Medicaid Gap in Non-Expansion States: Strategies for Adults Below 100% FPL

The Affordable Care Act was designed to eliminate uninsurance through a two-part system: Medicaid expansion for adults below 138% FPL, and Premium Tax Credits for adults between 100% and 400% FPL. The Supreme Court's 2012 NFIB v. Sebelius decision (567 U.S. 519) made Medicaid expansion optional for states. As of 2026, 10 states have declined to expand — Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wyoming, and Wisconsin (which has a unique partial-coverage structure; see the Wisconsin BadgerCare scenario). In these states, adults earning below their state's traditional Medicaid income limit may qualify for Medicaid; adults earning above that limit but below 100% FPL fall into a coverage gap.

The coverage gap exists because IRC § 36B(c)(1)(A) defines an "applicable taxpayer" as someone whose MAGI equals or exceeds 100% of the federal poverty level. Below 100% FPL, no PTC is available — the statute was written assuming Medicaid would cover that population. It didn't account for states exercising their NFIB-confirmed option not to expand. The result: 1.4 million uninsured adults in the non-expansion states who cannot access either program as of 2025 per KFF analysis. Texas alone accounts for 42% of those adults.

Traditional Medicaid in non-expansion states covers very limited populations: low-income children (via CHIP), pregnant women, extremely low-income parents (often below 15-20% FPL), people with disabilities, and the elderly. A childless adult earning $10,000/year (66% FPL) in Texas or Mississippi has no federally-subsidized coverage option under current law. Several strategies exist, all imperfect but worth evaluating.

Strategy 1: Income projection to 100% FPL. Under 45 C.F.R. § 155.305(f), the Marketplace accepts good-faith income projections. If an adult has variable income — gig work, seasonal employment, cash income — and expects to earn at least $15,060 (100% FPL, single, 2025) over the full year, they can project their income to 100% FPL on the application and receive APTC for marketplace coverage. The obligation is good faith — not certainty. If year-end income lands below 100% FPL, APTC repayment is technically required, but the § 36B(f)(2)(B) repayment cap tiers mean the actual amount owed at the lowest income levels is capped. Consult a tax professional before taking this approach.

Strategy 2: Basic Health Program (BHP). The ACA created the BHP option under § 1331, allowing states to establish a coverage program for residents between 0-200% FPL who would otherwise be eligible for Marketplace subsidies or Medicaid. As of 2026, Minnesota operates MinnesotaCare, New York operates the Essential Plan, and Oregon operates a BHP for residents 0-200% FPL. DC also has a coverage program. BHP is not available in the non-expansion states where the gap is most acute (Texas, Florida, etc.) — but it's relevant for gap adults who cross state lines.

Strategy 3: Federally Qualified Health Centers (FQHCs). Community health centers operate under 42 U.S.C. § 254b with sliding-fee-scale requirements tied to income. An uninsured adult in the coverage gap can access primary care, dental, mental health, and pharmacy services at an FQHC at reduced cost based on family size and income. FQHCs are not insurance and do not cover inpatient hospital stays, but they provide substantial preventive and primary care access. The HRSA health center finder (findahealthcenter.hrsa.gov) lists all federally-designated centers.

Strategy 4: State-funded programs. Some non-expansion states operate targeted state-funded programs. Florida provides limited Medicaid waivers for specific populations. Georgia's "Pathways" 1115 waiver covers adults at 0-100% FPL who complete 80 hours/month of qualifying work, community engagement, or job training. These programs cover small subsets of the gap population and often have waiting lists. Check with your state Medicaid agency for current program status.

The coverage gap is a structural outcome of NFIB v. Sebelius and the mismatch between the ACA's universal-expansion assumption and the opt-out reality. Nearly three-quarters of gap adults live in Southern states, reflecting both the concentration of non-expansion decisions in that region and the lower state Medicaid eligibility thresholds in many Southern states.

Wisconsin is often listed among non-expansion states in federal data because it did not formally adopt ACA expansion and does not receive the 90%/90% enhanced federal matching funds. But Wisconsin has no coverage gap: BadgerCare covers adults to 100% FPL via § 1115 waiver, and adults above 100% FPL qualify for PTC. The practical effect for Wisconsin residents is full coverage continuity — the formal expansion status is a policy and fiscal distinction, not a coverage one.

For gap adults with any variable income — seasonal work, freelance, cash income — the income-projection strategy is often the most accessible tool. Under 45 C.F.R. § 155.305(f), the Marketplace does not require proof of income at enrollment; it requires a good-faith attestation. An adult with unpredictable income who projects $16,000 for the year and enrolls with APTC may end the year with $13,000 — below 100% FPL. The reconciliation at filing would technically require repayment, but the § 36B(f)(2)(B) caps at the lowest income tiers (under 200% FPL) limit the maximum repayment. This is a gray area requiring careful judgment and ideally a tax professional's guidance.

The uninsured rate in non-expansion states is nearly twice that of expansion states (14.1% vs. 7.6% per KFF). Research consistently shows expansion increases take-up of preventive care, reduces medical debt, and improves health outcomes. The coverage gap is quantifiable in lives and dollars, not just policy abstractions.