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, regardless of age. The two programs operate separately, have different rules in each state, and cover different groups of people — though some people may have access to for both.
The confusion is understandable because both are government health programs and both help pay medical bills. But they are funded differently, run differently, and determine who gets in based on different criteria. Understanding which one you fall under — or whether you fall under both — changes what you pay, what doctors you can see, and what happens to your coverage if your situation changes.
Key Takeaways
- Medicare is based on age (65 and older) or disability; Medicaid is based on income and varies by state.
- Medicare is the same nationwide; Medicaid rules, coverage, and income limits differ significantly from state to state.
- You pay Medicare premiums and deductibles; Medicaid typically costs little or nothing out of pocket, depending on your state.
- Some people may have access to for both programs (called "dual may be able to access"), and the programs coordinate to avoid duplicate payments.
Who Medicare Covers
You become covered by Medicare at age 65 if you are a U.S. citizen or permanent resident who has lived in the country for at least five years. You do not need to be retired, and your income does not matter. If you are under 65, you can also may have access to if you have been receiving Social Security Disability Insurance (SSDI) for 24 months, or if you have end-stage renal disease or ALS.
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 (Medicare Advantage) is an alternative way to get Parts A, B, and D through a private insurance company. Most people pay a monthly premium for Part B and Part D, and there are deductibles and copays when you use services.
Who Medicaid Covers
Medicaid covers people with low income, but the income limit varies by state and changes year to year. In most states, you must have income below 138% of the federal poverty line to may have access to, though some states set the limit lower. You must also be a U.S. citizen or may have access to immigrant, and you must live in the state where you are explore.
Medicaid covers children, pregnant people, parents, seniors, and people with disabilities. Unlike Medicare, there is no age requirement — a 30-year-old with low income can may have access to in most states. Coverage includes doctor visits, hospital care, prescription drugs, dental care (in some states), and long-term care in a nursing home. Most people pay nothing or very little out of pocket, though some states charge small copays.
How Income and Assets Affect Coverage
Medicare does not check your income or assets. You pay the same premiums and face the same cost-sharing whether you earn $20,000 a year or $200,000. Your only option to reduce costs is to choose a Medigap or Medicare Advantage plan, which are available to everyone regardless of income.
Medicaid has strict income and asset limits that vary by state. In most states, your monthly income must fall below a certain threshold, and your savings and other assets must be under a limit (often $2,000 for an individual). Some states count a car and your home differently, and some states disregard certain income sources. If your income or assets exceed the limit, you do not may have access to, even if you have no health insurance.
What Each Program Costs You
Medicare Part A is free if you paid Medicare taxes for at least 10 years. Part B costs a monthly premium (the standard amount in 2024 is $164.90, but it varies based on income). Part D premiums vary by plan. You also pay a deductible when you use hospital care or see a doctor, and you pay copays or coinsurance for services. The total out-of-pocket cost can be significant, which is why many people buy Medigap insurance to cover what Medicare does not.
Medicaid costs vary by state. In most states, there is no monthly premium, no deductible, and copays are small or zero. Some states charge a small monthly premium for certain groups. Because Medicaid is designed for people with low income, the program absorbs most of the cost. If your income rises above the state limit, you lose coverage when ready — there is no gradual phase-out.
Coverage Differences: What Each Program Pays For
| Service | Medicare | Medicaid |
|---|---|---|
| Doctor visits | Covered after deductible; you pay 20% coinsurance | Covered; copay varies by state, often $0–$5 |
| Hospital stays | Covered after deductible; limits on days covered | Covered; copay varies by state |
| Prescription drugs | Part D covers; you pay premiums and copays | Covered; copay varies by state, often $0–$3 |
| Dental care | Not covered | Covered in some states; varies widely |
| Vision care | Not covered (except eye exams for certain conditions) | Covered in some states; varies widely |
| Long-term nursing home care | Covered only for skilled nursing, up to 100 days | Covered with no day limit; must meet asset test |
| Home health care | Covered if homebound and ordered by doctor | Covered; varies by state |
When You may have access to for Both: Dual may be able to access
Some people may have access to for both Medicare and Medicaid — usually seniors with low income or people under 65 with disabilities and low income. These people are called "dual may be able to access." When you have both, Medicare is your primary payer, meaning it pays first. Medicaid then pays what Medicare does not cover, including Medicare premiums, deductibles, and copays.
If you are dual may be able to access, you do not choose between the programs. You are enrolled in both, and they work together. Your state Medicaid program will tell you which doctors and hospitals accept Medicaid, and you use your Medicare card at those providers. The coordination between the two programs can be confusing, so if you think you might may have access to for Medicaid, contact your state Medicaid office to find out.
How to Find Out Which Program Covers You
If you are 65 or older, you are covered by Medicare. You do not need to do anything if you were already receiving Social Security — Medicare enrolls you automatically three months before your 65th birthday. If you were not receiving Social Security, you must contact Social Security to enroll in Medicare during your initial enrollment period, which begins three months before the month you turn 65.
To learn about you may have access to for Medicaid, contact your state Medicaid office. Each state runs its own program and has its own income limits, so the answer depends on where you live. You can find your state Medicaid office through the Centers for Medicare and Medicaid Services website or by calling 211 (a free referral service). You will need to provide proof of income, citizenship, and residency.
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, or if you are under 65 with a disability and low income, you may may have access to for both. When you have both, Medicare pays first, and Medicaid covers what Medicare does not. Contact your state Medicaid office to learn about you may have access to.
What happens to my Medicaid if my income goes up?
You lose Medicaid coverage when ready when your income exceeds your state's limit. There is no grace period. If you are working and your income is rising, contact your state Medicaid office to ask about work incentive programs that may let you keep coverage longer, or about other options.
Do I have to pay back Medicaid if I receive an inheritance?
Medicaid can place a lien on your estate to recover money it spent on your long-term care after you turn 55. This is called estate recovery. However, your home is usually protected while your spouse or minor children live there. The rules vary by state, so ask your state Medicaid office about what assets are protected.
Can I choose which doctors I see on Medicaid?
Medicaid doctors and hospitals vary by state and by plan. Some states use managed care, meaning you choose a primary care doctor from a list. Other states let you see any doctor who accepts Medicaid. Check with your state Medicaid office or your plan materials to see which providers are in your network.
What is the difference between Medicare Advantage and Medicaid?
Medicare Advantage (Part C) is a way to get Medicare coverage through a private insurance company instead of the government. You must be 65 or older and have Medicare Part A and B to enroll. Medicaid is a separate program for people with low income. They are not the same, and you cannot use one instead of the other.