The Core Difference: Who Pays and Who Gets Coverage

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, regardless of age. The programs serve different populations, work differently, and cover different things.

Medicare is the same nationwide. Medicaid rules change by state — what covers you in one state may not in another. This matters because a person can be on both programs at once (called "dual may be able to access"), or on one but not the other, depending on age and income.

The confusion is understandable: both are government health insurance, both use the word "medical" in their names, and both are run by the Centers for Medicare & Medicaid Services (CMS). But they are separate programs with separate rules, separate enrollment periods, and separate coverage.

Key Takeaways

  • Medicare covers people 65 and older, some younger people with disabilities, and people with end-stage renal disease, regardless of income.
  • Medicaid covers people with low income and assets, at any age, but rules vary significantly by state.
  • Medicare has four parts (A, B, C, D) with different coverage areas; Medicaid coverage is set by each state.
  • You pay Medicare premiums and deductibles based on your work history; Medicaid is usually free or low-cost for those who meet income limits.
  • Some people may have access to for both programs and use them together to cover more of their medical costs.

Who Medicare Covers

You are covered by Medicare at 65 if you or your spouse paid Medicare taxes for at least 10 years (40 quarters). You do not have to stop working. Income does not matter — a millionaire at 65 gets Medicare the same way a person with no savings does.

Some people under 65 also may have access to: those who have received Social Security Disability Insurance (SSDI) for 24 months, those with end-stage renal disease, and those with ALS (Lou Gehrig's disease). Otherwise, age 65 is the gate.

You enroll in Medicare during your Initial Enrollment Period, which runs three months before the month you turn 65, through three months after. If you miss this window, you pay a permanent penalty on your premiums unless you have a may have access to reason for the delay.

Who Medicaid Covers

Medicaid covers people with low income and limited assets. The income and asset limits vary by state and by category (children, parents, pregnant people, elderly, disabled). A single adult in one state might may have access to at $1,500 per month; in another state, the limit might be $800.

You do not have to be 65 to get Medicaid. Children, working-age adults, and seniors all can be covered if they meet their state's income and asset rules. Some states expanded Medicaid to cover more low-income adults; others did not, creating gaps in coverage for people who earn too much for Medicaid but too little for marketplace insurance.

Medicaid is always means-tested, meaning your income and assets are checked. Medicare is not — your income is irrelevant at 65.

How the Four Parts of Medicare Work

Part A covers hospital stays, skilled nursing facility care, hospice, and some home health care. Most people pay no premium for Part A because they paid Medicare taxes while working.

Part B covers doctor visits, outpatient care, lab tests, and medical equipment. You pay a monthly premium (the standard amount in 2024 is $164.90, but it varies by income). You also pay a deductible and coinsurance.

Part C (Medicare Advantage) is an alternative to Parts A and B. Private insurance companies offer it. You get the same coverage as Original Medicare but often with lower out-of-pocket costs and added benefits like dental or vision. The trade-off is a smaller network of doctors.

Part D covers prescription drugs. You choose a plan from private insurers. It has a monthly premium, an annual deductible, and cost-sharing. If you do not enroll when you first become may be able to access and you do not have other creditable drug coverage, you pay a permanent penalty.

What Medicaid Covers (and How It Varies by State)

Medicaid must cover certain services in every state: doctor visits, hospital stays, lab tests, X-rays, family planning, nursing home care, and home health services. But each state decides what else to cover and how much to pay providers.

Some states cover dental care; others do not. Some cover vision; others do not. Some cover physical therapy with few limits; others cap it. Some cover prescription drugs generously; others use strict formularies that exclude many medications.

This variation means a person moving from one state to another may lose coverage for services they relied on. It also means you cannot assume Medicaid in your state covers what it covers in your neighbor's state.

Cost Differences: Premiums, Deductibles, and Out-of-Pocket Limits

Medicare Part A has no premium for most people but has a deductible ($1,632 per benefit period in 2024; this changes yearly). Part B has a monthly premium and a deductible ($240 in 2024). Part D has a monthly premium and deductible that vary by plan. You pay coinsurance or copays for services.

Medicaid usually has no premium or a very low one. Many states charge no copay or a small copay ($1 to $5) for services. Some states charge higher copays for non-emergency emergency room visits or for brand-name drugs when generics are available. Medicaid has no annual deductible in most states.

Medicare has an out-of-pocket maximum (the most you pay in a year before Medicare covers 100 percent). Original Medicare's limit is higher than Part C plans. Medicaid does not have a standard out-of-pocket maximum; it varies by state.

When You Might Have Both Medicare and Medicaid

If you are 65 or older and your income and assets are low enough, you can be on both programs. This is called being "dual may be able to access." Medicaid fills gaps that Medicare does not cover — like long-term nursing home care, which Medicare covers only for a limited time.

Some people become dual may be able to access when they turn 65 and their Medicare premiums and cost-sharing push them below their state's Medicaid income limit. Others are already on Medicaid and stay on it when they turn 65 and enroll in Medicare.

If you are dual may be able to access, Medicare is your primary payer, and Medicaid is secondary. Medicaid pays some or all of your Medicare premiums and cost-sharing, depending on which "dual" category you fall into. Your state Medicaid program determines the exact rules.

Frequently Asked Questions

Can I have Medicare and Medicaid at the same time?

Yes. If you are 65 or older and meet your state's Medicaid income and asset limits, you can be on both. Medicaid will help pay your Medicare premiums and deductibles. The rules for how much Medicaid pays depend on your state and your specific income level.

What happens to my Medicaid if I turn 65 and get Medicare?

You do not automatically lose Medicaid. If your income and assets still meet your state's Medicaid limits for seniors, you stay on Medicaid. It becomes your secondary insurance and helps cover Medicare costs. If your income is now too high, you lose Medicaid coverage.

Is Medicaid the same in every state?

No. Each state sets its own income limits, asset limits, and covered services within federal guidelines. A service covered by Medicaid in one state may not be covered in another. If you move, contact your new state's Medicaid office to learn what you are covered for.

Do I have to pay for Medicare?

Most people pay no premium for Part A. Part B, Part C, and Part D all have premiums. If your income is high, you pay higher premiums for Parts B and D. You also pay deductibles and cost-sharing when you use services.

What if I do not enroll in Medicare at 65?

You can enroll later, but you will pay a permanent penalty on your premiums unless you have a may have access to reason for the delay (such as active employer coverage). The penalty is 10 percent per year for Part B and 1 percent per month for Part D. Enroll during your Initial Enrollment Period to avoid this.