What Medicaid Is and How It Differs From Medicare

Medicaid is a joint federal and state health insurance program for people with lower incomes and limited assets. Unlike Medicare, which is based on age or disability and funded through payroll taxes, Medicaid is means-tested — meaning your income and savings determine whether you may have access to. Each state runs its own Medicaid program within federal guidelines, so the rules, covered services, and income limits vary significantly depending on where you live.

Many seniors are confused about the difference because the names sound similar and some people have both programs at the same time. If you have Medicare but your income is very low, you may also have Medicaid. When you have both, Medicaid is called the "secondary payer" — it covers costs that Medicare does not, like long-term care, dental work, and vision care.

Medicaid covers hospital stays, doctor visits, prescription drugs, nursing home care, and home health services. The specific services covered and how much you pay out of pocket depend on your state's program and your income level.

Key Takeaways

  • Medicaid is based on income and assets, not age, and each state sets its own income limits and covered services.
  • Seniors can have both Medicare and Medicaid at the same time; when they do, Medicaid covers many costs Medicare does not.
  • Medicaid covers long-term care, nursing home stays, and dental and vision services that Medicare typically does not pay for.
  • You must contact your state's Medicaid office or local social services department to learn your state's specific rules and income limits.
  • Some seniors with low income and modest assets may be able to "spend down" assets to become Medicaid-covered for nursing home care.

Income and Asset Limits Vary by State

Medicaid has income and asset thresholds, but these numbers are different in every state. Some states use the federal poverty level as a starting point; others set their own limits higher or lower. A few states have expanded Medicaid to cover more people, while others have kept limits stricter. This means a senior with the same income might may have access to in one state and not in another.

Asset limits also vary. Most states count savings, investments, and property toward the limit, though rules about what counts (and what does not) differ. For example, some states do not count your primary home or one vehicle toward the asset limit. You need to contact your state's Medicaid program directly to find out the exact income and asset limits where you live.

If your income is slightly above the limit, you may still have options. Some states allow seniors to deduct medical expenses from their income before checking whether they may have access to, which can lower their countable income enough to become covered.

What Medicaid Covers That Medicare Does Not

Medicare covers hospital and doctor care, but it has significant gaps. Medicaid fills many of those gaps for people who have both programs. Medicaid typically covers long-term nursing home care, which Medicare covers only for a limited time after a hospital stay. If you need to stay in a nursing home for months or years, Medicaid is often the only program that will pay for it.

Medicaid also covers dental care, vision care, and hearing aids in most states — services Medicare does not cover at all. Prescription drug coverage through Medicaid may have lower copays than Medicare's drug plan. Home health services, personal care information, and adult day care are also covered by Medicaid in many states.

The exact list of covered services depends on your state. Some states cover more generous benefits than others. You can ask your state Medicaid office for a list of covered services, or you can ask a social worker at a hospital or senior center to help you understand what your state covers.

How to learn about You May Be Covered

The first step is to contact your state's Medicaid office or your local social services department. You can find your state Medicaid office by searching "[your state] Medicaid" online or by calling your county's social services office. Many states also have a 211 phone line — dial 2-1-1 from any phone — and the operator can tell you how to reach your local Medicaid office.

When you contact them, have your Social Security number, birth date, income information (such as recent pay stubs or bank statements showing interest), and a list of your assets ready. They will tell you whether you meet your state's income and asset limits and what the next steps are.

Some states allow you to start the process online through their website. Others require you to visit an office in person or mail in a form. The process and timeline vary by state, so ask how long it typically takes and what documents you will need to bring.

Medicaid and Nursing Home Care: The "Spend Down" Process

Many seniors turn to Medicaid specifically to pay for nursing home care when their savings run out. If your income is low enough but your assets are too high, you may be able to use your savings to pay for care first, then become Medicaid-covered once your assets fall below the state limit. This is called "spending down."

The spend-down process is complex because Medicaid has rules about which assets count, which transfers are allowed, and how quickly you must use your money. For example, if you give away money or property to family members within a certain time period before explore, Medicaid may penalize you by delaying coverage. These rules exist to prevent people from hiding assets.

If you are facing nursing home care and think you may need Medicaid, talk to a social worker at the nursing home or contact your state's Medicaid office before you spend down your savings. An elder law attorney or a social worker can help you understand the rules in your state and plan the best way to preserve assets for your spouse or family while becoming Medicaid-covered.

Medicaid and Medicare Together: Dual Coverage

If you have both Medicare and Medicaid, you are called a "dual may be able to access" beneficiary. This is common for seniors with very low incomes. When you have both, Medicare is your primary insurance — it pays first — and Medicaid pays the costs Medicare does not cover, such as copays, coinsurance, and deductibles.

Dual coverage can save you money because Medicaid covers many out-of-pocket costs that Medicare leaves you responsible for. However, you must follow the rules of both programs. For example, you must use doctors and hospitals that accept both Medicare and Medicaid. Some providers accept only one or the other.

If you think you might be covered by both programs, tell your doctor's office and the hospital when you arrive. They can verify your coverage and make sure they bill both programs correctly. You should also keep both your Medicare card and your Medicaid card with you.

Questions to Ask Your Doctor or Social Worker

Before you contact Medicaid, it can help to write down questions you want answered. Here are some to consider:

  • What is my state's income limit for Medicaid, and how is income counted?
  • What assets count toward the limit, and what does not?
  • If I have both Medicare and Medicaid, which one pays first?
  • What services does my state's Medicaid program cover?
  • If I need nursing home care, what is the process for becoming Medicaid-covered?
  • Are there any programs in my state that help seniors with low income pay for Medicare premiums or copays?

A social worker at your local senior center, hospital, or aging agency can help you understand these questions and guide you through the process. Many offer this service at no cost.

Frequently Asked Questions

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

Yes. If your income is very low, you may be covered by both programs. Medicare is your primary insurance, and Medicaid covers costs Medicare does not pay for, such as copays and deductibles. You must use providers who accept both programs.

Does Medicaid cover nursing home care?

Yes, Medicaid covers long-term nursing home care in all states, but Medicare covers it only for a limited time after a hospital stay. If you need to stay in a nursing home for months or years, Medicaid is usually the program that pays. Your state's Medicaid office can tell you which nursing homes accept Medicaid.

What if my income is slightly above the Medicaid limit?

Some states allow you to deduct medical expenses from your income before checking whether you may have access to. Other states have programs for people with income slightly above the limit. Contact your state's Medicaid office to ask whether you have other options.

How long does it take to be approved for Medicaid?

The timeline varies by state, but most programs aim to make a decision within 30 to 45 days if you provide all required documents. Some states are faster; others may take longer. Ask your state's Medicaid office how long the process typically takes where you live.

What happens if I am denied Medicaid?

You have the right to ask why you were denied and to request a hearing to appeal the decision. Your state's Medicaid office will explain the appeal process. A social worker or legal aid attorney can help you prepare for an appeal.