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What Is the Difference Between Medicare and Medicaid?

Oct. 9, 2019
Investing, Retirement Planning
What Is the Difference Between Medicare and Medicaid?
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Medicare and Medicaid are government-run health care programs meant to serve different populations:

  • Medicare is an insurance program that primarily serves people 65 and older, regardless of income.
  • Medicaid is an assistance program that provides health insurance to low-income people of all ages.

Some people get both Medicare and Medicaid. Medicaid can help pay Medicare premiums, deductibles and copays for impoverished people. Medicaid also can pay for nursing home and other long-term care, expenses that aren’t typically covered by Medicare.

Medicare

Key things to know about Medicare:

Medicare coverage isn’t based on income

You’re eligible once you turn 65, as long as you’re a U.S. citizen or legal permanent resident. Medicare also covers younger people with disabilities and certain diseases, including end stage renal disease (kidney failure) and Lou Gehrig’s disease or amyotrophic lateral sclerosis (ALS). People with higher incomes pay larger premiums for certain parts of Medicare, but eligibility isn’t limited by income.

Medicare isn’t free

People who have worked 40 qualifying quarters (10 years), and their spouses or qualifying ex-spouses, pay no premiums for Medicare Part A, which covers hospitalization. But Medicare recipients typically do have out-of-pocket costs, including deductibles and copays. Medicare Part B, which covers doctor’s visits, and Part D, which covers prescriptions, also require paying premiums.

Medicare is a federal program

What’s covered and what people pay is generally the same in every state.

Medicare usually doesn’t cover dependents

The spouse or ex-spouse of someone who is eligible for coverage can also be covered by Medicare. But other dependents, including children, usually aren’t covered. There are exceptions: People, including children, with end-stage renal disease or Lou Gehrig’s disease may qualify through the work history of a spouse or parent.

Medicaid

Key things to know about Medicaid:

Medicaid coverage is based on income

Medicaid is available in every state to those with incomes below the poverty line. Under the Affordable Care Act, most states have expanded Medicare eligibility to people with incomes up to 138% of the federal poverty line.

Medicaid is typically free

Some people may have to pay small copays. Medicaid can also make a claim against people’s assets after they die, but most people receiving Medicaid have few or no assets.

Medicaid is a state and federal program

The federal government makes the guidelines, but the program is administered by states so eligibility requirements vary.

Medicaid covers dependents

Medicaid and the related Children’s Health Insurance Program provide health insurance to more than 35 million children.

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