The core difference: age and income versus income alone

Medicare is a federal insurance program you earn by paying payroll taxes during your working years. You become may be able to access at 65, regardless of how much money you have. Medicaid is a joint federal and state program that pays medical bills for people with low income, at any age. The two programs have different rules, different costs, and different coverage — and you can be on both at the same time.

The confusion is understandable: both are government health programs, both help pay medical bills, and both use similar names. But they are run by different agencies, funded differently, and cover different groups of people. Understanding which one you might use — or whether you use both — changes what you pay and what doctors you can see.

Key Takeaways

  • Medicare is for people 65 and older (or some younger people with disabilities), paid for by payroll taxes you paid while working.
  • Medicaid is for people with low income at any age, funded by federal and state taxes, and rules vary by state.
  • Medicare has four parts (A, B, D, and Advantage plans), each covering different services and each with different costs.
  • Medicaid covers the same basic services in every state but copays, deductibles, and which doctors participate vary widely by state.
  • You can be on both programs at the same time — this is called "dual may be able to access" — and each program pays its share of your bills.

How Medicare works: earned through payroll taxes

Medicare is a social insurance program. You paid into it through payroll taxes (the Medicare tax on your paychecks) during your working years. At 65, you become may be able to access to use it — you do not have to be poor, and you do not have to pass an income test. You are may have access to to it because you paid for it.

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. Medicare Advantage (Part C) is an alternative to Parts A, B, and D — a private insurance plan that covers all three, usually with lower out-of-pocket costs but a smaller network of doctors.

You pay premiums for Parts B and D, and you pay deductibles and copays when you use services. Part A is usually free if you or your spouse paid Medicare taxes for at least 10 years. The amount you pay depends on your income and which parts you choose.

How Medicaid works: based on income, not age

Medicaid is a needs-based program. You do not earn it through payroll taxes. Instead, you show that your income is below a certain level set by your state. Each state runs its own Medicaid program within federal guidelines, so the income limits, covered services, and copays are different in every state.

In most states, Medicaid covers doctor visits, hospital care, prescription drugs, mental health services, and long-term care (nursing homes and home care). Some states cover more; some cover less. A few states have not expanded Medicaid to cover adults without children, so may be able to access rules vary widely depending on where you live.

Medicaid is free or very low cost — most states charge little or nothing for office visits and prescriptions. You do not pay premiums the way you do with Medicare Part B. If you have Medicaid, the state pays the doctor or hospital directly.

Who pays: federal taxes, payroll taxes, and state budgets

Medicare is funded by payroll taxes (you and your employer each paid 1.45 percent of your wages) and by general federal income taxes. The money goes into a trust fund, and when you turn 65, you draw from it.

Medicaid is funded by federal income taxes and state income taxes. The federal government pays a share (usually 50 to 75 percent, depending on the state's wealth), and the state pays the rest. This is why Medicaid rules are so different from state to state — each state decides how much to spend and who to cover within federal minimums.

Coverage and costs: what each program pays for

Medicare covers hospital care, doctor visits, skilled nursing, hospice, and prescription drugs. It does not cover dental, vision, hearing aids, or long-term custodial care (help with bathing and dressing in a nursing home). You pay premiums, deductibles, and copays. In 2024, Part B premiums start at $174.70 per month for most people, but higher earners pay more. Part D premiums vary by plan.

Medicaid covers the same basic services plus dental, vision, and long-term care in most states. It is much cheaper or free to use — most states charge $0 to $5 per visit. The trade-off is that fewer doctors accept Medicaid, and you may have to wait longer for appointments.

If you are on both Medicare and Medicaid (dual may be able to access), Medicare pays first, and Medicaid pays the copays and deductibles that Medicare does not cover. This can save you hundreds of dollars per month.

Age and disability: who can use each program

Medicare is primarily for people 65 and older. You can also get Medicare before 65 if you have been on Social Security Disability Insurance (SSDI) for 24 months, or if you have end-stage renal disease or ALS. Age is the main gate — income does not matter.

Medicaid is for people of any age with low income. In states that have expanded Medicaid (most states, but not all), adults earning up to about 138 percent of the federal poverty line can use it. In states that have not expanded, you usually have to be a child, pregnant, elderly, or disabled to may have access to. There is no age minimum.

State differences: why Medicaid rules change at the border

Medicare is the same in every state — the rules, coverage, and costs are federal. If you move from Florida to New York, your Medicare coverage does not change.

Medicaid is different in every state. Some states cover dental and vision; others do not. Some states pay doctors more, so more doctors accept Medicaid; others pay less, so fewer do. Some states have expanded Medicaid to cover more low-income adults; others have not. The income limit to may have access to, the copays you pay, and the doctors you can see all depend on which state you live in.

If you move to a different state, you may lose Medicaid or have to reapply. You should contact your new state's Medicaid office within 30 days of moving to understand what coverage is available to you there.

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, you can be on both. This is called "dual may be able to access." Medicare pays first, and Medicaid pays the parts Medicare does not cover, like copays and deductibles. Many states have special programs for dual-may be able to access people to help them understand their coverage.

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

If you did not pay Medicare taxes for at least 10 years, you can still buy Part A at age 65, but you will pay a premium (around $278 to $505 per month in 2024, depending on how many years you paid in). Part B and D still have their standard premiums. You can also use Medicaid if your income is low enough.

What happens to my Medicaid if I turn 65?

You become may be able to access for Medicare at 65. You should sign up for Medicare Part A and Part B during your enrollment window (usually three months before, the month of, and three months after your 65th birthday). You can keep Medicaid if your income is still low enough — the two programs will work together, with Medicare paying first.

Why do fewer doctors accept Medicaid than Medicare?

Medicaid pays doctors less than Medicare or private insurance does. Some doctors choose not to accept Medicaid because the payment is too low to make the visit worthwhile. This varies by state — states that pay doctors more have more doctors accepting Medicaid. You may have to call ahead to find a doctor who takes your Medicaid.

If I move states, do I keep my Medicaid?

No. Medicaid is run by each state, so when you move, your old state's Medicaid ends. You must explore for Medicaid in your new state. The income limits and covered services may be different. Contact your new state's Medicaid office within 30 days of moving to find out whether you may have access to and what to do next.