Health Insurance

Medicaid Cancellation Letter - Reasons, How to Respond, What to Do Next?

Khang T. Vuong, MHA
Khang T. Vuong, MHA1 Sep 2023

The most common reason for Medicaid cancellation is a change in income, accounting for 60% of all cancellations. Other reasons include a change in residency, as Medicaid programs are state-specific, and changes in eligibility status like aging out or failing to reenroll. The article notes that the continuous enrollment provision, which previously mandated states to retain individuals in Medicaid regardless of income or situational changes, ceased on March 31, 2023. This means that states can now disenroll individuals who no longer meet eligibility criteria, with most expected to do so by April 2023.

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Reasons for Medicaid Cancellation

Medicaid, the government's safety-net health program for low-income individuals, can be canceled for several reasons. Understanding these reasons is the first step towards managing and mitigating potential cancellation risks.

Income Change: 60% of All Medicaid Cancellation

Demonstrating the volatile nature of Medicaid, changes in income levels are the most common cause for Medicaid cancellations. According to The Commonwealth Fund, income fluctuations account for roughly 60 percent of all Medicaid cancellations. This occurs when an individual's income increases beyond the Medicaid eligibility threshold, which varies by state and family size. It's important to note that even minor income changes can potentially lead to a loss of Medicaid coverage, making it vital for beneficiaries to be aware of their state's specific eligibility requirements.

Residency Change: The Geographic Bind

The second key reason for Medicaid cancellation relates to residency. Medicaid programs are state-specific, and each state sets its own guidelines regarding eligibility and services within federal standards. When a Medicaid beneficiary moves out of the state where they were receiving benefits, their Medicaid coverage can be canceled. However, they may apply for Medicaid in their new state of residence if they meet the eligibility criteria.

Eligibility Change: The Rules of the Game

Changes in eligibility status can also lead to Medicaid cancellation. Examples of such changes include aging out of coverage (for beneficiaries who were covered as children), alterations in dependent status, or failure to submit necessary documentation or reenroll during the renewal period. The exact eligibility requirements can vary significantly by state, so it's crucial for beneficiaries to stay updated with their state's Medicaid rules and ensure all necessary paperwork is completed and submitted on time (Source:

Medicaid Continuous Enrollment and Its Impact on Enrollees

The continuous enrollment provision in Medicaid, which mandated states to retain individuals in the program regardless of income or situational changes, ceased on March 31, 2023. Post this date, states can disenroll individuals who are no longer eligible for Medicaid. While CMS has permitted states some flexibility in implementing this change, most states are expected to initiate the disenrollment process by April 2023.

Staying Enrolled in Medicaid: A Tactical Approach

Here are some strategic tips for Medicaid beneficiaries to maintain their enrollment:

  • Regular Eligibility Check: Continually verify your eligibility status to remain updated.
  • Update Income and Contact Details: Ensure your income and contact information with your state Medicaid agency is up-to-date.
  • Prompt Response to Renewal Notices: Delays can lead to cancellation, so respond to renewal notices swiftly.
  • Maintain Updated Documentation: Keep all the required documentation current.
  • Quick Re-enrollment Post Disenrollment: In case of disenrollment, reapply immediately.
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Medicaid Enrollment Income Limits in 2023

For enrollment in Medicaid in 2023, the following requirements need to be met:

  • You must be a U.S. citizen or legal permanent resident.
  • You must be a resident of the Medicaid State which you are applying for.
  • Your income must not exceed the State's defined limit:
StateIncome Limit for an Individual (per month)Income Limit for a Couple (per month)
CaliforniaVaries by income categoryVaries by income category
MassachusettsVaries by income categoryVaries by income category
New Hampshire$1,750$2,450
New Jersey$1,860$2,570
New Mexico$1,725$2,375
New York$1,677$2,268
North Carolina$1,650$2,290
North Dakota$1,640$2,280
Rhode Island$1,780$2,470
South Carolina$1,590$2,270
South Dakota$1,700$2,350
West Virginia$1,500$2,100

How to Respond to Medicaid Cancellation

When a person's Medicaid coverage gets canceled, it can be a stressful situation. However, understanding the steps to take can significantly alleviate the panic and uncertainty. Here are some immediate steps to take.

Immediate Actions

Reacting quickly is crucial after a Medicaid cancellation. Firstly, it's essential to understand the reason for the cancellation. You should receive a notice explaining the cause, which can guide your next steps.

  • If your Medicaid cancellation is due to an income increase or change in household size, consider applying for a health plan through the Health Insurance Marketplace. You may qualify for savings based on your income.
  • If the cancellation is due to moving to a different state, apply for Medicaid in your new state of residence. Medicaid programs vary from state to state, and you may qualify in your new location.
  • If you have access to an employer's insurance plan, consider enrolling. Often, employer-sponsored schemes provide comprehensive coverage. However, compare the cost and coverage with other available options before making a decision.
  • Another temporary solution is short-term health insurance, also known as term health insurance or temporary health insurance. While these plans do not have to cover pre-existing conditions or the essential health benefits that ACA-compliant plans must cover, they can provide some coverage in the interim until you can secure more stable insurance coverage.


If you believe that your Medicaid was wrongly canceled, you have the right to appeal. This process involves requesting a fair hearing where you can dispute the reasons for your Medicaid cancellation. You must submit your appeal within 90 days from the date of your cancellation notice. The steps to appeal may vary by state, so it’s important to contact your state Medicaid program for guidance.

Medicaid Reapplication

If your circumstances change again or if you can clarify the eligibility requirements, you may reapply for Medicaid. The reapplication process is similar to the initial application process. This includes submitting a comprehensive application with all necessary documentation to prove eligibility. You can reapply through HealthCare.Gov, your state’s health department website, or in person at local Medicaid offices. Remember, each state sets its own guidelines regarding eligibility and applying, so understand your state's rules for Medicaid reapplication.

3 Alternative Options Following Medicaid Cancellation

If your Medicaid has been canceled, you still have options to secure healthcare coverage:

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Affordable Care Act (ACA) Marketplace

The ACA Marketplace allows individuals to purchase private insurance plans. Depending on income, some individuals may qualify for premium tax credits or cost-sharing reductions, which can make these plans more affordable.

Employer-Sponsored Health Insurance

If Medicaid cancellation occurs due to income increase, it may be that the individual or their family member has gained employment that offers health insurance. Employer-sponsored plans can be a viable alternative, especially if the employer contributes towards the cost of premiums.

Short-Term Health Insurance

Short-term health insurance plans provide temporary coverage for as short as a month to up to a year. These plans are typically less expensive but also provide less comprehensive coverage.

Frequently Asked Questions

What can I do if my Medicaid is canceled?

If your Medicaid is canceled, you should first understand the reason for cancellation. If it's due to an income change or moving to a different state, you might want to consider applying for health insurance through the Health Insurance Marketplace or your new state's Medicaid program. If you believe the cancellation was unjustified, you can appeal the decision.

How can I avoid getting my Medicaid canceled?

To avoid getting your Medicaid canceled, make sure to keep all your information, like income and contact details, up-to-date with your state Medicaid agency. Respond promptly to any renewal notices and keep all required documentation current.

How can I reapply for Medicaid?

If your Medicaid is canceled and you wish to reapply, you can do so through HealthCare.Gov, your state’s health department website, or in-person at local Medicaid offices. Remember, each state has its guidelines for Medicaid reapplication, so be sure to understand your state's rules.

Khang T. Vuong, MHA

Khang T. Vuong received his Master of Healthcare Administration from the Milken Institute School of Public Health at the George Washington University. He was named Forbes Healthcare 2021 30 under 30. Vuong spoke at Stanford Medicine X, HIMSS conference, and served as a Fellow at the Bon Secours Health System.