The coverage gap is the hardest thing to explain in American health insurance, because it sounds like a mistake. You can earn too much for Medicaid and too little for marketplace subsidies at the same time. Roughly 1.4 million adults are in that position, and more than a million of them live in just three states.
Why it exists
The ACA was written on an assumption: Medicaid would be expanded everywhere to cover adults up to 138% of the federal poverty level, and marketplace subsidies would pick up from 100% upward. The two would overlap and nobody would fall through.
A Supreme Court decision made expansion optional for states. Ten still have not adopted it. In those states the subsidy floor at 100% of the poverty level stayed exactly where it was, while Medicaid eligibility for adults stayed narrow — often extremely narrow. The gap between the two is not a loophole. It is the space where the two rules fail to meet.
| State | Scale of the gap |
|---|---|
| Texas | The largest in the country, roughly 570,000 people. Medicaid eligibility for parents stops at about 15% of the poverty level, the lowest threshold of any state. Adults without dependent children generally do not qualify at any income. |
| Florida | Around 260,000 adults, per KFF. Florida Medicaid does not cover most adults without dependent children regardless of income. |
| Georgia | Estimates run from 180,000 to 300,000. Georgia runs a partial expansion, Pathways to Coverage, reaching 100% of the poverty level with a work requirement — but fewer than 17,000 people were enrolled as of April 2026. |
1. Project your income for the whole year, not this month. Subsidy eligibility runs on projected annual income. Someone with irregular work who looks below the line in February may clear it across twelve months. Contract, seasonal and self-employment income move people over this threshold far more often than they expect, and one good quarter can do it.
2. Count every source. A spouse’s earnings, unemployment benefits, interest, retirement distributions, and some other income all count toward the figure. People routinely project only their own wages and land artificially low.
3. Check the children separately. CHIP and children’s Medicaid have far more generous eligibility than adult Medicaid, and they exist in every state. It is entirely normal for the children in a household to qualify while the adults do not, and applications are taken year-round.
Those three checks resolve a meaningful share of cases where someone has already decided the answer is no. None of them cost anything to run.
If you are genuinely in the gap
Sometimes the answer really is that no insurance product fits, and it is more useful to say so than to pretend otherwise. What exists in that case is not insurance, but it is not nothing:
- Community health centers — federally qualified health centers charge on a sliding scale based on income and are the most practical route to ongoing primary care, dental and often behavioral health. They are widespread and consistently underused.
- Hospital charity care. Non-profit hospitals are legally required to have financial assistance policies, and many reduce or eliminate bills entirely below certain income levels. Ask before treatment where possible, and ask again after a bill arrives — it is frequently applied retroactively.
- Prescription assistance programs run by drug manufacturers, which can cover expensive maintenance medication for people below income thresholds.
- Reassess when your income changes. A raise or additional work that pushes you above the poverty line makes you subsidy-eligible, and a change in income is a qualifying event that lets you enroll outside open enrollment.
Do not deliberately misstate income to qualify. Beyond being fraud, reconciliation catches it at tax time — and the caps on repaying excess subsidies were repealed for tax year 2026, so the entire amount comes back.
Be careful with health care sharing ministries. They are marketed to people in exactly this position and they are not insurance. There is no guarantee your costs will be paid, no state regulator standing behind them, and pre-existing conditions are usually excluded.
It is worth asking rather than assuming
The most common version of this we see is not someone who is in the gap. It is someone who believes they are, has believed it for two or three years, and has never had anyone actually run the numbers with them. Incomes change, state rules change, and household composition changes.
Brokers are paid by carriers rather than by you, which means checking costs nothing even when the answer turns out to be no.
General information as of September 2026. Not a quote, an offer of coverage, or a guarantee of eligibility. Medicaid and CHIP eligibility, expansion status and assistance programs vary by state and change over time.
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