The difference between Medicare and Medicaid, and which one you might use

Medicare is a federal health insurance program for people 65 and older, regardless of income. You pay into it through payroll taxes during your working years. Medicaid is a joint federal and state program for people with lower incomes — the income limits and what it covers vary by state.

Most people over 65 use Medicare. Medicaid is available to some seniors with limited income and assets, and it often covers costs Medicare does not, like long-term care. Some people have both programs at the same time, which is called "dual may be able to access." Your state determines Medicaid rules, so what is available in one state may not be in another.

Key Takeaways

  • You must sign up for Medicare within three months of turning 65, or you will pay a permanent penalty on your premiums.
  • You can sign up for Medicare online at Medicare.gov, by phone at 1-800-MEDICARE, or in person at your local Social Security office.
  • Medicaid applications go through your state — there is no single national process — and the process and income limits differ by state.
  • If you miss the Medicare important date, you can still sign up during the General Enrollment Period from January 1 to March 31 each year, but the penalty applies.
  • You will need documents like your birth certificate, proof of citizenship, and tax information for either program.

How to sign up for Medicare before or at age 65

You should sign up for Medicare three months before the month you turn 65. This is called your Initial Enrollment Period, and it runs from three months before your 65th birthday through three months after. If you sign up during this window, your coverage starts the month you turn 65 with no penalty.

You have three ways to sign up. The easiest is online at Medicare.gov — you can create an account, fill out the form, and submit it without leaving home. You can also call 1-800-MEDICARE (1-800-633-4227) and speak to someone who will walk you through it. A third option is to visit your local Social Security office in person with your documents.

When you sign up, you will choose between Original Medicare (Part A and Part B) or a Medicare Advantage plan (Part C). Original Medicare is run by the federal government; Medicare Advantage plans are run by private insurance companies but must cover at least what Original Medicare covers. You will also choose whether to add prescription drug coverage (Part D). If you do not add Part D when you first sign up and you do not have other drug coverage, you will pay a penalty later.

What documents you need for Medicare

Have these documents ready before you start your process:

  • Your birth certificate or other proof of birth date
  • Proof of U.S. citizenship (passport, naturalization papers, or birth certificate issued in the U.S.)
  • Your Social Security number
  • Your current address

If you are explore online, you can upload images of these documents. If you are calling or visiting in person, you can describe them or bring originals. Medicare will not ask for your tax return or bank statements during the initial sign-up, but Medicaid will — see the section below.

how the process works for Medicaid in your state

Medicaid is run by each state, so there is no single national process. You explore through your state's Medicaid office, which may be called the Department of Human Services, Department of Social Services, or Department of Health and Human Services depending on where you live. The easiest way to find your state's Medicaid office is to search "[Your State] Medicaid" online or call your local Area Agency on Aging — they can tell you exactly where to explore and what your state requires.

Most states now let you explore online through their Medicaid website. Some still require you to explore by mail or in person. When you explore, you will need to prove your income (usually your last two months of pay stubs or tax return), your assets (bank statements), your citizenship, and your state residency. Income and asset limits vary by state — a senior in one state may may have access to while the same person in another state does not.

Processing time also varies. Some states decide in two to four weeks; others take longer. You can ask when you explore how long the decision usually takes. If you are denied, you have the right to appeal — your state's Medicaid office will explain how.

What happens if you miss the Medicare important date

If you do not sign up for Medicare during your Initial Enrollment Period, you can still sign up during the General Enrollment Period, which runs from January 1 to March 31 each year. However, you will pay a permanent penalty on your Part B and Part D premiums for as long as you have Medicare.

The penalty is 10 percent of the standard Part B premium for each full 12 months you were not signed up. If you waited two years, you pay 20 percent more forever. The same applies to Part D. The only exceptions are if you had other health coverage (like through an employer) during the time you were not signed up, or if you are a federal employee or Native American — these groups have different rules.

If you missed the important date and want to sign up now, you can still do so at Medicare.gov, by calling 1-800-MEDICARE, or at your Social Security office. The penalty will be calculated and added to your monthly bill.

Medicaid and Medicare together: what you need to know

If you have both Medicare and Medicaid, Medicaid is called your secondary payer. This means Medicare pays first, and Medicaid covers some of what Medicare does not — like copayments, coinsurance, and deductibles. Medicaid may also cover services Medicare does not, such as long-term care in a nursing home or assisted living.

To have both, you must first be enrolled in Medicare. Then you explore for Medicaid through your state using the same process described above. Your state will check whether you are on Medicare and adjust your Medicaid coverage accordingly. Some states have special programs for people with both — ask your state Medicaid office whether you may have access to for any of them.

Frequently Asked Questions

What if I am still working at 65 — do I still have to sign up for Medicare?

If you or your spouse are still working and have health coverage through your employer, you can delay signing up for Medicare without penalty. You have eight months after you or your spouse stops working to sign up without paying the late penalty. Tell your employer's benefits office that you are delaying Medicare so they know to keep you on their plan.

Can I change my Medicare plan after I sign up?

Yes. You can switch between Original Medicare and Medicare Advantage plans during the Annual Enrollment Period from October 15 to December 7 each year, and your new coverage starts January 1. You can also switch prescription drug plans during this same window. If you have a life-changing event like moving to a new state or losing other coverage, you may be able to change plans outside this window.

What if my state does not have Medicaid for seniors?

Every state has some form of Medicaid, but the income limits and what it covers for seniors vary widely. Some states cover seniors with higher incomes; others have very low limits. Call your state Medicaid office or your Area Agency on Aging to learn what your state offers and whether you might may have access to based on your income and assets.

Do I have to pay for Medicare?

Most people pay a monthly premium for Part B (doctor visits) and Part D (prescription drugs). Part A (hospital care) is usually free if you or your spouse paid Medicare taxes for at least 10 years. If you have Medicaid, it may pay your Part B and Part D premiums for you. Original Medicare also has deductibles and copayments when you use care.

What if I am not a U.S. citizen?

You must be a U.S. citizen or a lawful permanent resident (green card holder) to sign up for Medicare. For Medicaid, the rules vary by state — some states cover certain non-citizens, and others do not. Contact your state Medicaid office to learn what you need to prove your immigration status and whether you are covered.