Medicare and Medicaid are government programs, not commercial insurance you buy from a company

The biggest difference is who runs them and who pays. Medicare is a federal program run by the Centers for Medicare & Medicaid Services (CMS). You become may be able to access at 65 or through disability, and you've already paid into it through payroll taxes during your working years. Medicaid is a joint federal and state program — each state runs its own version with its own rules — and it's based on income and assets, not age or work history. Private insurance, by contrast, is sold by for-profit companies and is based entirely on what you can afford to pay in premiums.

With Medicare and Medicaid, the government sets what doctors and hospitals can charge. With private insurance, the company negotiates rates with providers, and those rates vary widely. This means your out-of-pocket costs work differently under each system, and the doctors and hospitals you can see may not be the same.

Key Takeaways

  • Medicare is federal and age-based; Medicaid is state-run and income-based; private insurance is sold by companies and based on what you pay in premiums.
  • Medicare covers people 65 and older or those on disability; Medicaid covers low-income individuals and families; private insurance covers whoever can pay the premium.
  • Government programs set provider payment rates; private insurers negotiate them, which affects which doctors and hospitals will see you.
  • Medicare has four parts (A, B, C, D) with different coverage rules; Medicaid coverage varies by state; private plans vary by company and plan type.
  • Medicaid is free or very low-cost; Medicare requires premiums and cost-sharing; private insurance premiums are typically higher but vary widely.

Who is covered and how you become covered

Medicare covers people who are 65 or older, people under 65 with end-stage renal disease or ALS, and people who have received Social Security Disability Insurance (SSDI) for 24 months. You don't explore based on income — if you meet the age or disability requirement, you're covered. You do have to sign up during your enrollment period, or you may face penalties.

Medicaid covers low-income individuals and families, but the income limits and rules differ by state. Some states cover adults earning up to 138% of the federal poverty level; others have lower thresholds. You must live in the state where you explore, and you have to meet that state's specific rules about assets, citizenship, and family size. Medicaid is the only one of the three that covers children as a matter of course.

Private insurance covers anyone who can pay the premium, regardless of age or income. You buy it directly from an insurance company, through your employer, or through the health insurance marketplace. There's no income test and no age requirement, though premiums rise sharply as you age.

How costs work: premiums, deductibles, and out-of-pocket limits

Medicare has a monthly premium for Part B (medical insurance) and Part D (prescription drugs), and these premiums are income-based — higher earners pay more. You also pay a deductible before coverage kicks in, and you share costs with Medicare for most services (copays or coinsurance). There's an annual out-of-pocket limit, after which Medicare covers 100% of most services.

Medicaid is free or very low-cost in most states — some states charge small copays for certain services, but many charge nothing. There's usually no deductible. Because Medicaid is state-run, what you pay varies: one state might charge $1 per doctor visit, another might charge nothing.

Private insurance premiums vary enormously depending on the plan, your age, and where you live. You typically pay a monthly premium, a deductible (often $500 to $2,000 or more), and then copays or coinsurance for services. Like Medicare, there's an annual out-of-pocket maximum, but it's often higher than Medicare's.

What services are covered

Medicare Part A covers hospital stays, skilled nursing facility care, and hospice. Part B covers doctor visits, outpatient care, and some preventive services. Part D covers prescription drugs. Part C (Medicare Advantage) is an alternative to Parts A and B offered by private companies, and it usually includes prescription drug coverage. Medicare does not cover dental, vision, or hearing aids — you'd need a separate plan for those.

Medicaid covers doctor visits, hospital care, emergency services, and prescription drugs in all states. Beyond that, coverage varies: some states cover dental and vision; others don't. Some cover hearing aids; others don't. Long-term care (nursing home or home care) is covered by Medicaid in all states, which is a major difference from Medicare.

Private insurance plans vary by company and plan type. A basic plan might cover doctor visits and hospital care but have high deductibles. A comprehensive plan covers more, but premiums are higher. Dental, vision, and hearing are usually separate add-ons or not covered at all. Long-term care is almost never covered by standard private insurance.

Network restrictions: which doctors and hospitals you can see

Medicare has no network in the traditional sense — any doctor or hospital that accepts Medicare can treat you. However, if you choose Medicare Advantage (Part C), you're locked into that plan's network, just like private insurance.

Medicaid also has no strict network in most states, though some states run managed Medicaid plans that do restrict you to certain providers. Ask your state Medicaid office whether you're in a managed plan or traditional Medicaid.

Private insurance always has a network. You pay less (or nothing) if you see in-network providers and more (sometimes much more) if you go out-of-network. The network varies by plan and company, so two private plans in the same town may cover completely different doctors.

How each program handles pre-existing conditions and coverage denials

Medicare and Medicaid cannot deny you coverage or charge you more based on a pre-existing condition — that's federal law. If Medicare or Medicaid says no to a service, you have a right to appeal, and the process is spelled out in writing.

Private insurance also cannot deny you based on a pre-existing condition (since 2014), but it can deny coverage for a specific service if it determines the service isn't medically necessary. The appeal process varies by company and is usually faster than government appeals but less transparent.

All three systems require prior authorization for some services — meaning the insurance company must approve the service before you receive it, or it won't pay. This is most common with expensive procedures, specialty drugs, and mental health services.

State differences: why Medicaid varies where you live

Medicare is the same everywhere — the federal government runs it. Medicaid is not. Each state designs its own program within federal guidelines, which means income limits, covered services, and copays differ by state.

For example, New York's Medicaid covers dental care; Texas's does not. California's Medicaid covers hearing aids; many other states don't. Some states expanded Medicaid to cover adults earning up to 138% of poverty; others cover only children, pregnant women, and the disabled. If you move states, your Medicaid coverage may change, and you may need to reapply.

Private insurance also varies by state because state insurance regulators set different rules, but the variation is less dramatic than Medicaid's. A private plan sold in one state may not be sold in another, but the basic structure (premiums, deductibles, networks) is similar.

When you might have more than one at the same time

You can have both Medicare and Medicaid — this is called "dual may be able to access" status. If you're 65 and low-income, you may may have access to for both. Medicaid covers what Medicare doesn't (like long-term care and dental), and it usually pays your Medicare premiums and cost-sharing. This is a significant advantage.

You can also have private insurance and Medicaid if you're low-income and your employer offers coverage. Medicaid becomes your secondary payer, covering costs the private plan doesn't. However, if you have Medicare, you cannot also have private insurance as a primary payer — Medicare Advantage is the only private option once you're on Medicare.

Frequently Asked Questions

Can I keep my private insurance after I turn 65?

You can, but you must also sign up for Medicare Part A and Part B during your enrollment period, or you'll face penalties. If you have employer coverage, you may be able to delay Part B enrollment without penalty, but you still need Part A. Medicare becomes primary once you're may be able to access, and private insurance becomes secondary.

If I'm on Medicaid, can I see any doctor I want?

In most states, yes — Medicaid has no network restrictions. However, some doctors don't accept Medicaid because the payment rates are low. Call ahead to confirm a doctor takes Medicaid before scheduling. Some states also run managed Medicaid plans that do have networks, so check with your state program.

Why doesn't Medicare cover dental and vision?

Medicare was designed in 1965 to cover acute medical care, not routine dental or vision services. You can buy a separate dental or vision plan, or look for a Medicare Advantage plan that includes these benefits. Medicaid coverage of dental and vision varies by state.

What happens to my coverage if I move to a different state?

Medicare coverage stays the same — it's federal. Medicaid coverage may change because each state has different rules. You'll need to explore for Medicaid in your new state, and your income limit, covered services, and copays may be different. Private insurance also may not transfer; you may need to find a new plan in your new state.

Is there a way to get lower costs if I'm on Medicare?

Yes. If you're low-income, you may may have access to for Extra Help with prescription drugs or Medicare Savings Programs, which help pay your premiums and cost-sharing. You can also choose a Medicare Advantage plan, which often has lower premiums and out-of-pocket costs than Original Medicare, though the trade-off is a restricted network.