Medicaid 101: What Families of Children with Disabilities Need to Know

Medicaid is a public insurance program that provides essential healthcare for individuals on low income, seniors, and those with disabilities. It’s funded by a combination of federal and state budgets; in order for states to receive federal funding, they must offer a baseline of services, and then they can opt to offer additional services paid for by state and federal funds.

All 50 states have a Medicaid program, but the name varies by state. Find your state’s Medicaid program and website here on this list.

It’s also worth noting that some states have programs partially funded by Medicaid, like a state’s department of developmental disability services; how funding and services work are determined by each state.

How does Medicaid work?

How service providers get paid by Medicaid is determined by each state. In some states, families who use Medicaid as health coverage sign up for a managed care plan that acts like an insurance company in managing claims. In other states, providers or hospitals bill Medicaid directly instead of going through a managed care plan.

In order to use Medicaid coverage for your child’s services, you must see a provider who is contracted (“in-network”) with your Medicaid plan type and agrees to accept the Medicaid rate. Not all providers accept Medicaid, so make sure to confirm coverage when you see a new provider. Most major hospitals accept Medicaid for emergency care, but always verify before specialized or non-emergency care.

Some recipients of Medicaid must pay a co-pay or share of cost, but this may not apply to individuals who are eligible based on income.

All state Medicaid programs must provide certain required services for recipients. These include:

• Physician and hospital services (both inpatient and outpatient)
• Labs and X-rays
• Nursing facility services (or medical home health care for individuals who would qualify for a nursing facility)
• For children under 21, Early and Periodic Screening, Diagnostic and Treatment (EPSDT) for preventative care and early intervention services, such as:
  • Vision and hearing health and equipment
  • Dental health
  • Mental health
  • Mobility equipment and prosthetics
  • Assistive communication equipment
  • Occupational, physical, and behavioral therapy
  • Specialized feeding formula
  • Other medically necessary treatment

While states are mandated to cover these services, they can set their own policies and limits, such as the number of covered visits per year or the qualifications of a provider.

Additional services that may be covered by Medicaid depending on the state:

• Prescription drugs
• Hospice care
• Inpatient psychiatric care for children under 21
• Home and community-based services (HCBS)

In most states, schools that provide therapeutic services to students with IEPs can seek reimbursement from Medicaid.

Medicaid is designed to provide health care assistance for individuals with low income and/or disabilities. The exact criteria will depend on your state, but here's general information on what to expect.

Medicaid eligibility by income

In states that have expanded Medicaid under the Affordable Care Act, an individual earning less than 133% of the federal poverty income level can qualify for Medicaid. For children, this limit is often higher (200% in most states), so it’s possible for a child to qualify for Medicaid even if their parents do not; you can find out more here. Eligibility is based on Modified Adjusted Gross Income (MAGI), which counts taxable income but does not have an asset limit.

States that have not yet expanded Medicaid under the Affordable Care Act include Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming. In these states, the income level required for Medicaid coverage varies.

Work requirements

Note that changes to Medicaid under HR-1 will implement work requirements for certain adults starting January 1, 2027, but the changes do not apply to those under age 19. There are also exemptions for caregivers of children with disabilities.

Other criteria

In addition to the income limit, an individual must be a lawful permanent resident of the state where they’re applying for Medicaid.

Certain applicants, such as foster care youth, former foster youth under age 26, and pregnant individuals, are eligible for coverage regardless of income.

Medicaid eligibility by disability

SSI recipients

Adults and children who are recipients of Supplemental Security Income (SSI) are eligible for Medicaid because they have demonstrated low income, minimal assets, and a disability that meets SSI criteria. In some states, Medicaid eligibility is automatic for SSI recipients, and in other states, individuals must submit a separate application.

Waiver recipients

When a person applies for Medicaid, parental income (for minors) and/or spousal income and assets are treated as available to the individual through “deeming” rules. However, if a person lives in a hospital, nursing home, or other health care facility, only their own income and assets are countable.

If an individual with a disability does not meet the low income requirement for Medicaid eligibility due to spousal or parental income, they may still be able to obtain coverage through a program that waives deeming rules for people who would qualify for admission to a care facility. This is called “institutional deeming,” meaning the state follows the deeming rules that would be in place if the person already lived in a facility. Through institutional deeming, people with disabilities can qualify for Medicaid and get their medically necessary care at home in the community, preventing unnecessary institutionalization.

All states have waivers for children with disabilities, but the eligibility requirements and policies vary. Some programs only allow a certain number of individuals in the waiver program at once, so there is a waiting list before an applicant can enroll in Medicaid coverage. Some programs charge a waiver fee to participate in Medicaid coverage, while others enroll individuals with disabilities without any fees or waiting list.

The website kidswaivers.org has great information on the waiver programs in each state and the services available to families. Most of these are HCBS 1915(c) waivers, which allow children with disabilities to qualify for Medicaid via institutional deeming, i.e. based on their own income and assets, regardless of their parents’ income. They may also grant recipients access to additional services designed for disability care, like in-home support or funding for accessible home modifications.

Asset limits

Note that all states impose asset limits on recipients of Medicaid with disabilities. Most states set the asset limit the same as SSI — $2,000 for individuals or $3,000 for married couples. Other states set the limit much higher.

Programs such as ABLE accounts and special needs trusts can help individuals with disabilities save money that doesn’t count toward asset limits for Medicaid or SSI.

Families who already have private health insurance coverage for their child can still benefit from Medicaid, which may be used as secondary insurance to pay for certain expenses that primary health insurance doesn’t cover.

Additionally, in states with expanded Medicaid services like in-home attendant care, which may or may not allow for paid parent caregiving, Medicaid is a prerequisite for accessing these services.

Whether your whole family moves or just your child moves to a new state, such as when attending college or a residential placement, you must cancel Medicaid enrollment in the former state and re-apply for the Medicaid program in the new state. This is because eligibility requirements differ, and all state programs are run separately, so you cannot transfer Medicaid coverage to the new state. Note that the services covered in your new state will likely also be different. Because you cannot be an active Medicaid recipient in two states at once, you will need to include Medicaid logistics as part of your relocation plan.

If you are in another state temporarily, such as on vacation, Medicaid will only cover emergency care, unless you request preauthorization.

Because Medicaid and waiver programs have strict criteria, not every child qualifies for state assistance with health coverage. Children’s Health Insurance Program (CHIP) provides health coverage to children whose household income exceeds the income requirement to qualify for Medicaid. In some states with expanded Medicaid, CHIP recipients have access to EPSDT benefits. For assistance with CHIP, select your state here on the Medicaid website.

Most states also have “medically needy” programs for individuals who don’t qualify based on income or disability but still have significant medical expenses. Essentially, you must be able to show that you spend so much of your income on medical expenses that the rest of your income would be below a certain limit. If so, you may be eligible for Medicaid, potentially with a monthly share of cost.

What's the difference between Medicaid and Medicare? A helpful rule of thumb is that Medicare is linked to work history and Social Security disability insurance (SSDI) and retirement benefits, while Medicaid is linked to household income and Supplemental Security Income (SSI). A person can be enrolled in both programs.

Medicare is largely for seniors age 65 and older, but some adults with long-term disabilities can qualify before that age. Children are typically only eligible if they have a diagnosis of end-stage renal disease or ALS.