The coverage gap exists in states that did not expand Medicaid: adults earn too much for their state's Medicaid but too little for marketplace subsidies, leaving no affordable option.
The design was meant to run without a gap, Medicaid below the line, subsidies above, but expansion became optional and the bottom rung vanished in non-expansion states. If you might be in it: verify with HealthCare.gov's household-size-and-state checker, since rules and expansion status change; apply anyway, because pregnancy or disability can qualify you; and use sliding-scale community health centers while uninsured.
What to do
Common questions
What is the Medicaid coverage gap?
The coverage gap is a crack in the system created by geography, and it works like this. The Affordable Care Act was written so Medicaid would cover everyone up to a set income and marketplace subsidies would take over above that line, with no gap in between. But the Supreme Court made expansion optional, and non-expansion states kept old rules that often cover parents only at very low incomes and childless adults not at all. Meanwhile marketplace premium tax credits only kick in above the poverty line. The result: adults in non-expansion states earning too much for their state's Medicaid but less than the subsidy threshold fall into the gap, with no affordable coverage at all. What you can do if you are in it: first, verify you are actually in the gap, because HealthCare.gov's tool checks household size and state against current rules and states do change their expansion status; second, apply anyway, since you might qualify for your state's program on grounds other than income, like pregnancy or disability; third, watch for life events, because a move to an expansion state or an income change reopens options; and fourth, use community health centers, which charge sliding-scale fees, for care in the meantime.