The Basic Difference

Medicare is a federal insurance program you pay into through payroll taxes while you work. Medicaid is a joint federal and state program that covers people with low income, regardless of age. Most people over 65 are on Medicare because they earned it. Most people on Medicaid are younger, but some older adults may have access to for both programs at the same time.

The confusion happens because both programs help pay medical bills, both have the word "care" in the name, and both are run by the Centers for Medicare & Medicaid Services. But they work differently, cover different things, and have different rules about who gets in.

If you are over 65 and worked long enough to build up Social Security credits, you almost certainly belong on Medicare. If you are over 65 and have very little income or assets, you might also be on Medicaid. Some people are on both — this is called "dual may be able to access".

Key Takeaways

  • Medicare is earned through work history and payroll taxes; Medicaid is based on income and assets, and rules vary by state.
  • Medicare covers hospital stays, doctor visits, and prescription drugs for people 65 and older; Medicaid covers similar services but also includes long-term care like nursing homes.
  • You pay premiums, deductibles, and copays for Medicare; Medicaid usually costs little or nothing out of pocket, depending on your state.
  • Some older adults are on both programs at the same time and get help from both to cover costs.
  • You must take action to enroll in Medicare at 65; Medicaid enrollment happens through your state and has different important date.

Who Medicare Covers

You are may be able to access for Medicare at 65 if you have worked at least 10 years (40 quarters) in jobs where you paid Social Security taxes. You do not have to be retired — you can still be working. You do not have to be poor. Your income and savings do not matter.

Some people under 65 also get Medicare: those who have received Social Security disability benefits for 24 months, those with end-stage renal disease, and those with ALS (Lou Gehrig's disease). But the vast majority of Medicare members are 65 and older.

If you did not work long enough to earn Medicare, you can still buy into it by paying a higher premium, but this is rare. Most people without work history fall back on Medicaid if they are poor enough, or they buy private insurance.

Who Medicaid Covers

Medicaid covers people with low income and low assets. The exact income and asset limits vary by state — there is no single national number. Some states are more generous than others. A person who qualifies in one state might not may have access to in another.

Older adults on Medicaid are usually people who never worked enough to earn Medicare, or who worked but did not pay into Social Security. They might be immigrants, self-employed people who did not pay taxes, or people who worked under the table. They might also be people who spent down their savings on medical care or long-term care and now have little left.

Medicaid does not care whether you are 30 or 80. It only cares about your income and assets right now. Some older adults are on Medicaid alone. Others are on both Medicare and Medicaid — usually because they earned Medicare but their income is too low to afford the premiums and out-of-pocket costs.

What Each Program Covers

Medicare has four parts. Part A covers hospital stays, skilled nursing care after a hospital stay, hospice, and some home health care. Part B covers doctor visits, outpatient care, lab tests, and medical equipment. Part D covers prescription drugs. Part C (Medicare Advantage) is an alternative way to get Parts A, B, and D through a private insurance company.

Medicaid covers similar ground — hospital care, doctor visits, prescription drugs — but the exact coverage varies by state. Medicaid also covers services Medicare does not: long-term care in a nursing home or assisted living, dental care, vision care, and hearing aids. This is why some older adults on both programs use Medicaid to cover the nursing home bill.

Neither program covers everything. Medicare does not cover dental, vision, or hearing aids (though some Medicare Advantage plans do). Medicare does not cover long-term care. Medicaid covers these things, but only in states that choose to offer them, and only if you meet that state's income and asset rules.

What You Pay

Medicare charges a monthly premium for Part B (about $165 to $560 per month in 2024, depending on income). Part A is usually free if you earned it through work. Part D (prescription drugs) costs vary by plan. You also pay a deductible when you use the service, and copays or coinsurance after that. The exact amounts depend on which plan you choose.

Medicaid costs little or nothing. Most states charge no premium. Some charge small copays for doctor visits or prescriptions, but many charge nothing. If you are on both Medicare and Medicaid, Medicaid usually pays your Medicare premiums and your out-of-pocket costs, which is why dual-may be able to access people often seek Medicaid enrollment.

The trade-off is that Medicaid comes with income and asset limits. If you earn too much or own too much, you lose Medicaid. Medicare has no such limits — you can be a millionaire and still be on Medicare.

When You Enroll

You should enroll in Medicare in the three months before you turn 65, the month you turn 65, or the three months after. This is your Initial Enrollment Period. If you miss this window, you can still enroll, but you may pay a penalty on your premiums for the rest of your life. The penalty is 10 percent per year you were late, and it never goes away.

Medicaid enrollment has no fixed important date — you can explore any time. But rules vary by state. Some states have continuous enrollment; others have open enrollment periods. Some states have waiting lists. You explore through your state Medicaid office, not through Medicare.

If you are already on Social Security at 65, you are usually enrolled in Medicare automatically. If you are not on Social Security, you must enroll yourself through Medicare.gov or by calling 1-800-MEDICARE. Do not assume you are enrolled just because you turned 65.

Dual may be able to access: When You Are on Both

Some older adults are on both Medicare and Medicaid. This usually happens when someone earned Medicare through work history but now has very low income. Medicaid steps in to help pay the Medicare premiums and the out-of-pocket costs (deductibles, copays, coinsurance).

Being dual may be able to access is usually good news. You get the broad coverage of Medicare plus the extra benefits of Medicaid (like nursing home care and dental). You pay very little out of pocket. But you have to meet both programs' rules — you have to have earned Medicare, and you have to meet your state's Medicaid income and asset limits.

If you think you might be dual may be able to access, contact your state Medicaid office. They can tell you whether you may have access to and help you enroll. Some states have special programs for dual-may be able to access people that offer extra benefits or lower costs.

Frequently Asked Questions

Can I be on both Medicare and Medicaid at the same time?

Yes. If you earned Medicare through work history but now have low income, you can be on both. Medicaid will help pay your Medicare premiums and out-of-pocket costs. Contact your state Medicaid office to see if you may have access to.

What happens if I do not enroll in Medicare at 65?

You can enroll later, but you will pay a penalty on your Part B and Part D premiums for as long as you are on Medicare. The penalty is 10 percent per year you were late. Enroll as soon as you are may be able to access to avoid this.

Does Medicaid cover nursing homes?

Yes, Medicaid covers long-term care in a nursing home or assisted living, but Medicare does not. This is one reason some older adults seek Medicaid enrollment. Rules and coverage vary by state.

How do I know if I have enough work history for Medicare?

You need 40 quarters (10 years) of work in jobs where you paid Social Security taxes. You can check your work history on your Social Security account at ssa.gov, or call Social Security at 1-800-772-1213.

What if I worked but did not pay into Social Security?

You may not may have access to for Medicare. You might be able to buy into it by paying a higher premium, or you might rely on Medicaid if your income is low enough. Contact Medicare at 1-800-MEDICARE to discuss your options.