The Core Difference: Who Pays and Who Gets Covered

Medicare is a federal insurance program you pay into through payroll taxes during your working years. You become covered at 65, regardless of income. Medicaid is a joint federal and state program that covers people with low income at any age. The biggest difference: Medicare is based on age or disability; Medicaid is based on income.

Think of it this way. Medicare says: "You worked and paid taxes, so at 65 we cover your hospital and doctor bills." Medicaid says: "Your income is below a certain level, so the state covers your medical bills." You can have both at the same time — this is called being "dual may be able to access" — but they work differently and cover different things.

Key Takeaways

  • Medicare covers people 65 and older, or younger people with certain disabilities or end-stage renal disease, regardless of how much money they have.
  • Medicaid covers people of any age whose income falls below their state's limit, which varies widely by state.
  • Medicare has the same rules nationwide; Medicaid rules and coverage differ by state.
  • You pay Medicare premiums, deductibles, and copays; Medicaid typically has lower or no out-of-pocket costs for people with very low income.
  • Many people over 65 with low income have both programs, and Medicaid can pay some of Medicare's costs.

Who Medicare Covers

You can get Medicare if you are 65 or older, or if you are younger and have been receiving Social Security Disability Insurance (SSDI) for 24 months, or if you have end-stage renal disease or ALS (Lou Gehrig's disease). Age is the most common path: the month you turn 65, you become covered if you have worked and paid Medicare taxes for at least 10 years (or your spouse has).

Your income does not matter for Medicare. A person with $2 million in the bank and a person with $500 can both get Medicare at 65. Your assets do not matter either. What matters is age, disability status, or kidney disease — and your work history or your spouse's work history.

Who Medicaid Covers

Medicaid covers people whose income is below a threshold set by their state. That threshold is different in every state. In some states, a single person earning $1,500 a month might not may have access to; in others, someone earning $2,000 a month might. Your state's Medicaid office sets the limit based on federal guidelines, but each state has some freedom to set it higher or lower.

Medicaid also covers people of any age — children, working-age adults, and seniors. You do not have to be retired or disabled to get Medicaid. You just have to live in the state and have income below the limit. Some states also count assets (savings, property), though the limits are usually generous. Your state's Medicaid office can tell you the exact income and asset limits for your situation.

What Medicare 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 to Parts A and B offered by private insurance companies — it covers the same things but through a private plan instead of the government.

Medicare does not cover dental, vision, or hearing care. It does not cover long-term custodial care in a nursing home (only skilled nursing after a hospital stay). You pay a monthly premium for Part B and Part D, and you pay deductibles and copays when you use care. The amounts change each year.

What Medicaid Covers

Medicaid covers doctor visits, hospital stays, emergency care, lab tests, X-rays, and prescription drugs. It also covers services Medicare does not: dental care, vision care, hearing aids, and long-term nursing home care. Medicaid often covers more preventive care without a copay than Medicare does.

Because Medicaid is run by each state, coverage varies. One state might cover acupuncture; another might not. One state might cover more therapy visits than another. Your state's Medicaid program can tell you exactly what is covered. For people with very low income, Medicaid usually has no monthly premium and low or no copays.

How They Work Together When You Have Both

If you are 65 or older with low income, you might have both Medicare and Medicaid. In this case, Medicare is your primary insurance — it pays first. Medicaid is secondary — it can pay some of the costs Medicare does not cover, like copays, deductibles, and services Medicare does not cover at all (like dental or nursing home care).

This combination is called being "dual may be able to access." It usually means lower out-of-pocket costs than Medicare alone, because Medicaid fills in gaps. Your state's Medicaid office can tell you whether you may have access to for both based on your income and assets. If you do, you will have a Medicare card and a Medicaid card, and you show both when you see a doctor or go to the hospital.

Cost Differences: Premiums, Deductibles, and Copays

Medicare requires you to pay a monthly premium for Part B (doctor and outpatient care) and Part D (drugs). In 2024, the standard Part B premium is $164.90 per month, though it is higher if your income is above a certain level. You also pay an annual deductible for Part B ($240 in 2024) and copays when you use services. These amounts increase each year.

Medicaid typically has no monthly premium for people who may have access to based on income. Many Medicaid programs have no copay or a very small copay (50 cents to $3) for doctor visits and prescriptions. Some states charge a small copay for emergency room visits if you do not have a medical reason to be there. If you have both Medicare and Medicaid, Medicaid usually pays your Medicare premiums and deductibles, so your out-of-pocket cost is very low.

State Differences in Medicaid

Medicaid rules are not the same everywhere. Income limits vary by state — some states cover people earning up to 138% of the federal poverty level; others cover fewer people. Some states count your savings toward the limit; others do not. Some states cover more services (like dental or therapy) than others.

If you move to a different state, your Medicaid coverage might change. Your income might now may have access to you, or it might not. The services covered might be different. It is important to check with your new state's Medicaid office when you move. You can find your state Medicaid office through the Centers for Medicare & Medicaid Services (CMS) website or by calling 1-800-MEDICARE.

Frequently Asked Questions

Can I have Medicare and Medicaid at the same time?

Yes. If you are 65 or older and your income is low enough, you can have both. Medicare covers first, and Medicaid covers some of what Medicare does not. This is called dual coverage, and it usually means lower costs for you.

Do I have to choose between Medicare and Medicaid?

No. If you may have access to for both, you have both automatically (or after you sign up for Medicaid). You do not choose one or the other. If you may have access to for only one, you have only that one.

What if my income is too high for Medicaid but I cannot afford Medicare?

You may may have access to for a Medicare Savings Program (MSP) run by your state. These programs help pay your Medicare premiums and copays if your income is slightly above the Medicaid limit. Contact your state Medicaid office to learn the income limits for your state's MSP.

Does Medicare cover nursing home care?

Medicare covers skilled nursing care for up to 100 days after a hospital stay of at least 3 days. It does not cover long-term custodial care in a nursing home. Medicaid does cover long-term nursing home care if you have low income and assets.

How do I learn about I may have access to for Medicaid?

Contact your state Medicaid office directly — the phone number and website are on your state's health department website. You can also call 1-800-MEDICARE and ask for a referral to your state Medicaid program. They will tell you the income and asset limits for your state.