Medicaid was established in 1965 to provide basic medical services to certain low-income populations. It is a means-tested entitlement program that financed the delivery of primary and acute medical services, as well as long-term services and supports, to an estimated 56.7 million people in FY2012, at a total cost of $431 billion with the federal government paying $249 billion (about 58%) of that total. Each state designs and administers its own version of Medicaid under broad federal rules. State variability is the rule rather than the exception in terms of eligibility levels, covered services, and how those services are delivered and reimbursed. Benefit packages have always varied across states and across eligibility groups. Beginning in 2005, the Deficit Reduction Act ( P.L. 109-171 ) added benchmark benefit packages (now called Alternative Benefit Plans or ABPs) as a state option. As of January 1, 2014, the Affordable Care Act (ACA; P.L. 111-148 , as amended) required states to provide ABP coverage to the newly established optional eligibility group that includes all citizens with income at or below 133% of the federal poverty level (FPL). Not everyone enrolled in Medicaid has access to the same set of services. Different eligibility classifications determine available benefits, as described below. This report begins with a summary of major Medicaid eligibility pathways. Then traditional Medicaid benefits and alternative benefit plans (previously called benchmark benefit plans) are described. The final section provides an analysis of state experiences with ABPs as of mid-April 2014. Additional CRS resources on Medicaid are provided at the end of this report. Historically, eligibility for Medicaid was subject to "categorical restrictions" that generally limited coverage to the elderly, persons with disabilities, members of families with dependent children, certain other pregnant women and children, among others. As of January 1, 2014, federal law allows states to expand Medicaid eligibility for citizens with income up to 133% of the federal poverty level who do not fit into these traditional categories. The Congressional Budget Office (CBO) estimated that the coverage expansion provisions in the ACA would increase enrollment in both the Medicaid and the State Children's Health Insurance Programs by about 7 million in CY2014, rising to 13 million by CY2024. To qualify for Medicaid, applicants must have income (and sometimes assets) that meet financial requirements. These financial criteria are usually tied to specific percentages of the federal poverty level (FPL), and are sometimes based on certain cash assistance programs (e.g., Supplemental Security Income or SSI). Below is a description of services available for Medicaid beneficiaries by eligibility classification. First, "categorical needy" individuals represent the vast majority of people enrolled in Medicaid, most of whom receive traditional Medicaid benefits (described in more detail in the " Traditional Medicaid Benefits " subsection). The Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended) required that a newly established categorically needy group consisting of poor nonelderly, non-pregnant adults with income below 133% FPL receive Medicaid benefits through Alternative Benefit Plans (ABPs). However, on June 28, 2012, the United States Supreme Court issued a decision in National Federation of Independent Business v. Sebelius making this ACA Medicaid expansion optional. For the medically needy subgroup, states may offer a more restrictive benefit package than is available to most categorically needy individuals. Such individuals include people who meet the main categorical restrictions described above but may have higher income. States electing the medically needy option must provide coverage to certain pregnant women (i.e., prenatal and delivery services) and children under age 18. Finally, states also use waiver authority to design benefit packages. Under Section 1115 waivers, states tailor benefits to state-specified subpopulations that can include both currently authorized groups and/or new groups not specified in federal statute. Each such waiver delineates the unique terms and conditions that are negotiated between a given state and the federal Centers for Medicare & Medicaid Services (CMS). , Table 1 provides examples of Medicaid benefits available by selected eligibility classifications. Mandatory benefits are services that a state must cover in its state Medicaid plan. Likewise, there are also a number of optional benefits that states may choose to cover. As illustrated, different Medicaid subpopulations may have access to benefit packages that can be quite varied, and can be categorized into two broad groups: (1) traditional benefits, and (2) Alternative Benefit Plans (ABPs). Additional details are described further below. Under federal law, states must cover certain benefits, while other services may be offered at state option. Examples of benefits that are mandatory for most Medicaid groups (i.e., categorically needy populations excluding the ACA Medicaid expansion subgroup) include inpatient hospital services, physician services, laboratory and x-ray services, early and periodic screening, diagnostic and treatment services (EPSDT) for individuals under 21, nursing facility services for individuals aged 21 and over, and home health care for those entitled to nursing facility care. Examples of optional benefits for such Medicaid groups include prescribed drugs, physician-directed clinic services, services of other licensed practitioners (e.g., chiropractors, podiatrists, psychologists), nursing facility services for individuals under age 21, physical therapy, and prosthetic devices. Table 2 provides additional information on selected mandatory benefits for most categorically needy subpopulations under the traditional Medicaid program. Table 3 provides additional information for selected optional benefits covered by most states under the traditional Medicaid program near the end of 2010 and beginning of 2011. The breadth of coverage for a given benefit can and does vary from state to state, even for mandatory benefits. For example, states may place different limits on the amount of inpatient hospital services a beneficiary can receive in a year (e.g., up to 15 days of inpatient days per year in one state versus unlimited inpatient days in another state). In general, in defining a covered benefit, federal guidelines require that (1) services be sufficient in amount, duration, and scope to reasonably achieve their purpose; (2) the amount, duration, and scope of services must be the same statewide; (3) within a state, services available to various categorically needy groups must be equal in amount, duration, and scope; and (4) with some exceptions, beneficiaries must have freedom of choice of providers among health care practitioners or managed care entities participating in Medicaid. States can modify these rules via existing waiver authority provided in Section 1115 of the Social Security Act. As an alternative to providing all the mandatory and selected optional benefits under traditional Medicaid, the Deficit Reduction Act of 2005 (DRA; P.L. 109-171 ) gave states the option to enroll state-specified groups in what were referred to as benchmark or benchmark-equivalent coverage, but are currently called ABPs. The ACA made significant changes to both ABP design and requirements. Examples of those changes are provided below. Individuals eligible for Medicaid through the ACA Medicaid expansion are required to have ABP coverage. States can also require "full benefit eligibles" (or specific subgroups of these individuals) to enroll in Medicaid ABPs. A full benefit eligible is someone who is eligible for all the mandatory and optional services that a state covers under its traditional Medicaid program. States have the option to provide ABP coverage to other sub-populations, and these plans can also exist in sub-state areas. Medically needy and certain spend-down populations (e.g., individuals whose Medicaid eligibility is based on a reduction of countable income for costs incurred for medical or remedial care) are excluded from the definition of a full benefit eligible. Medically needy populations can continue to receive coverage through the medically needy program, or if they are eligible for the ACA Medicaid expansion subgroup, they can receive services through an ABP. Such individuals can choose which coverage option they believe would be most beneficial to them. Additional sub-groups are also exempt from mandatory enrollment in ABPs (e.g., those with special health care needs such as disabling mental disorders or serious and complex medical conditions). Table 4 provides a description of each of these other exempted populations. These exempted groups may get traditional Medicaid benefits or may be offered voluntary enrollment in ABPs. In such cases, states must describe the differences between traditional Medicaid and ABPs to these beneficiaries in order to facilitate an informed choice. In general, ABPs may cover fewer benefits than traditional Medicaid, but there are some requirements, such as coverage of EPSDT and transportation to and from medical providers (as per a 2010 regulation), that might make them more generous than private health care insurance. Starting in 2014, both ABP and ABP-equivalent packages must cover at least the 10 essential health benefits that also apply to plans in the private individual and small group health insurance markets. These essential health benefits (EHBs) are (1) ambulatory patient services, (2) emergency services, (3) hospitalization, (4) maternity and newborn care, (5) mental health and substance use disorder services (including behavioral health treatment), (6) prescribed drugs, (7) rehabilitative and habilitative services and devices, (8) lab services, (9) preventive and wellness services and chronic disease management, and (10) pediatric services, including oral and vision care. For calendar years 2014 and 2015, HHS requires states to define details for each EHB; however, this process may change in the future. Certain services are not considered to be EHBs, including (1) routine non-pediatric dental services, (2) routine non-pediatric eye exams, (3) long-term/custodial nursing home care, or (4) non-medically necessary orthodontia. All ABP plans must also cover family planning services and supplies. Such plans must also comply with the requirements of the Mental Health Parity and Addiction Equity Act (MHPAEA) mental health services.