What's the Difference Between Medicaid & Obamacare?

Obamacare Is the ACA; Expansion of Medicaid Is Part of Obamacare

Image of an apple and an orange.
Comparing Medicaid and Obamacare is like comparing apples to oranges. Image © JGI/Getty Images

Technically, Obamacare is just a nickname for the Affordable Care Act. 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.

Since Obamacare is synonymous with the ACA, it includes all of the regulatory changes that apply to the individual health insurance market (both on and off-exchange, all new major medical plans are ACA-compliant), as well as changes that apply ​to the small group and large group markets.

It also encompasses Medicaid expansion, which is a cornerstone of the ACA. And it includes the individual mandate and employer mandates—the ACA's "sticks" to encourage people to obtain coverage—along with the premium subsidies—the "carrots"—that make coverage more affordable in the health insurance exchanges.

Typical Usage of "Obamacare" = Plans Sold in the Exchange

But although the term Obamacare technically encompasses all of that, people typically use it to refer to individual market health insurance plans sold in the health insurance exchanges. So for the purpose of this article, we'll go with that utilization of the word, and take a look at the difference between those plans and Medicaid.

"Obamacare" plans are private plans; Medicaid is government-run coverage

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.

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.

The term Obamacare is typically used to describe private health insurance purchased through the Affordable Care Act’s health insurance exchanges.

Obamacare health insurance plans are offered by health insurance companies such as Blue Cross, Kaiser Permanente, Molina, Aetna, Humana, Wellpoint, and others. Obamacare health plans are not run by the government. 

It's worth noting, however, that more than three-quarters of Medicaid enrollees nationwide are on Medicaid managed care plans, which means that their insurance is administered by private insurers that also sell commercial insurance to individuals and businesses. Those plans operate via a contract with the state government to provide Medicaid benefits.

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. Who Gets Obamacare

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

If you’re a legal resident of the United States, you can buy an Obamacare private health insurance plan through your ACA health insurance exchange as long as you’re not eligible for Medicare. If your income is from 100% to 400% of federal poverty level, you may qualify for a subsidy that helps pay part of your monthly health insurance premiums (note that the lower threshold for subsidy eligibility is 138 percent of the poverty level in states that have expanded Medicaid; in those states, Medicaid is available to people with income up to 138 percent of the poverty level).

If your income is above 400% of FPL, you won’t get help paying for the health insurance sold on Obamacare exchanges, but you may buy an Obamacare plan anyway. In this case, you’ll be responsible for paying 100% of the monthly premium yourself.

The criteria to get Medicaid are strict and vary from state to state. 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 complying with this part of the Affordable Care Act optional. This resulted in a confusing system in which some states have very strict Medicaid eligibility criteria because their leaders chose not to expand Medicaid coverage, but other states have more lenient Medicaid eligibility criteria because their leaders opted into the ACA’s Medicaid expansion.

As of 2017, there are 19 states that have not expanded Medicaid. Roughly 2.6 million people in 18 of those states are in what's known as the coverage gap: their income is too low for subsidies in the exchange (under the poverty level), but they're also ineligible for Medicaid).

If you live in a state that has expanded Medicaid coverage, you’ll be 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, token monthly premium for coverage for people with income above the poverty level.

If you live in a state that didn’t expand Medicaid coverage, you’ll have to meet the older, stricter eligibility criteria. These stricter criteria vary from state to state. They include low-income criteria and may require that you be a member of a medically vulnerable group such as the elderly, the disabled, the blind, children, pregnant women, and parents or adult caregivers of young children.

So, for example, if you’re a childless, healthy 30-year-old male with an income of $10,000 per year, whether or not you qualify for Medicaid depends on which state you reside in. If you live in a state that expanded Medicaid coverage to everyone making up to 138% of FPL, you’ll get Medicaid because you meet the income criteria. If you live in a state that didn’t expand Medicaid coverage, you won’t qualify for Medicaid, even though your income is low, since you’re not also disabled, elderly, blind, or the parent of a young child (Wisconsin is an exception; the state has not accepted federal funding to expand Medicaid, but they provide Medicaid to residents with income up to the poverty level, so there's no coverage gap in Wisconsin).

Limited Enrollment Period for Obamacare Vs. Enroll Anytime for Medicaid

You may apply for Medicaid throughout the year. You may only apply for Obamacare during open enrollment or if you meet the eligibility criteria for a limited special enrollment period. If it’s not open enrollment, you’ll have to wait until the next open enrollment period to apply for an Obamacare plan (note that this is true regardless of whether you're enrolling through the exchange or off-exchange; plans sold outside the exchange are ACA-compliant too, and have the same limited enrollment windows; Nevada is an exception, where off-exchange plans are sold year-round, but with a 90-day waiting period before coverage takes effect).

When you apply for an Obamacare plan during open enrollment (scheduled to run from November 1 to December 15 from now on), 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 2017, your Obamacare plan coverage will take effect on January 1 of 2018 (there are different effective date rules that apply in some cases when people apply as a result of a qualifying event, such as the birth of a child).

However, when you apply for Medicaid and are accepted into the Medicaid program, there is no waiting period before your coverage takes effect.

Retroactive Coverage for Medicaid Vs. No Retroactive Coverage for Obamacare

In some instances, Medicaid coverage can be retroactive. For example, if you’re 5 months pregnant when you apply for and receive Medicaid coverage, Medicaid may actually pay for the prenatal care you got during months 1-4 of your pregnancy, even before you applied for Medicaid. This is not true of the private health insurance plans sold on Obamacare exchanges.

Lower Cost-Sharing for Medicaid Vs. Obamacare

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 do come with deductibles, copayments, and coinsurance. Since a deductible of several thousand dollars can be difficult for people with modest incomes to pay, there is a cost-sharing subsidy available to those making less than 250% of FPL that helps to decrease these cost-sharing expenses. Those making more than 250% of FPL are responsible for the full amount of any cost-sharing required by their Obamacare health plan.

Medicaid & Medicare Can Be Combined; Obamacare & Medicare Can't

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 is generally 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 eligible for Medicare, although they can't force you to give up an Obamacare plan you already have when you become eligible for Medicare. But in that case, you'll lose any premium subsidy that you're receiving once you become eligible for Medicare, and there's also no coordination of benefits between Medicare and the individual market. So it's generally advised that Obamacare enrollees drop their individual coverage once they become eligible for Medicare.

Note that this process is not automatic; you have to initial cancellation of your Obamacare plan yourself. When you become eligible for Medicare, you’ll need to coordinate the cancellation of your Obamacare health insurance policy with the start of your Medicare coverage. This is true whether you sign up for original Medicare Parts A and B, or a Medicare Part C, Medicare Advantage plan

Why Telling the Difference Between Medicaid & Obamacare Can Be Tough

Understanding the difference between Medicaid and Obamacare can be confusing because

  • Often, you learn you’re eligible for Medicaid when you fill out an application for health insurance on your ACA health insurance exchange. If the exchange determines that you qualify for Medicaid in your state, it will forward that information to Medicaid, starting the Medicaid application process. Since you submitted your initial health insurance application to an Obamacare health insurance exchange, it can be confusing when you end up receiving Medicaid instead of a private Obamacare plan.
  • Although Medicaid is a government program, in most states, Medicaid services for the majority of enrollees are provided through a private health insurance company. In fact, according to Kaiser Family Foundation, more than three-quarters of Medicaid recipients are in managed care health plans. A Medicaid beneficiary receiving his or her Medicaid ID card from UnitedHealthCare, Humana, Kaiser, or Blue Cross, might mistakenly assume he’s received private Obamacare health insurance. In fact, his state Medicaid program has contracted with a private insurer to manage the care of Medicaid recipients. Even though a private company is managing the Medicaid benefits, the benefits themselves are still Medicaid and the money to pay for those benefits ultimately comes from combining federal and state taxpayer funds.

Since the majority of people buying health insurance on an ACA health insurance exchange get help paying for that health insurance in the form of subsidies from the federal government, it may be confusing as to how government-subsidized private health insurance (Obamacare) is really all that different than government-funded Medicaid.

Updated by Louise Norris.

Sources:

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

Kaiser Family Foundation, The Coverage Gap: Uninsured Poor Adults in States That Do Not Expand Medicaid. October 19, 2016.

Kaiser Family Foundation, Total Medicaid Managed Care Enrollment, 2014.

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