The Core Difference Between Medicaid and Medicare

Medicare is a federal insurance program for people 65 and older, regardless of income. Medicaid is a joint federal and state program that covers low-income people of any age. They are separate programs with different rules, different costs, and different coverage — and you may be covered by one, both, or neither depending on your age and income.

Medicare comes from Social Security taxes you paid during your working years. Medicaid comes from federal and state tax dollars. Because Medicaid is run partly by each state, the income limits, covered services, and out-of-pocket costs vary where you live. Medicare is the same everywhere.

Many people over 65 are on Medicare only. Some low-income seniors are on both programs at the same time — this is called being "dual may be able to access." Younger people with disabilities or end-stage renal disease can also get Medicare. Medicaid covers children, pregnant women, parents, and non-elderly adults in states that have expanded the program.

Key Takeaways

  • Medicare is a federal program for people 65 and older; Medicaid is a state and federal program for low-income people of any age.
  • Medicare has the same rules nationwide; Medicaid rules, income limits, and covered services differ by state.
  • You pay Medicare premiums and deductibles based on your income and which plan you choose; Medicaid costs little or nothing for those who meet income requirements.
  • Some seniors may have access to for both programs and are called "dual may be able to access," which can lower their out-of-pocket costs.
  • Medicaid covers long-term care and nursing home costs in ways Medicare does not.

Who Medicare Covers

You become covered by Medicare automatically when you turn 65 if you have worked and paid Medicare taxes for at least 10 years (40 quarters). You do not have to be retired. If your spouse worked long enough, you may be covered based on their work record even if you did not work yourself.

Younger people can also get Medicare if they have been receiving Social Security disability benefits for 24 months, or if they have end-stage renal disease or ALS (Lou Gehrig's disease). These are the only exceptions to the age 65 rule.

Medicare does not check your income. A millionaire and a person living in poverty both pay the same Medicare premiums if they are the same age and have the same coverage choices.

Who Medicaid Covers

Medicaid covers low-income people, but the income limit depends on your state and your family situation. In states that expanded Medicaid under the Affordable Care Act, most adults earning up to about 138% of the federal poverty line are covered. In states that did not expand, the income limits are much lower and often explore only to parents, children, or pregnant women.

Medicaid also covers people who are blind, disabled, or over 65 with very low income and few assets. Each state sets its own asset limits — how much money and property you can own and still be covered. Some states allow you to own a home and a car; others have stricter rules.

Children are covered in every state up to a certain age and income level, even if their parents do not meet Medicaid income limits. Pregnant women and new mothers have higher income limits in most states. You do not have to be a U.S. citizen to get Medicaid in most states, though rules vary.

What Medicare Covers

Medicare has four parts. Part A covers hospital stays, skilled nursing facility care, 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, called Medicare Advantage, is an alternative to Parts A and B offered by private insurance companies.

Medicare does not cover dental, vision, hearing aids, or long-term custodial care in a nursing home. It covers a limited number of days in a skilled nursing facility (up to 100 days per benefit period) only if you were hospitalized first. If you need help with daily activities like bathing or dressing in your own home, Medicare does not pay for that.

You pay a monthly premium for Part B and Part D, and you pay deductibles and copays when you use services. The amounts change each year. If your income is higher, you pay higher premiums for Parts B and D.

What Medicaid Covers

Medicaid covers doctor visits, hospital care, lab tests, X-rays, and prescription drugs. It also covers dental and vision care in most states, though the scope varies. Medicaid covers long-term care in nursing homes and assisted living facilities — a major difference from Medicare. It also pays for home and community-based services that help people stay out of institutions.

Medicaid covers family planning, pregnancy and childbirth, and well-child visits. It covers mental health and substance use treatment in most states. Many states cover hearing aids and other equipment that Medicare does not.

For people on Medicaid, copays are usually very small or zero. Some states charge a small copay for doctor visits or prescriptions, but not for emergency care. If you are on both Medicare and Medicaid, Medicaid usually pays your Medicare premiums and covers the gaps that Medicare does not.

Costs: Premiums, Deductibles, and Out-of-Pocket Limits

Medicare Part B has a monthly premium that most people pay. In 2024, the standard premium is $164.90 per month, but it is higher if your income is above a certain level. Part D premiums vary by plan and range from about $7 to $100 per month. Part A has no premium if you paid Medicare taxes for 10 years, but you pay a deductible when you are hospitalized.

Medicaid has no monthly premium for most people. Some states charge small copays — typically $1 to $5 per doctor visit or prescription — but many states charge nothing. Medicaid has no deductible. If you are on both Medicare and Medicaid, Medicaid pays your Medicare premiums and deductibles, which can save you hundreds of dollars per year.

Medicare has an annual out-of-pocket limit: once you spend a certain amount on covered services, Medicare pays 100% of additional covered costs for the rest of the year. Medicaid does not have an out-of-pocket limit in most states, but because copays are so low, your actual costs are usually much lower than with Medicare alone.

How to Enroll and When to Enroll

You enroll in Medicare through Social Security. You can sign up online at ssa.gov, by phone at 1-800-772-1213, or in person at your local Social Security office. You should enroll three months before you turn 65. If you miss that window, you may pay a penalty for the rest of your life.

If you are still working at 65 and have health insurance through your employer, you may be able to delay Medicare Part B without penalty. You must tell Social Security this when you turn 65.

To enroll in Medicaid, you contact your state's Medicaid office or explore online through your state's website. Each state has a different process process and website. You can find your state's Medicaid office at medicaid.gov. You can explore for Medicaid at any time; there is no enrollment period.

Frequently Asked Questions

Can I have both Medicare and Medicaid at the same time?

Yes. If you are 65 or older and have low income and few assets, you may be covered by both programs. Medicaid will pay your Medicare premiums and cover services Medicare does not, like long-term care and dental care. People with both programs are called "dual may be able to access."

What happens if I do not enroll in Medicare when I turn 65?

If you do not enroll in Part B when you first become may be able to access, you will pay a 10% higher premium for Part B for each year you delayed. This penalty lasts for the rest of your life. The exception is if you were covered by an employer health plan when you turned 65; in that case, you can enroll without penalty when you leave that job.

Does Medicaid pay for nursing home care?

Yes, Medicaid covers long-term care in nursing homes and assisted living facilities. Medicare covers only up to 100 days in a skilled nursing facility after a hospital stay. If you need long-term care, Medicaid is usually the program that pays. You must meet your state's income and asset limits to be covered.

If I move to a different state, does my Medicaid coverage move with me?

No. Medicaid is run by each state, so your coverage ends when you move. You must explore for Medicaid in your new state. The income limits, covered services, and process process may be different. You should explore before you move to avoid a gap in coverage.

Why does my neighbor pay more for Medicare than I do?

If your neighbor has higher income, they pay higher premiums for Medicare Part B and Part D. Medicare adjusts premiums based on your income from two years ago. If you had a large income change, such as from selling a home, your premiums may go up the following year.