfectly legal and beneficial to have both Medicare and Medicaid coverage at the same time if you're eligible for both. In fact, there’s even a name for people who have both: dual eligibles.

However, there's usually no benefit to having both an Obamacare health insurance plan and Medicare.

It's illegal for a private insurer to sell you an individual market plan after you're enrolled in Medicare, but it's legal to sell an individual market plan (on-exchange or off-exchange) to someone who's eligible for Medicare but not enrolled.

Also, an insurer can't force you to give up an Obamacare plan you already have when you become eligible for Medicare.

In that case, though, you'll lose any premium subsidy you're receiving once you become eligible for Medicare (assuming you're eligible for premium-free Medicare Part A, which is usually the case), and there's no coordination of benefits between Medicare and the individual market.

It's generally advised that you drop individual coverage under Obamacare once you're eligible for Medicare. This process is not automatic; you have to initiate the cancellation of your Obamacare plan yourself and coordinated it with the start of your Medicare coverage.

This is true whether you sign up for original Medicare Parts A and B, or a Medicare Advantage (Part C) plan. 

Telling the Difference

When it comes to Medicaid and Obamacare, understanding who is providing your health coverage can be confusing, especially in certain circumstances.

Apply for ACA, Get Medicaid

You may not know you're eligible for Medicaid until you fill out an application for health insurance through the ACA-created health insurance exchange in your state.

If the exchange determines that you qualify for Medicaid, it will forward that information to the state Medicaid office, which starts the Medicaid application process.

Since you submitted your initial health insurance application to an Obamacare health insurance exchange, it might surprise you to end up receiving Medicaid instead of a private Obamacare plan. However, this is a normal part of the process.

Medicaid Through Private Companies

Although Medicaid is a government program, in most states, Medicaid services for the majority of enrollees are provided through a private health insurance company.

If you receive a Medicaid ID card from UnitedHealthcare, Humana, Kaiser, or Blue Cross, you might mistakenly assume you're receiving private Obamacare health insurance, when it's actually just the company your state has contracted with to provide Medicaid benefits.

Even though a private company is managing the Medicaid coverage, the benefits themselves are still Medicaid and the money to pay for those benefits ultimately comes from federal and state taxpayer funds.

Subtle Differences

The majority of people buying Obamacare health insurance get help paying for it in the form of subsidies from the federal government, so it can be confusing as to how government-subsidized private health insurance (Obamacare) is really all that different from government-funded Medicaid.

A Word From Verywell

If you have questions about who is providing your medical coverage and why, or about particular aspects of your coverage, look for contact information on your insurance card or paperwork. The agency or company should be able to provide you with the information you need.

Was this page helpful?
Article Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. The Washington Post. President Obama embraces ‘Obamacare’ label. But why?

    Published March 26, 2012

  2. Congress.gov. All Information (Except Text) for H.R.1 - An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018. 115th Congress (2017-2018).

  3. Kaiser Family Foundation. Total Monthly Medicaid and CHIP Enrollment. August 2020.

  4. Centers for Medicare and Medicaid Services, Newsroom. Effectuated enrollment for the first half of 2020. December 2020.

  5. Kaiser Family Foundation. Medicaid Managed Care Market Tracker.

  6. American Council on Aging. Medicaid By State: Alternative Names and Contact Information. October 11, 2017.

  7. Centers for Medicare and Medicaid Services. Frequently Asked Questions Regarding Medicare and the Marketplace. August 1, 2014.

  8. HealthInsurance.org. Medicaid coverage in your state.

  9. Norris, Louise. healthinsurance.org. A state-by-state guide to Medicaid expansion, eligibility, enrollment, and benefits. November 18, 2020.

  10. Covered California. Projected Impacts of State Laws Affecting Health Care Consumers and Covered California in 2020.

  11. GetCoveredNJ. Lower Your Monthly Premiums with the NJ Health Plan Savings.

  12. Supreme Court of the United States. National Federation of Independent Business, et al. v. Sebelius, Secretary of Health and Human Services, et al. Decided June 2012.

  13. Kaiser Family Foundation, The coverage gap: Uninsured poor adults in states that do not expand medicaid. January 14, 2020.

  14. HealthInsurance.org. Wisconsin and the ACA’s Medicaid expansion. Published November 14, 2018.

  15. Kaiser Family Foundation. Premium and Cost-Sharing Requirements for Selected Services for Medicaid Adults. January 1, 2020.

  16. HealthInsurance.org. What’s the deadline to get coverage during Obamacare’s open enrollment period? Published February 12, 2020.

  17. Maryland Health Connection. Gov. Hogan and Maryland Health Benefit Exchange Announce New Special Enrollment Period. January 4, 2021.

  18. Parallon. States Waive Retroactive Medicaid Eligibility, Challenging Vulnerable Patients and Hospitals.

  19. Centers for Medicare and Medicaid Services. Frequently Asked Questions Regarding Medicare and the Marketplace. August 28, 2014.