Medicare and Medicaid are separate federal programs with different rules, funding, and who they serve

Medicare is a federal health insurance program for people 65 and older, regardless of income. It is also available to some younger people with disabilities or end-stage renal disease. You pay into Medicare through payroll taxes during your working years, and it becomes your insurance when you turn 65.

Medicaid is a joint federal and state program that pays for health care for people with low incomes. Each state runs its own Medicaid program within federal guidelines, so rules and coverage vary by state. You do not pay into Medicaid through taxes — it is funded by general tax revenue and is means-tested, meaning your income and assets must fall below a certain level.

The two programs overlap in some ways — some people may have access to for both, and both help pay medical bills — but they are run by different agencies, have different may be able to access rules, and cover different services. Understanding which one applies to you matters because it changes what you pay, what doctors you can see, and what services are covered.

Key Takeaways

  • Medicare is a federal program for people 65 and older, funded by payroll taxes you paid during your working years.
  • Medicaid is a state-run program for people with low incomes, funded by general tax revenue and available at any age.
  • Some people may have access to for both programs at the same time, which is called "dual may be able to access" status.
  • Medicare has the same rules nationwide, but Medicaid rules and coverage vary significantly from state to state.
  • You enroll in Medicare through Social Security, but you enroll in Medicaid through your state's health department or social services office.

How Medicare works and who pays for it

Medicare is funded through the Federal Insurance Contributions Act (FICA) tax — the payroll tax you see on your paychecks as "Medicare tax." You and your employer each pay 1.45 percent of your wages. If you are self-employed, you pay both portions. These taxes go into a trust fund that pays for Medicare benefits when you turn 65.

Medicare has four parts. Part A covers hospital stays, skilled nursing care, and hospice. Part B covers doctor visits, outpatient care, and medical equipment. Part D covers prescription drugs. Part C, also called Medicare Advantage, is an alternative way to get Parts A and B through a private insurance company instead of the government.

You are automatically enrolled in Parts A and B when you turn 65 if you are receiving Social Security benefits. If you are not yet receiving Social Security, you need to enroll during your initial enrollment period, which is the three months before, the month of, and the three months after your 65th birthday. Missing this window can result in permanent penalties on your premiums.

How Medicaid works and who can get it

Medicaid is jointly funded by the federal government and individual states. The federal government sets minimum standards, but each state designs its own program. This means a person who qualifies for Medicaid in one state may not may have access to in another, and the services covered can differ.

Medicaid is based on income and assets. To may have access to, your income must be below a certain percentage of the federal poverty level — but this percentage varies by state and by category (children, pregnant people, parents, elderly people, people with disabilities). Some states have expanded Medicaid to cover more people; others have not. You can find your state's income limits by contacting your state Medicaid office or using the Medicaid.gov website.

You enroll in Medicaid through your state's health department, social services office, or sometimes through a contracted enrollment agency. The process and timeline vary by state. Some states process applications within days; others take weeks. You will need to provide proof of income, citizenship, and residency.

When someone qualifies for both Medicare and Medicaid

People who may have access to for both programs are called "dual may be able to access" or "Medicare-Medicaid enrollees." This usually happens when someone is 65 or older with a low income, or when someone under 65 qualifies for Medicare because of a disability and also has low enough income for Medicaid.

If you are dual may be able to access, Medicare is your primary insurance and pays first. Medicaid then covers some of the costs that Medicare does not pay, such as copayments, coinsurance, and deductibles. In some cases, Medicaid also covers services that Medicare does not, such as long-term care or dental care (depending on your state).

Being dual may be able to access can significantly reduce your out-of-pocket costs. However, you must enroll in both programs separately — may have access to for one does not automatically enroll you in the other. If you think you might may have access to for Medicaid, contact your state Medicaid office even if you already have Medicare.

What each program covers and what they do not

Medicare covers hospital care, doctor visits, lab tests, imaging, mental health services, and prescription drugs (through Part D). It does not cover dental care, vision care, hearing aids, or long-term care such as nursing home stays or home health aides for non-medical reasons.

Medicaid covers many of the same services as Medicare, but coverage varies by state. Most states cover dental care, vision care, and long-term care — services Medicare does not. However, Medicaid may have stricter limits on how many visits you can have or which providers you can see. Some states cover services like transportation to medical appointments or adult day care; others do not.

Both programs have out-of-pocket costs. Medicare requires you to pay premiums, deductibles, and copayments. Medicaid typically has lower or no premiums for people with very low incomes, but some states charge small copayments for services. The exact amounts depend on your income, your state (for Medicaid), and which parts of Medicare you use.

Where to find your state's Medicaid rules

Because Medicaid is run by each state, you need to contact your state's program directly to learn about income limits, covered services, and how to enroll. You can find your state Medicaid office through Medicaid.gov, which has a state-by-state directory with phone numbers and websites.

You can also call 211 (a free helpline) and ask for Medicaid information for your state. Many 211 services can tell you whether you might may have access to based on your income and help you understand next steps. Some states also have enrollment information programs that help people explore for free.

If you are already on Medicare and think you might also may have access to for Medicaid, do not wait. Contact your state Medicaid office as soon as possible. There is no penalty for explore, and the sooner you enroll, the sooner Medicaid can help cover costs that Medicare does not.

Medicare and Medicaid are not the same as the Affordable Care Act

The Affordable Care Act (ACA), also called Obamacare, is a separate health insurance law that created health insurance marketplaces where people can purchase coverage. If you are under 65 and do not may have access to for Medicaid or Medicare, you may be able to purchase an ACA plan through Healthcare.gov or your state's marketplace.

Some people confuse these programs because they all help with health costs, but they are different. Medicare is for people 65 and older. Medicaid is for people with low incomes. The ACA marketplace is for people who do not may have access to for either and need to purchase insurance on their own. You may may have access to for more than one option, and understanding which applies to you helps you make the right choice.

Frequently Asked Questions

Do I have to pay for Medicare if I did not work long enough to pay into it?

If you did not pay Medicare taxes for at least 10 years (40 quarters), you do not may have access to for premium-free Part A at 65. You can still purchase Part A by paying a monthly premium, which varies based on how many quarters you did work. Contact Social Security to learn your specific situation.

Can I have Medicare and private insurance at the same time?

Yes. Many people have Medicare and a supplemental insurance policy (called Medigap) or a retiree health plan from a former employer. These policies help cover costs that Medicare does not pay. You can also switch to Medicare Advantage (Part C), which is a private insurance alternative to original Medicare.

What happens if I move to a different state while on Medicaid?

Your Medicaid coverage ends when you move, because each state runs its own program. You will need to enroll in your new state's Medicaid program. Contact your new state's Medicaid office as soon as you move to learn about income limits and how to enroll. There may be a gap in coverage, so explore right away.

Is there a penalty if I do not enroll in Medicare at 65?

Yes. If you do not enroll in Part B during your initial enrollment period and you do not have other may have access to coverage, you will pay a permanent 10 percent increase to your Part B premium for each year you delayed. This penalty stays with you for life, so it is important to enroll on time even if you do not plan to use Medicare when ready.

Can I use any doctor with Medicaid?

It depends on your state and your specific Medicaid plan. Some states allow you to see any doctor who accepts Medicaid; others require you to choose a primary care doctor and get referrals. Check with your state Medicaid office or your Medicaid plan documents to learn which doctors are in your network.