Medicare vs. Medicaid: What’s the Difference?

A key difference between Medicare and Medicaid is that Medicare covers health care mostly for people age 65 and older, while Medicaid is mostly for people with low income.
Alex Rosenberg
Liz Weston, CFP®
By Liz Weston, CFP® and  Alex Rosenberg 
Updated
Edited by Holly Carey
What Is the Difference Between Medicare and Medicaid?

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Nerdy takeaways
  • Medicare covers mostly people age 65 and older, whereas Medicaid covers mostly people with limited income.

  • Medicaid is generally free or nearly free, while Medicare has premiums, copays, coinsurance and deductibles.

  • Medicaid covers some benefits Medicare doesn't, such as nursing homes and personal care services.

  • If you have both Medicare and Medicaid, they work together to pay for your health care.

MORE LIKE THISMedicareInsurance

Medicare is health insurance for people age 65 and older and younger people with certain disabilities. Medicaid is health insurance primarily for people with limited income. The rules for eligibility, costs and coverage vary between the programs. They’re both government programs, and they can overlap.

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

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Difference between Medicare and Medicaid

The primary difference between Medicare and Medicaid is who they cover. Medicare covers people 65 and older, while Medicaid covers people with limited income

Department of Health and Human Services. What's the Difference Between Medicare and Medicaid?. Accessed Jun 14, 2024.
. Both programs also cover people with certain disabilities. It’s possible to have both Medicare and Medicaid at the same time.

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 everywhere in the United States.

Medicare has four letter-named parts

Centers for Medicare & Medicaid Services. Parts of Medicare. Accessed Jun 14, 2024.
:

  • Medicare Part A covers inpatient health care at hospitals and similar facilities, as well as hospice care and some 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 health insurance that bundles 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.

There’s also Medicare Supplement Insurance, or Medigap, that helps pay for certain out-of-pocket costs that come with Original Medicare.

What is Medicaid?

Medicaid is a government assistance program that covers health care costs for people with low income and certain children, people with disabilities and pregnant people. Unlike Medicare, Medicaid can work differently from state to state

Department of Health and Human Services. What's the Difference Between Medicare and Medicaid?. Accessed Jun 14, 2024.
.

The federal government sets certain rules for Medicaid, so there are certain benefits that are always included. For example, every Medicaid program must cover transportation, inpatient and outpatient hospital care, labs, X-rays, certain screenings, physician services, family planning and home health services

Centers for Medicare & Medicaid Services. Mandatory & Optional Medicaid Benefits. Accessed Jun 14, 2024.
. States also have the option to cover additional benefits, such as prescription drugs, clinic visits, dental care, vision care and therapies.

Medicare vs. Medicaid

How does Medicare differ from Medicaid?
Cash with a green percentage sign on the top-right corner.
IncomeMedicaid has income-based eligibility, whereas Medicare has age-based eligibility. Bother cover people with certain disabilities.
Blue invoice.
CostParts of Medicare have premiums, copays, coinsurance and/or deductibles, whereas Medicaid is free or nearly free.
Paper documents wrapped with a ribbon that has a checkmark on it.
BenefitsMedicaid may offer more or different coverage than Medicare for benefits such as nursing homes, transportation, and dental, hearing and/or vision care.

Medicare vs. Medicaid: Eligibility

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

Medicare

Most people qualify for Medicare when they 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

Department of Health and Human Services. Who's Eligible for Medicare?. Accessed Jun 14, 2024.
.

There are no income limits for Medicare eligibility, but people with higher incomes might have to pay more for certain coverage.

Medicaid

Most people qualify for Medicaid based on income. Medicaid is available in every state to those with incomes below the federal poverty level (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.

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

Centers for Medicare & Medicaid Services. Costs. Accessed Jun 14, 2024.
:

  • Medicare Part A has no premiums for most people. However, there are copays, coinsurance and a deductible.

  • Medicare Part B has premiums for everyone. Most people pay $174.70 per month in 2024, but beneficiaries with particularly high incomes 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 plans 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 $34.50 in 2024 for basic coverage. Beneficiaries with particularly high incomes pay higher adjusted amounts.

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

Medicaid

Medicaid is generally free or low cost, depending on your state’s rules and how you qualify

Centers for Medicare & Medicaid Services. Cost Sharing. Accessed Jun 14, 2024.
. 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. 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

Social Security Administration. Benefits For Your Family. Accessed Jun 14, 2024.
. 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 Jun 14, 2024.
. 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 (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

Centers for Medicare & Medicaid Services. CHIP Eligibility. Accessed Jun 14, 2024.
.

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 nearly 38 million children

Centers for Medicare & Medicaid Services. February 2024 Medicaid & CHIP Enrollment Data Highlights. Accessed Jun 14, 2024.
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CMS has 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.

Who is eligible for both Medicare and Medicaid?

If you’re eligible for both Medicare and Medicaid, you can enroll and get coverage from both programs. 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.”

If you qualify for both Medicare and Medicaid, they work together to cover your health care. For example, Medicaid can help pay Medicare premiums, deductibles and copays

Centers for Medicare & Medicaid Services. Medicaid. Accessed Jun 14, 2024.
. Medicaid also can pay for nursing home and personal care services — expenses that aren’t typically covered by Medicare.

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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