Jane Dotson
Medicaid eligibility is determined by state law and varies depending on income, family size, and other factors. If your employer offers health insurance, you may still be eligible for Medicaid as a secondary insurance option to cover copays, deductibles, and insurance premiums. However, it is important to note that Medicaid is the last resort payer if you have coverage through another agency. Additionally, if you have a Marketplace plan and receive an offer for job-based insurance, you may no longer qualify for savings on your Marketplace plan, even if you do not accept the job-based coverage.
| Characteristics | Values |
|---|---|
| Can someone get Medicaid if their employer offers insurance? | Yes, if their employer's insurance is unaffordable or does not meet minimum coverage standards. |
| How is affordability defined? | Affordability is defined as the cost of annual coverage being no greater than 9.02% of annual household income. |
| Can someone have both employer-provided insurance and Medicaid? | Yes, if they are qualified low-income families or individuals. |
| Can someone decline employer-provided insurance and buy an individual-market plan? | Yes, but they will likely not be eligible for a subsidy and will have to pay the full price for the individual-market plan. |
| Can someone keep their Medicaid and not take the insurance through their job? | Yes, but if they lose their Medicaid, they may have missed the open enrollment period with their employer. |
| Can someone receive a stipend from their employer if they opt-out of employer coverage and use Medicaid? | It depends on the state and the individual's income, family size, and other factors. |
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What You'll Learn
Medicaid as a secondary insurance
In the United States, Medicaid beneficiaries can have one or more additional sources of coverage for healthcare services. This is known as Third-Party Liability (TPL), where third parties are legally obligated to pay part or all of the expenditures for medical assistance under a Medicaid state plan. Medicaid may also pay for services that are otherwise financed by other public agencies or programs.
Medicaid can be used as a secondary insurance if you are already covered by your employer or have private coverage. This is especially useful for low-income families and individuals who may struggle to pay deductibles and co-pays. However, it is important to note that Medicaid is the last resort payer if you have coverage through another agency. This means that secondary payers usually cover smaller amounts, such as coinsurance or co-pays, while primary insurance covers more significant costs.
In most cases, Medicaid acts as the payer of last resort for most services. As a condition of eligibility, enrollees must identify potential third-party sources of coverage and assign the Medicaid agency the right to pursue third-party liability on their behalf. It is also important to note that Medicaid eligibility is governed by state law, and each state has different rules for keeping Medicaid if you are eligible for other coverage.
For example, in Arizona, most Medicaid recipients do not owe a monthly premium for the services and only need to make payments while receiving care. Additionally, if you are 19 or older, you may have to make small copayments for Medicaid-covered services, while those 18 or younger, pregnant, in hospice care, or exempt under certain other conditions are exempt from copayments.
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Employer-provided insurance affordability
In the United States, the Affordable Care Act (ACA) requires employers with 50 or more full-time employees (or full-time equivalents) to provide health insurance that is affordable and provides minimum value to 95% of their full-time employees and their children up to the age of 26. Coverage is considered "affordable" if employee contributions for employee-only coverage do not exceed a certain percentage of an employee's household income (8.39% in 2024 and 9.02% in 2025).
If an employer does not offer coverage or does not meet the minimum value requirement, they may be subject to penalties if any full-time employee purchases coverage on the Marketplace and receives a federal premium subsidy. The U.S. Department of Health & Human Services has developed a minimum value calculator to determine if a plan meets this requirement.
Even if your employer offers health insurance, you may still be eligible for Medicaid if you meet the financial requirements. Medicaid eligibility is governed by state law, and each state has different rules for Medicaid qualification and keeping Medicaid if eligible for other coverage. For example, in Arizona, most Medicaid recipients do not owe a monthly premium and only need to make payments while receiving care. Additionally, individuals who are 18 or younger, pregnant, in hospice care, or meet certain other conditions are exempt from copayments.
If you are already enrolled in Medicaid and are offered private insurance through your employer, you may be able to keep your Medicaid coverage. However, it is important to note that Medicaid is always the last resort payer if you have coverage through another agency. It is recommended to check with your state's Medicaid office to determine your eligibility, as it will depend on your income, family size, and other factors.
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Medicaid eligibility and income
Medicaid eligibility is governed by state law. Each state has its own rules for Medicaid eligibility and keeping Medicaid if you are eligible for other coverage. For example, in Arizona, most Medicaid recipients don't owe a monthly premium for the services and only need to make payments while receiving care. If you are 19 or older, you might have to make small copayments for Medicaid-covered services. However, you won't have to cover copayments if you are 18 or younger, pregnant, in hospice care, or exempt under certain other conditions.
The Affordable Care Act of 2010 created the opportunity for states to expand Medicaid to cover nearly all low-income Americans under 65. Eligibility for children was extended to at least 133% of the federal poverty level (FPL) in every state, and states were given the option to extend eligibility to adults with an income at or below 133% of the FPL. Most states have chosen to expand coverage to adults, and those that have not yet expanded may choose to do so at any time.
Medicaid eligibility is based on Modified Adjusted Gross Income (MAGI), which considers taxable income and tax filing relationships. MAGI-based income counting rules do not allow for income disregards that vary by state or eligibility group and do not allow for an asset or resource test. However, some individuals are exempt from MAGI-based income counting rules, including those whose eligibility is based on blindness, disability, or age (65 and older). Eligibility for these individuals is generally determined using the income methodologies of the SSI program administered by the Social Security Administration.
In addition to income requirements, there are also non-financial eligibility criteria for Medicaid. Individuals must be residents of the state in which they are receiving Medicaid and must be either citizens of the United States or certain qualified non-citizens, such as lawful permanent residents. Some eligibility groups are limited by age, pregnancy, or parenting status. For example, children in foster care who are not otherwise eligible may be covered under certain state programs.
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Switching from Medicaid to employer insurance
If you are currently enrolled in Medicaid but have recently started a new job that offers health insurance, you may be able to keep your Medicaid coverage. This decision will ultimately depend on your income, family size, and other factors determined by your state. In some cases, you may be able to maintain both Medicaid and employer insurance simultaneously. However, it is important to note that Medicaid will typically be the secondary payer in such cases.
If you choose to transition from Medicaid to employer-provided insurance, it is recommended to act promptly. Employees typically have only 60 days from the date they lose Medicaid coverage to request a Special Enrollment Period (SEP). This period allows you to make changes to your insurance coverage. Additionally, employers usually offer an annual open enrollment period when employees can re-evaluate their coverage options and make adjustments.
When considering switching from Medicaid to employer insurance, it is essential to evaluate your healthcare needs and financial situation. Employer-provided insurance plans often vary in their coverage and associated costs. Some plans may have higher premiums, while others may have lower out-of-pocket expenses for healthcare services. It is advisable to review the details of your employer's insurance plan and compare it with your current Medicaid coverage to make an informed decision.
Lastly, if you are concerned about the affordability of your employer's insurance plan, there may be other options available. You can explore the possibility of enrolling in a Marketplace plan, which may offer savings or premium tax credits to reduce your monthly insurance costs. These plans take into account your income and household information to determine eligibility for savings.
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Employer insurance and tax credits
If you are already enrolled in Medicaid and are offered private insurance through your employer, you may be able to keep your Medicaid coverage. However, this depends on your income, family size, and other factors. It is best to consult the Medicaid office in your state for specific advice.
In general, employer-sponsored coverage must meet certain requirements for affordability and minimum value. If it does not, employees may be able to opt-out of their employer's coverage and purchase coverage in the ACA marketplace with the help of a premium tax credit. This is known as "jumping the firewall".
Small businesses and non-profits with fewer than 25 full-time equivalent (FTE) employees, an average employee salary of $56,000 per year or less, and a contribution of at least 50% towards their full-time employees' premium costs may qualify for the Small Business Health Care Tax Credit. This credit can cover up to 50% (35% for non-profits) of the costs of employees' premiums.
Large employers (those with at least 50 full-time employees) are not required to offer coverage to their employees' dependents. If an employer chooses to offer coverage to part-time workers, those workers will only be eligible for premium tax credits if the employer's offer of coverage is unaffordable or does not meet the "minimum value" standard.
It is important to note that the guidelines and thresholds for tax credits are indexed and can change each enrollment year.
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Frequently asked questions
Yes, you can have both your employer's insurance and Medicaid. However, you will need to check with your state's Medicaid office to see if you are eligible, as it will depend on your income, family size, and other factors.
No, there is no penalty for rejecting your employer's insurance. However, if you lose your Medicaid coverage, you may miss the open enrollment period for your employer's insurance.
Yes, qualified low-income families and individuals might be able to cover co-pays, deductibles, and insurance premiums by using Medicaid as a secondary insurance. However, it is important to note that Medicaid will be the last resort payer if you have coverage through another agency.
If your employer does not offer health coverage, you can get health insurance through your state's health insurance marketplace during an enrollment period. For example, in Vermont, eligible residents can get financial help paying for their Vermont Health Connect plan.
