There is a reason some of the lowest-income clients a broker encounters end up with nothing at the end of the application. Not because the Marketplace rejected them. Not because they made an error on the form. Because the state they live in chose not to expand Medicaid, and the ACA subsidy formula assumes all states did. The result is a band of adults with income below 100 percent FPL who are ineligible for Marketplace premium tax credits and ineligible for Medicaid. The broker who understands why this happens can explain it clearly. The broker who does not will spend twenty minutes trying to debug an application that is working exactly as designed.
Key Takeaways
- The ACA coverage gap is a policy artifact, not a program error. The original ACA assumed all states would expand Medicaid to 138 percent FPL. After NFIB v. Sebelius (2012), expansion became optional. States that did not expand left a band of adults, those with income below 100 percent FPL, ineligible for both Medicaid and Marketplace APTC.
- APTC requires income at or above 100 percent FPL. Below that line in non-expansion states, the Marketplace will show plans but without APTC. The full premium is the client's responsibility. That is the gap. The client earns too little for the Marketplace subsidy and too much for traditional Medicaid, where that limit is set far below 138 percent FPL.
- As of June 2026, ten states have not expanded Medicaid under the ACA. They are: Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming. State legislatures can change this. Verify current status before advising clients.
- A client in the gap who moves to an expansion state gains immediate Medicaid eligibility if their income qualifies, or gains APTC eligibility if their income exceeds 100 percent FPL in the new state. State is determined by current residency, not by where the client lived at enrollment.
- Brokers in non-expansion states with clients at or below 100 percent FPL should document the conversation and the options available. The gap is not the broker's fault, but unexplained coverage lapses generate complaints. Clients who understand the policy reason are less likely to blame the broker when the system declines their application.
How the gap was created
The original ACA expanded Medicaid eligibility to 138 percent of the federal poverty level for all states. The subsidy formula in the Marketplace was designed with that expansion assumed: APTC was available starting at 100 percent FPL because Congress expected no one below that threshold would need it. They would be covered by Medicaid.
In NFIB v. Sebelius (2012), the Supreme Court ruled that the Medicaid expansion could not be coerced on states. Each state could choose whether to expand. States that chose not to expand retained their pre-ACA Medicaid income limits, which in many Southern states covered only parents below 20 to 40 percent FPL and provided almost nothing for childless adults. The APTC floor at 100 percent FPL remained. The gap between traditional Medicaid eligibility and 100 percent FPL opened.
For a broader look at how state-based exchanges and state decisions affect Marketplace operations, read state-based exchanges versus Healthcare.gov.
Non-expansion states as of June 2026
State Medicaid decisions change through legislative action. Verify current expansion status with each state's Medicaid agency before advising clients. The table below reflects the status as of June 2026.
| State | Traditional Medicaid income limit | Coverage gap notes |
|---|---|---|
| Alabama | 18% FPL for parents; very limited for adults without children | Childless adults below 100% FPL have no coverage pathway |
| Florida | 31% FPL for parents; not available for most adults without children | One of the largest uninsured populations in the country |
| Georgia | 35% FPL for parents; limited Pathways expansion in place | Work-requirement expansion covers a narrow population |
| Kansas | 38% FPL for parents; not available for adults without children | Multiple expansion bills have failed in the legislature |
| Mississippi | 27% FPL for parents; not available for most adults without children | Among the highest uninsured rates for low-income adults |
| South Carolina | 65% FPL for parents; not available for adults without children | Expansion bills introduced repeatedly; not passed as of June 2026 |
| Tennessee | 94% FPL for parents; TennCare not available for most adults without children | TennCare waiver maintains narrow eligibility |
| Texas | 17% FPL for parents; not available for adults without children | Largest total number of gap-affected adults in the country |
| Wisconsin | 100% FPL via BadgerCare waiver; covers adults up to but not past 100% FPL | Unique structure: gap is narrow but the 100% FPL cliff is precise |
| Wyoming | 54% FPL for parents; not available for adults without children | Smallest population, lowest total gap count |
State Medicaid income limits vary by household composition and category. Limits shown are illustrative for parents or adults without children at the time of publication. Verify with each state's Medicaid agency before advising clients. State expansion status may change through legislation.
What to do when a client is in the gap
The first step is confirming the gap applies. Run the income and state combination through the Marketplace application. The application will return an eligibility determination. If it shows no APTC and refers the client to Medicaid, run the Medicaid application for the state. If the state Medicaid denies the client because income exceeds the traditional limit and the state has not expanded, the client is in the gap.
Document the determination at each step. The gap is a legal policy outcome. No broker action changes it within the current application cycle. What the broker can control is the explanation and the documentation. A client who understands that two separate policy decisions created the situation is less likely to believe the broker made an error. A client who receives no explanation will assume one.
For the intake conversation framework that surfaces income and state early in the process, read how to onboard a new ACA client.
Options for clients in the gap
Coverage options narrow significantly in the gap, but a few pathways exist depending on the client's situation.
Community health centers. Federally qualified health centers provide primary care on a sliding-fee scale for clients without insurance. They do not cover hospitalizations or specialist care, but they provide preventive services, chronic disease management, and prescriptions at reduced cost. FindAHealthCenter.hrsa.gov is the federal directory.
State charity care and county programs. Many non-expansion states have county-level programs that cover emergency and some primary care for very low-income adults. Eligibility and services vary widely. Local social services agencies are the right starting point.
Relocation.A client who moves to an expansion state and can demonstrate new residency becomes subject to that state's Medicaid rules immediately. If their income falls under the expansion limit (138 percent FPL), they qualify for Medicaid in the new state. If income exceeds 100 percent FPL, they qualify for APTC on the Marketplace. The move is a qualifying life event that opens a SEP window. This is a real option for clients with geographic flexibility, not a throwaway suggestion.
Waiting for state action.State expansion status is not permanent. Several non-expansion states have had active expansion legislation in recent sessions. A client who is following their state legislature should be aware that a mid-year expansion would create a special enrollment window. The broker should note the client's situation and flag the coverage opportunity if the state acts.
Wisconsin: the edge case
Wisconsin operates a BadgerCare waiver that provides Medicaid coverage up to 100 percent FPL for adults. This means Wisconsin's gap is narrow: adults at exactly 100 percent FPL transition from Medicaid to Marketplace eligibility at the dollar. Wisconsin is technically a non-expansion state but its waiver covers most of the population that would have been covered by expansion. Brokers with clients near the 100 percent FPL line in Wisconsin should verify whether the client qualifies for BadgerCare or for APTC, since the two are mutually exclusive above the Medicaid limit.
FAQ
Common questions from brokers about the ACA Medicaid expansion coverage gap.
What is the ACA coverage gap?
The ACA coverage gap refers to adults in states that did not expand Medicaid whose income falls below 100 percent of the federal poverty level. They earn too little to qualify for Marketplace premium tax credits, which require income at or above 100 percent FPL, and their state's Medicaid program does not cover them because it was not expanded to 138 percent FPL as the ACA originally envisioned. The gap is largest among childless adults in Southern states with the most restrictive traditional Medicaid limits.
Can a client in the coverage gap buy a Marketplace plan?
Yes, but without APTC. The Marketplace will allow enrollment, but without the premium tax credit the full unsubsidized premium is due. For most clients below 100 percent FPL, the unsubsidized premium is unaffordable. Some clients in the gap may qualify for cost-sharing reductions if they do enroll, but CSR only reduces cost-sharing, not the premium itself. Confirm with the Marketplace application before advising.
Does moving to an expansion state fix the coverage gap for a client?
For Medicaid purposes, yes. Medicaid eligibility is determined by the state where the client currently resides. A client who moves from Texas to California immediately becomes subject to California's Medicaid rules, including expansion. If their income qualifies for Medi-Cal (California Medicaid), they can enroll. If their income exceeds 100 percent FPL in the new state, they qualify for APTC on the Marketplace. State of residency at the time of application controls eligibility, not the state they came from.
What should a broker document when a client is in the coverage gap?
Document the conversation about the gap and the options explained. Record the income figure used, the state, and the conclusion that no APTC-eligible Marketplace plan or Medicaid program is available for the client at that income. If the client declines coverage or cannot afford the unsubsidized premium, note that as well. The coverage gap is a federal and state policy outcome, not a broker error. Clear documentation protects the broker if the client later claims they were not informed.
Is the coverage gap the same as a special enrollment period gap?
No. They are different issues. A SEP gap refers to periods when a client cannot enroll on the Marketplace outside of open enrollment because they lack a qualifying life event. The ACA coverage gap refers specifically to the income band below 100 percent FPL in non-expansion states where neither Medicaid nor APTC is available. A client can face both at once, but they are distinct policy problems with different resolution paths.
