Choosing between Medicaid and ACA Marketplace insurance comes down to one thing: your income. If your household earns below 138% of the Federal Poverty Level (FPL) and you live in a Medicaid expansion state, you likely qualify for Medicaid at little to no cost. If your income falls above that threshold, the ACA Marketplace is your main option for subsidized coverage. As of 2026, the rules have changed enough that millions of people need to re-evaluate which program fits their situation.
Quick Answer: Medicaid is free or nearly free coverage for lower-income individuals and families. The ACA Marketplace offers subsidized private insurance for people who earn too much for Medicaid but still need help paying premiums. Income is the primary dividing line between the two.
Check your eligibility now at CoveredUSA -- it takes 2 minutes.
How Medicaid and Marketplace Insurance Differ
Medicaid is a government-run program jointly funded by the federal government and individual states. It covers a broad range of healthcare services at little or no cost to the enrollee. There are no monthly premiums in most cases, and copays are minimal.
The ACA Marketplace (also called the Health Insurance Exchange or Obamacare) is a platform where you shop for private insurance plans. The federal government helps you pay for those plans through Premium Tax Credits (PTCs) if your income falls within the eligible range. You still pay a monthly premium, but the subsidy lowers what you owe out of pocket.
Here is a side-by-side comparison:
| Feature | Medicaid | ACA Marketplace |
|---|
| Monthly premium | $0 in most cases | Reduced by subsidies; varies by plan |
| Deductible | Low or $0 | Varies; can be $0 to $8,000+ |
| Copays | Low (often $0 to $4) | Higher; depends on plan tier |
| Network size | State-managed; varies | Private insurer network |
| Income-based | Yes, must be below threshold | Yes, must be within subsidy range |
| Enrollment period | Anytime (no set window) | Open Enrollment + Special Enrollment Periods |
| Covers dental/vision | Varies by state | Usually separate or add-on |
| Application | Medicaid agency or HealthCare.gov | HealthCare.gov or state exchange |
2026 Income Limits: Medicaid vs Marketplace
Medicaid Income Limits (2026)
In the 40 states plus Washington D.C. that have expanded Medicaid under the ACA, adults under 65 qualify if their income is at or below 138% of the FPL. (The law sets the threshold at 133%, but a built-in 5% income disregard effectively raises it to 138%.)
The 2026 FPL figures used for Medicaid eligibility are based on 2025 HHS guidelines:
| Household Size | 100% FPL | 138% FPL (Medicaid cutoff) |
|---|
| 1 person | $15,650 | $21,597 |
| 2 people | $21,150 | $29,187 |
| 3 people | $26,650 | $36,777 |
| 4 people | $32,150 | $44,367 |
| 5 people | $37,650 | $51,957 |
| 6 people | $43,150 | $59,547 |
Alaska and Hawaii have higher FPL figures due to cost-of-living adjustments.
In the 10 states that have NOT expanded Medicaid, eligibility for non-disabled adults is extremely limited. If you live in one of those states and your income is above the state's very low Medicaid threshold, you may fall into a coverage gap -- earning too much for Medicaid but potentially too little to qualify for meaningful Marketplace subsidies.
ACA Marketplace Subsidy Income Limits (2026)
As of January 1, 2026, the enhanced Premium Tax Credits that were in place since 2021 have expired. The "subsidy cliff" has returned: you can only receive premium subsidies if your income falls between 100% and 400% of the FPL.
| Household Size | 100% FPL (lower limit) | 400% FPL (upper limit) |
|---|
| 1 person | $15,650 | $62,600 |
| 2 people | $21,150 | $84,600 |
| 3 people | $26,650 | $106,600 |
| 4 people | $32,150 | $128,600 |
| 5 people | $37,650 | $150,600 |
| 6 people | $43,150 | $172,600 |
If you live in a Medicaid expansion state and your income is below 138% FPL, you qualify for Medicaid -- not Marketplace subsidies. Marketplace subsidies kick in at incomes above 138% FPL in expansion states.
If you live in a non-expansion state, Marketplace subsidies start at 100% FPL.
See the full breakdown at /aca-income-limits or explore Medicaid income limits by state.
Which Program Has Better Coverage?
Medicaid often provides more comprehensive coverage for the lowest-income Americans. Preventive care, hospitalizations, mental health services, and prescription drugs are covered. Many states also include dental and vision for adults, though this varies.
Marketplace plans are private insurance products. They cover the 10 essential health benefits required by the ACA, including hospitalization, maternity care, mental health, and prescription drugs. However, deductibles and copays are generally higher than Medicaid. A Silver plan on the Marketplace might carry a $1,500 to $4,000 deductible, while Medicaid typically has no deductible.
Cost-Sharing Reductions (CSRs) are available for Marketplace enrollees earning between 100% and 250% FPL who choose a Silver plan. These reductions lower your deductible and copays significantly. Even so, Medicaid is typically less expensive for those who qualify.
When Each Program Makes More Sense
Medicaid is likely the better fit if:
- Your income falls below 138% FPL (in expansion states)
- You have children in the household (CHIP also covers kids up to 19)
- You have frequent medical needs and want minimal out-of-pocket costs
- You are pregnant (many states expand Medicaid income thresholds for pregnancy)
- You recently lost a job or your income dropped significantly
Marketplace insurance is likely the better fit if:
- Your income is between 138% and 400% FPL
- You want more plan options or a broader provider network
- You prefer to stay with your current doctors (check network before enrolling)
- You anticipate your income rising and want stable coverage
How to Apply for Each
Applying for Medicaid
- Go to HealthCare.gov or your state's Medicaid agency website.
- Complete an application with your household size, income, and basic personal information.
- If eligible, the system routes you to Medicaid automatically.
- Enrollment is available year-round -- there is no open enrollment window.
- Coverage can begin as soon as the same month you apply, or sometimes retroactively.
Applying for Marketplace Insurance
- Go to HealthCare.gov (or your state's exchange if your state runs its own).
- Create an account and fill out an application.
- You will see available plans with estimated Premium Tax Credits applied.
- Compare plans by premium, deductible, and network.
- Enroll during Open Enrollment (typically November 1 through January 15) or during a Special Enrollment Period triggered by a qualifying life event (job loss, marriage, birth of child, etc.).
- Pay your first premium to activate coverage.
If you apply through HealthCare.gov and your income is below the Medicaid threshold, you will be referred to your state's Medicaid program rather than shown Marketplace plans.
What If Your Income Changes During the Year?
This is where the two programs behave very differently.
Medicaid eligibility is based on your current monthly income. If your income drops below the threshold, you can enroll immediately. If it rises above the threshold, you may become ineligible and need to transition to a Marketplace plan through a Special Enrollment Period.
Marketplace eligibility is based on your projected annual income for the coverage year. If your income changes significantly mid-year, you should update your application to avoid owing money back on your tax return (if you received more subsidy than you were entitled to) or to capture additional credits you may have missed.
The 2026 Subsidy Cliff: What Changed
Before 2026, enhanced PTCs allowed people earning above 400% FPL to receive some subsidy if their premiums exceeded a certain percentage of their income. That provision expired at the end of 2025.
Starting in 2026:
- People earning above 400% FPL no longer receive any premium tax credit
- Contribution percentages (what you owe before the subsidy kicks in) are higher than they were from 2021 to 2025
- Millions of Americans who were receiving enhanced subsidies are now paying more or have lost eligibility entirely
If you were on a Marketplace plan with enhanced subsidies, check your current premium and re-run your eligibility estimate. For some people near the bottom of the subsidy range, Medicaid may now be the better option if income has fluctuated.
Medicaid Expansion States vs Non-Expansion States
As of 2026, 40 states and Washington D.C. have expanded Medicaid. The 10 states that have not are:
Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming.
If you live in one of these non-expansion states and earn between 100% and 138% FPL, you are eligible for Marketplace subsidies (since there is no Medicaid option to fall back on). If you earn below 100% FPL in a non-expansion state, you may fall into the coverage gap with limited options.
Frequently Asked Questions
Can I have both Medicaid and Marketplace insurance at the same time?
No. If you qualify for Medicaid, you are not eligible for premium tax credits on the Marketplace. The two programs are mutually exclusive for subsidy purposes. If you are enrolled in Marketplace insurance and later become eligible for Medicaid, you should switch to Medicaid and cancel your Marketplace plan.
What happens if I enroll in a Marketplace plan but I actually qualify for Medicaid?
You will not receive premium tax credits for a plan you enrolled in while Medicaid-eligible. If HealthCare.gov determines you qualify for Medicaid, it will redirect you to your state's Medicaid program. Staying on a Marketplace plan while Medicaid-eligible means paying full unsubsidized premiums.
Is Medicaid only for people who are unemployed?
No. Medicaid eligibility is based on income, not employment status. You can be employed and still qualify for Medicaid if your wages fall below the income threshold for your household size.
Does Medicaid cover the same things as a Marketplace plan?
Both programs cover the 10 essential health benefits required by the ACA. Medicaid may also cover additional services like dental, vision, and non-emergency medical transportation, depending on your state. Marketplace plans tend to have larger networks and more plan options, but higher out-of-pocket costs.
What is the income limit for Medicaid for a family of four in 2026?
In a Medicaid expansion state, a family of four qualifies for Medicaid with an annual income up to approximately $44,367 (138% of the 2025 FPL). This figure applies to most of the continental United States. Alaska and Hawaii have higher thresholds.
How do I know if my state expanded Medicaid?
As of 2026, 40 states and Washington D.C. have expanded Medicaid. Non-expansion states include Texas, Florida, Georgia, and several others. You can check your state's status at Medicaid.gov or run the screener at CoveredUSA to see your options based on your location and income.
Can I switch from Marketplace to Medicaid outside of open enrollment?
Yes. Gaining or losing Medicaid eligibility is a qualifying life event that triggers a Special Enrollment Period. If your income drops and you become eligible for Medicaid, you can enroll in Medicaid at any time and cancel your Marketplace plan.
What if I earn just above the Medicaid limit?
If your income is just above 138% FPL in an expansion state, you qualify for Marketplace subsidies. Depending on your income, you may also qualify for Cost-Sharing Reductions if you choose a Silver plan. These reductions lower your deductible and out-of-pocket costs significantly for incomes between 100% and 250% FPL.
Understanding which program fits your situation can save you hundreds or even thousands of dollars per year. The dividing line between Medicaid and Marketplace coverage comes down to where your income lands relative to the FPL, and which state you live in.
Check your eligibility now at CoveredUSA -- it takes 2 minutes.
