Difference Between Medicare and Medicaid

When navigating the United States’ healthcare system, understanding the difference between Medicare and Medicaid is essential. At their core, Medicare is a federal program that primarily serves individuals over 65 or those with certain disabilities, whereas Medicaid is a joint federal and state program aimed at assisting those with limited income and resources.

This article will delineate the distinct eligibility requirements, coverage details, and financial implications of each program, helping you to identify which one may apply to your situation.


Key Takeaways


  • Medicaid is a joint federal and state program providing health coverage to individuals with limited income and resources, with varying eligibility and benefits by state, including services not typically covered by Medicare like nursing home care.


  • Dual eligibility allows qualified individuals to benefit from both Medicare and Medicaid, potentially lowering healthcare costs through a wider range of services and covering expenses such as Medicare premiums, deductibles, and copays.

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Understanding Medicare: A Federal Health Insurance Program

We’ll start with Medicare. This federal health insurance program, also known as medical insurance, mainly caters to individuals aged 65 and over, while also providing additional coverage for younger individuals with particular disabilities.

Medicare operates uniformly across the United States, ensuring every enrollee gets the same services regardless of where they reside.


Medicare Part A, Medicare Part A Eligibility Criteria

Medicare’s structure is quite comprehensive, with four parts, each covering different services:


  1. Part A encompasses hospital care
  2. Part B includes medical services
  3. Part C, also known as Medicare Advantage, offers an alternate method of receiving Medicare benefits
  4. Part D assists in covering prescription drug expenses.


The Components of Medicare

Upon further examination of Medicare’s components, we discover that Original Medicare, comprising Parts A and B, includes inpatient health care in hospitals and similar establishments, in addition to hospice care and select home health services. Meanwhile, Medicare Part B covers specific doctor’s services, outpatient care, medical supplies, and preventive services.

In contrast, a Medicare Advantage plan, or Part C, is a type of Medicare health plan offered by private companies that contract with Medicare. It provides all the benefits of Parts A and B and often includes additional benefits such as vision, dental, and hearing, and frequently incorporates prescription drug coverage as well.


Enrollment and Eligibility for Medicare

In terms of Medicare enrollment, eligibility largely hinges on age or disability. The program is designed for individuals who are 65 years of age or older. However, there are exceptions for younger individuals with specific conditions such as a disability, End-Stage Renal Disease (ESRD), or ALS.

For those already receiving Social Security benefits, enrollment in Medicare is automatic. However, if you’re not yet receiving these benefits, you’ll need to sign up manually through the Social Security Administration. It’s important to note that, even if you’re not ready to retire, you should still sign up for Medicare three months before turning 65 to avoid late enrollment penalties.


The Cost of Joining Medicare

Grasping the expenses tied to Medicare is crucial in planning your healthcare budget. While Part A is generally premium-free for most enrollees, Parts B, C, and D come with varying costs, including:


  • Premiums
  • Deductibles
  • Copayments
  • Coinsurance


For instance, the current monthly premium for Medicare Part B is $174.70 in 2024.

The costs for Part C, also known as Medicare Advantage, and Part D, which provides prescription drug coverage, differ and encompass:


  • Premiums
  • Deductibles
  • Copays
  • Coinsurance


Comprehending these expenses and planning accordingly is key when deciding which parts of Medicare to sign up for.

Deciphering Medicaid: State and Federal Health Coverage

Now, we’ll turn our attention to Medicaid, a combined federal and state program that provides health coverage to individuals with limited income and resources. Unlike Medicare, which operates uniformly across the country, Medicaid programs can vary greatly from state to state, both in terms of eligibility criteria and the benefits offered.


Medicare vs medicaid



Eligibility for Medicaid is typically determined by income, family size, and other factors, with certain allowances for retaining assets. Moreover, Medicaid offers benefits that Medicare typically doesn’t cover, including nursing home care and personal care services.


How Medicaid Works

Medicaid provides comprehensive health care coverage, which includes hospital insurance benefits such as:


  • Inpatient and outpatient hospital care
  • Labs and X-rays
  • Certain screenings
  • Family planning
  • Home health services
  • Doctor services
  • Nursing home care (in some cases)


This breadth of coverage ensures that low-income individuals and families can access a wide range of health services.

But Medicaid’s benefits don’t stop there. Each state has the flexibility to introduce optional benefits beyond the obligatory coverage. The additional benefits could include:


  • coverage for prescription drugs
  • clinic visits
  • dental care
  • vision care
  • different types of therapies


These benefits can provide more comprehensive healthcare coverage for individuals. The result is a program that can offer a wider range of benefits than Medicare, particularly for those with limited resources.


Applying for Medicaid

While Medicare has defined enrollment periods, Medicaid permits applications at any time via your state Medicaid agency or the HealthCare.gov website. This flexibility makes it easier to access Medicaid coverage when you need it.

Eligibility is determined by a variety of factors, including income, family size, and sometimes assets. In some states, individuals with incomes above the Medicaid limit may still qualify through a ‘spend down’ process, which involves incurring medical expenses until they meet the eligibility criteria.

Applying for Medicaid requires several documents, including:


  • Driver’s license, photo ID card, or passport
  • Social security card
  • Proof of income such as pay stubs and income tax returns
  • Documentation of assets including property and retirement accounts
  • Car registration


If you are unsure of your eligibility or need help with the application process, consult your local Medicaid office for assistance.

Key Differences Between Medicare and Medicaid

Having analyzed both Medicare and Medicaid, it’s now time to highlight the main distinctions between these two programs. While both provide health coverage, they do so in different ways, with varying eligibility criteria, coverage scopes, and financial aspects.


Medicare coverage



Primarily, Medicare eligibility is determined by age or disability, whereas Medicaid is primarily income-based. In terms of coverage, Medicare focuses on hospital and medical services, while Medicaid offers a broader scope, including long-term care and home health services.

Finally, in terms of costs, Medicare has varying expenses depending on the part, while Medicaid is generally free or low-cost with limited out-of-pocket expenses.


Eligibility Criteria: Age vs. Income

A closer look at the eligibility criteria for Medicare and Medicaid reveals clear differences. For Medicare, eligibility is primarily based on age or specific disabilities. Specifically, the program is designed for individuals 65 years of age or older, with exceptions for younger individuals with certain conditions such as End-Stage Renal Disease (ESRD) or ALS.

On the other hand, Medicaid eligibility is primarily income-based. Various other factors such as family size and assets may also come into play depending on the state’s specific criteria. This makes Medicaid more accessible for low-income individuals and families who might not qualify for Medicare.


Coverage Scope: What’s Included?

When it comes to coverage scope, Medicare and Medicaid also differ significantly.

Medicare provides specific medical and hospital services including:


  • Inpatient hospital care
  • Skilled nursing facility care
  • Hospice care
  • Lab tests
  • Surgery
  • Home health care


It also offers coverage for prescription drugs through Medicare Part D, an optional program available to all Medicare beneficiaries.

Medicaid, on the other hand, can cover a wider range of services not covered by Medicare, such as:


  • long-term nursing home care
  • personal care services
  • dental care (in certain states)
  • vision care (in certain states)
  • physical therapy (in certain states)
  • transportation to and from medical appointments (in certain states)


This broader range of benefits can make Medicaid a more comprehensive health coverage option for low-income individuals and families.


Financial Aspects: Premiums and Out-of-Pocket Costs

The financial aspects of Medicare and Medicaid are another major point of difference. For Medicare, costs can vary depending on the part. For instance, while Part A is generally premium-free for most enrollees, Parts B, C, and D come with varying costs, including premiums, deductibles, copayments, and coinsurance.

In contrast, Medicaid is generally free or low-cost, with limited out-of-pocket expenses. This makes it a more accessible option for low-income individuals and families who might struggle to afford the varying costs associated with Medicare.

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Dual Eligibility: When You Qualify for Both Medicare and Medicaid

What occurs when a person qualifies for both Medicare and Medicaid? This scenario is referred to as dual eligibility, allowing individuals to benefit from both programs’ coverage, thereby providing supplementary financial aid and comprehensive healthcare.

Dual eligibility can be particularly beneficial for low-income seniors and people with disabilities, as Medicaid can cover:


  • Medicare premiums
  • deductibles
  • copays
  • funding nursing home and personal care services not covered by Medicare


However, navigating dual coverage can be complex and may require additional support.


Navigating Dual Coverage

Managing dual coverage entails:


  • Synchronizing benefits between Medicare and Medicaid
  • Medicare taking precedence in paying for services covered under its program
  • Medicaid bridging the gaps by covering residual Medicare cost-sharing amounts
  • Medicaid offering additional benefits not covered by Medicare


However, managing dual coverage can be challenging due to fragmented care, complex eligibility requirements, and the need to navigate multiple entities and systems. Therefore, it’s crucial for dual-eligible individuals to understand how to coordinate their benefits and take full advantage of both programs.


Benefits of Dual Eligibility

There are substantial benefits to being dually eligible for both Medicare and Medicaid. Firstly, it can result in lower healthcare costs, as Medicaid can cover Medicare premiums, deductibles, and copays, reducing out-of-pocket expenses.


Medicaid eligibility



Secondly, dual eligibility provides access to a wider range of services and personalized support from both programs. Individuals with dual eligibility can avail additional benefits such as:


  • long-term nursing home care
  • personal care services
  • durable medical equipment
  • doctor visits


These benefits are generally unavailable to individuals who only qualify for either Medicaid or Medicare.

Additional Support Programs

In addition to Medicare and Medicaid, other government health insurance programs offer Medicare supplement insurance and supplementary assistance for eligible individuals.

These include the Children’s Health Insurance Program (CHIP) and Medicare Savings Programs. These programs are designed to provide further support to individuals and families who need it, helping to cover a wider range of healthcare costs.


Medicare office



These health insurance programs can be particularly helpful for individuals with specific needs or circumstances. For example, CHIP provides health insurance for children from families with incomes too high for Medicaid but too low for private insurance, while Medicare Savings Programs help low-income individuals pay for Medicare premiums, deductibles, and coinsurance costs.


Children’s Health Insurance Program (CHIP)

The Children’s Health Insurance Program (CHIP) offers economical health coverage to children from families whose incomes surpass the Medicaid eligibility threshold. It also extends coverage to pregnant women in certain states.

CHIP provides comprehensive health coverage, which includes essential benefits customized by each state. Furthermore, CHIP also includes coverage for dental and vision care for children, ensuring that they receive the comprehensive care they need during their formative years.


Medicare Savings Programs

Medicare Savings Programs aim to help low-income individuals afford their Medicare premiums, deductibles, and coinsurance costs. These programs can provide significant financial relief for eligible individuals, reducing the financial burden of healthcare costs.

There are several different Medicare Savings Programs, each with its own eligibility criteria based on income and assets. These programs can be particularly helpful for individuals who qualify for Medicare but struggle to afford the associated costs.


In conclusion, while both Medicare and Medicaid offer health coverage, they do so in distinct ways, catering to different groups of people based on age, disability, and income.

Understanding these differences is crucial in making informed decisions about your healthcare. Whether you qualify for one, both, or additional support programs like CHIP or the Medicare Savings Programs, it’s essential to explore all your options to ensure you get the coverage you need.

Frequently Asked Questions



What is the difference between Medicare and Medicaid?

The main difference between Medicare and Medicaid is that Medicare is a federal program providing health coverage based on age or disability, while Medicaid is a joint federal and state program offering coverage based on low income. Therefore, Medicare is based on age and disability whereas Medicaid is based on income and resources.


What is the lowest income to qualify for Medicaid?

To qualify for Medicaid, low-income working adults with no children must make less than 138% FPL, or $17,226 per year if they are the only person in their household. Additionally, the Federal Poverty Level for a single adult person is $14,580.


Do you pay for Medicare?

Most people are required to pay a standard monthly premium for Medicare Part B, which is $174.70 in 2024. Depending on income, some individuals may pay more.


Medicaid what is?

Medicaid is a joint federal and state program that provides health coverage to low-income families, offering benefits not typically covered by Medicare. It was created in 1965 and is funded by both the federal government and the states.


What is dual eligibility?

Dual eligibility refers to qualifying for both Medicare and Medicaid, providing access to benefits from both programs.

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Russell Noga
( Medicare Expert )

Russell Noga is the CEO of ZRN Health & Financial Services, and head content editor of several Medicare insurance online publications. He has over 15 years of experience as a licensed Medicare insurance broker helping Medicare beneficiaries learn about Medicare, Medicare Advantage Plans, Medigap insurance, and Medicare Part D prescription drug plans.