Medicare vs. Medicaid: What’s the Difference?

Medicare covers health care mostly for seniors, whereas Medicaid is mostly for people with low income.
Alex Rosenberg
Liz Weston, CFP®
By Liz Weston, CFP® and  Alex Rosenberg 
Edited by Holly Carey Reviewed by Debra Nuckols
What Is the Difference Between Medicare and Medicaid?

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Medicare and Medicaid are government-run health insurance programs. Despite their similar names, they have different purposes.

The main difference between Medicare and Medicaid is that Medicare covers people age 65 and older, while Medicaid covers people with low income. Both programs also cover people with certain disabilities. If you qualify for both Medicare and Medicaid, they work together to cover your health care.

The rules for eligibility, costs and coverage also vary between the two programs.

Here’s what you need to know about the differences between Medicare and Medicaid.

Difference between Medicare and Medicaid

What is Medicare?

Medicare is health insurance for people age 65 and older and individuals with certain disabilities. Medicare is run by the federal government, so it works the same way throughout the country.

Different parts of Medicare cover different benefits

Centers for Medicare & Medicaid Services. Parts of Medicare. Accessed Sep 8, 2022.
:

  • Medicare Part A covers inpatient health care at hospitals and similar facilities, as well as hospice care and home health services.

  • Medicare Part B covers preventive services like vaccines and screenings, plus medically necessary outpatient health care like doctor’s office visits.

  • Medicare Part C, or Medicare Advantage, is private insurance that bundles together Part A and Part B coverage, and it usually includes prescription drug coverage and other extras, too. You can choose to buy a Medicare Advantage plan rather than using Medicare Part A and Part B.

  • Medicare Part D covers outpatient prescription drugs.

What is Medicaid?

Medicaid is government-provided health insurance for people with limited income and certain children, people with disabilities, and pregnant people. The federal government provides funding and sets some rules for Medicaid, but individual state governments run their own Medicaid programs, so how they work varies from state to state.

Medicaid coverage isn’t the same everywhere, but there are mandatory benefits included in every Medicaid program. Each state’s Medicaid program must cover benefits that include inpatient and outpatient hospital care, labs, X-rays, certain screenings, family planning and home health services

Centers for Medicare & Medicaid Services. Mandatory & Optional Medicaid Benefits. Accessed Sep 8, 2022.
. States also have the option to cover additional benefits, such as prescription drugs, clinic visits, dental care, vision care and therapies.

Medicare vs. Medicaid: Eligibility

Medicare eligibility is mostly based on age, while Medicaid eligibility is mostly based on income.

Medicare: Age-based eligibility for Medicare starts when you turn 65. Medicare also covers certain younger people with disabilities and specific diseases, including end-stage renal disease (kidney failure) and amyotrophic lateral sclerosis, also called ALS or Lou Gehrig’s disease

U.S. Department of Health and Human Services. Who is Eligible for Medicare?. Accessed Sep 8, 2022.
. People with higher incomes pay larger premiums for certain parts of Medicare, but eligibility isn’t limited by income.

Medicaid: Medicaid coverage is based on income. Medicaid is available in every state to those with incomes below the federal poverty level, or FPL. Under the Affordable Care Act, most states have expanded Medicaid eligibility to people with incomes up to 133% of the FPL.

You can enter your information at healthcare.gov/lower-costs to see whether you qualify based on your state’s rules.

🤓Nerdy Tip

Qualifying for both Medicare and Medicaid is called “dual eligibility.” A person who qualifies for both programs might be referred to as “dual eligible” or “dually eligible.”

Medicare vs. Medicaid: Cost

Most of Medicare has premiums and cost-sharing requirements, whereas Medicaid is generally free or very close to free.

Medicare: Different parts of Medicare have different costs

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  • Medicare Part A has no premiums if you or your spouse has worked and paid Medicare taxes for at least 40 quarters, or 10 years. However, there are still copays, coinsurance and a deductible.

  • Medicare Part B has premiums for everyone. Most people pay $164.90 per month in 2023, but beneficiaries with particularly high income pay higher adjusted amounts. There’s also a deductible and a 20% coinsurance for most services covered by Part B.

  • Medicare Advantage (Part C) plans each have their own premiums, deductibles, copays and coinsurance — some do have $0 premiums. You’re still responsible for the Part B premium, too, unless your plan helps pay some or all of those costs.

  • Medicare Part D plans each have their own premiums, deductibles, copays and coinsurance. The average monthly premium is $31.50 per month in 2023. Beneficiaries with particularly high income pay higher adjusted amounts.

» If you have concerns about affording Medicare Part D, look into Medicare Extra Help

If you qualify for both Medicare and Medicaid, Medicaid can help pay Medicare premiums, deductibles and copays. Medicaid also can pay for nursing home and personal care services — expenses that aren’t typically covered by Medicare.

Medicaid: Medicaid is free or low cost, depending on your state’s rules and how you qualify. Medicaid premiums and other out-of-pocket costs are also capped — the total for everyone in the household can’t exceed 5% of the family’s income

Code of Federal Regulations. Title 42, Part 447, Section 56 (f). Accessed Sep 8, 2022.
. You can’t be denied services if you can’t pay, but Medicaid will work to collect unpaid balances. This includes making claims against people’s assets after they die, unless they have a surviving spouse, a child under age 21, or a dependent child who is blind or has a disability.

Medicare vs. Medicaid: Dependent coverage

Medicare doesn’t cover dependents, but Medicaid covers children and certain other dependents.

Medicare: Medicare doesn't cover dependents. If a spouse or ex-spouse is eligible for coverage, they must get their own Medicare plan. Other dependents, including children, aren't covered.

Medicaid: Medicaid covers dependents. For example, children in households with income up to 133% of the FPL are eligible for Medicaid in every state

Centers for Medicare & Medicaid Services. Medicaid Eligibility. Accessed Sep 8, 2022.
. In most states, children can qualify with even higher income levels. Dependent individuals with certain disabilities are also included among the mandatory eligibility groups that every state Medicaid program must cover.

The Children’s Health Insurance Program, or CHIP, is another government health insurance program that’s closely related to Medicaid. CHIP covers uninsured children in households that might not be able to afford private insurance, but that have an income too high to qualify for Medicaid.

Like Medicaid, each state administers its own CHIP program, so the eligibility rules and other details vary from state to state.

Medicaid and the related Children’s Health Insurance Program provide health insurance to more than 40 million children

Centers for Medicare & Medicaid Services. May 2022 Medicaid & CHIP Enrollment Data Highlights. Accessed Sep 8, 2022.
.

The Centers for Medicare & Medicaid Services have state-by-state lists of eligibility levels for Medicaid and CHIP, or you can check with your state’s health department to find information on your state’s rules.

If you have additional questions about Medicare, visit Medicare.gov or call 800-MEDICARE (800-633-4227, TTY 877-486-2048).
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