Health coverage is one of the most important financial protections available to low- and moderate-income Americans — but the difference between Medicaid and Marketplace (ACA) insurance confuses a lot of people. Applying for the wrong one, or missing both, leaves you uninsured and exposed to medical costs that can wreck a budget.
What Medicaid is
Medicaid is a federal and state-funded program that provides free or very low-cost health coverage to people with limited income. Eligibility is based primarily on your income relative to the Federal Poverty Level (FPL). In states that have expanded Medicaid under the ACA, adults with income up to 138% FPL generally qualify — that's about $20,700 for a single person in 2025.
Medicaid covers doctor visits, hospital stays, emergency care, prescriptions, and mental health services. Most enrollees pay little to nothing in premiums or copays.
What Marketplace insurance is
ACA Marketplace plans are private insurance plans sold through healthcare.gov (or your state's exchange). If your income is between 100–400% FPL, you likely qualify for premium tax credits that reduce your monthly cost. For many people at lower income levels, these subsidies make Marketplace plans very affordable — sometimes under $50 a month.
You can only sign up for a Marketplace plan during Open Enrollment (November 1 – January 15) or during a Special Enrollment Period triggered by a life event like losing a job, getting married, or having a baby.
How to figure out which one applies to you
The easiest way is to go to healthcare.gov and start an application. The system will automatically check your Medicaid eligibility first. If you qualify for Medicaid, it will tell you and direct you to enroll through your state. If you don't qualify for Medicaid, it will show you available Marketplace plans with your subsidy amount applied.
You don't need to figure this out in advance — the system does it for you based on your household size and income.
What if your state didn't expand Medicaid?
Twelve states have not expanded Medicaid. If you live in one of these states and your income is below the poverty level, you may fall into what's called the "coverage gap" — too high to qualify for Medicaid, but also below the threshold to receive Marketplace subsidies. This is a genuine policy gap. Options include community health centers (which use sliding-scale fees), CHIP (for children), or checking whether your state has any partial expansion programs.
Other coverage options worth knowing about
CHIP (Children's Health Insurance Program) covers children in families with incomes too high for Medicaid but who can't afford private insurance. If you're between jobs, COBRA lets you keep your employer plan temporarily — but it's expensive because you pay the full premium. Losing job-based coverage is a qualifying life event that triggers a Special Enrollment Period for Marketplace plans.
If you're unsure where you fall, Ask Fin's US Programs Checker can give you a quick read on what programs may apply to your household.