Medicaid is a means-tested entitlement program that finances the delivery of primary and acute care services, as well as long-term services and supports. It is a federal-state program, and participation in Medicaid is voluntary for states, though all states and the District of Columbia choose to participate. In order to participate in Medicaid, the federal government requires states to cover certain mandatory populations and benefits, but the federal government also allows states to cover optional populations and services. Due to this flexibility, there is substantial variation among the states in terms of factors such as Medicaid eligibility, covered benefits, and provider payment rates. Medicaid is jointly financed by the federal government and the states. States incur Medicaid costs by making payments to service providers (e.g., for doctor visits) and performing administrative activities (e.g., making eligibility determinations), and the federal government reimburses states for a share of these costs. The federal government's share of a state's expenditures for most Medicaid services is called the federal medical assistance percentage (FMAP). The FMAP varies by state and is inversely related to each state's per capita income. For FY2015, FMAP rates range from 50% (13 states) to 74% (Mississippi). Historically, Medicaid eligibility has generally been limited to certain low-income children, pregnant women, parents of dependent children, the elderly, and individuals with disabilities; however, starting January 1, 2014, states have the option to extend Medicaid coverage to most non-elderly, nonpregnant adults with income up to 133% of the federal poverty (FPL). This expansion of Medicaid eligibility is one of a number of changes the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 as amended) made to the Medicaid program, and it is referred to as the ACA Medicaid expansion. This report provides an overview of the ACA Medicaid expansion, and the impact of the Supreme Court decision on the ACA Medicaid expansion. Then, the report describes who is covered under the expansion, the expansion rules, and how the expansion is financed. In addition, enrollment and expenditure estimates for the ACA Medicaid expansion are provided. Finally, the report reviews state decisions whether or not to implement the ACA Medicaid expansion, and the implications of those decisions on certain individuals, employers, and hospitals. A common misconception about the Medicaid program is that all low-income individuals are eligible for Medicaid. Instead, only certain low-income individuals are eligible for Medicaid coverage. To qualify, an individual must meet both categorical (i.e., must be a member of a covered group, such as children, pregnant women, parents with dependent children, the elderly, or individuals with disabilities) and financial eligibility requirements. In addition, individuals need to meet federal and state requirements regarding residency, immigration status, and documentation of U.S. citizenship. The federal Medicaid statute (Title XIX of the Social Security Act) defines a number of distinct population groups as being potentially eligible for Medicaid coverage. Some of these populations are mandatory eligibility groups that states must cover if they choose to participate in Medicaid, while others are optional eligibility groups that states are allowed to cover if they choose to do so. In addition, states are able to provide Medicaid coverage to additional populations not listed as a mandatory or optional coverage group in statute through Section 1115 demonstration waivers. Due to optional eligibility groups and the Section 1115 demonstration waivers, Medicaid eligibility varies significantly from state to state. The bars in Figure 1 show the federally mandated Medicaid income eligibility levels for the major population groups that were in effect prior to the implementation of the ACA Medicaid expansion. The text in Figure 1 indicates the number of states in January 2013 using optional eligibility groups and Section 1115 waivers to provide Medicaid coverage to individuals with incomes above the federally mandated level and the highest income eligibility level for each population. The ACA Medicaid expansion provides states with the option to increase Medicaid eligibility to 133% of FPL for non-elderly, nonpregnant adults. As shown in Figure 1 , prior to the ACA, Medicaid income eligibility levels for parents with dependent children were low relative to the income eligibility levels for children and pregnant women, and adults without dependent children were not eligible for Medicaid in most states. For this reason, 70% of low-income children had Medicaid coverage, while 30% of low-income, non-elderly adults had Medicaid coverage. In addition, the uninsured rate for low-income, non-elderly adults was 42%, which was more than twice the national average of 18%. The primary goals of ACA are to increase access to affordable health insurance for the uninsured and to make health insurance more affordable for those already covered. The ACA Medicaid expansion is one of the major insurance coverage provisions included in the law, but the ACA Medicaid expansion is just one of a few Medicaid eligibility expansions included in the ACA. The ACA Medicaid expansion (as initially enacted) established 133% of FPL as the new mandatory minimum Medicaid income eligibility level for most non-elderly, nonpregnant adults. The law also specified that an income disregard in the amount of 5% of FPL be deducted from an individual's income when determining Medicaid eligibility based on the modified adjusted gross income (MAGI). Thus, the upper income eligibility threshold for individuals in this new eligibility group is effectively 138% of FPL. This ACA Medicaid expansion was effective January 1, 2014 (or earlier at state option). The Supreme Court decision in National Federation of Independent Business (NFIB) v. Sebelius made the ACA Medicaid expansion optional rather than mandatory. In states that adopt the ACA Medicaid expansion, the three major groups of individuals gaining Medicaid coverage are adults without dependent children, parents with dependent children, and adults with disabilities. States that implement the ACA Medicaid expansion are required to follow the ACA Medicaid expansion rules. The federal government funds a vast majority of the cost for the ACA Medicaid expansion. Originally, it was assumed that all states would implement the ACA Medicaid expansion in 2014 as required by statute because implementation was required in order for states to receive any federal Medicaid funding. However, with respect to Medicaid, the Supreme Court decision in NFIB addressed the issue of whether withholding Medicaid reimbursement to a state unless that state complies with the expansion of its Medicaid program exceeds Congress's enumerated powers under the Spending Clause and/or violates the Tenth Amendment. On June 28, 2012, the Supreme Court issued its decision in NFIB , and the Supreme Court held that the ACA Medicaid expansion violated the Constitution. The Supreme Court decision held that the federal government could not withhold payment for a state's entire Medicaid program for failure to implement the ACA Medicaid expansion. However, the federal government could withhold the funding for the ACA Medicaid expansion if a state did not implement the expansion. As a result, the Supreme Court's ruling in NFIB effectively made state participation in the ACA Medicaid expansion voluntary. The federal government cannot terminate federal Medicaid matching funds for a state's pre-ACA Medicaid program if a state doesn't implement the ACA Medicaid expansion. After the Supreme Court ruling, the Centers for Medicare and Medicaid Services (CMS) issued guidance to states specifying that states have no deadline for deciding when to implement the ACA Medicaid expansion. Also, the guidance said states that decide to implement the expansion have the ability to end the ACA Medicaid expansion at any point in time. The three major categories of non-elderly adults that would receive Medicaid coverage under the ACA Medicaid expansion are adults without dependent children, parents with dependent children, and adults with disabilities. Prior to the implementation of the ACA Medicaid expansion, only a few states provided Medicaid coverage to adults without dependent children, and in general, the Medicaid income eligibility level for parents and adults with disabilities was significantly lower than 133% of FPL (i.e., the ACA Medicaid expansion eligibility level). Prior to the ACA, adults without dependent children were not included in the federal statute as either a mandatory or an optional Medicaid coverage group. However, states were able to provide Medicaid coverage to these adults through Section 1115 demonstration waivers or state‐funded programs. As of January 2013, eight states (Arizona, Colorado, Connecticut, Delaware, Hawaii, Minnesota, New York, and Vermont) and the District of Columbia provided full Medicaid coverage to adults without dependent children, and only two of these states and the District of Columbia covered adults without dependent children up to at least 133% of FPL. In addition, 18 states provided Medicaid coverage with limited benefits to adults without dependent children. For most states, a significant portion of the population that would gain Medicaid coverage through the implementation of the ACA Medicaid expansion would be adults without dependent children. See Figure A-1 for state-by-state Medicaid income eligibility levels for non-elderly adults without dependent children as of January 1, 2014. Under Section 1931 of the Social Security Act, states are required to provide Medicaid coverage for parents (and their dependent children), at a minimum, at the Aid to Families with Dependent Children (AFDC) eligibility levels in place on July 16, 1996. This federally mandated eligibility threshold varies by state but averages 41% of FPL. Section 1931 of the Social Security Act also gives states the option to cover parents with incomes above the 1996 minimum levels and most states do. As of January 2013, 12 states provided full Medicaid coverage for parents of dependent children with incomes at or above 133% of FPL, and 13 states provided Medicaid coverage with limited benefits to parents of dependent children with incomes of 133% of FPL or higher. In most states, the ACA Medicaid expansion would provide Medicaid coverage to a significant number of parents with dependent children. See Figure A-2 for state-by-state Medicaid income eligibility levels for parents with dependent children as of January 1, 2014.