Medicare vs. Medicaid: What’s the difference?

Key points

• Medicare and Medicaid are government-run health insurance programs.
• Medicare is primarily for people 65 or older.
• Medicaid covers low-income people of all ages, with eligibility requirements varying by state.
• Deductibles, coinsurance and premiums can vary for each of these plans.

While Medicare and Medicaid share some similarities — both are government-run health care programs, for one — they work quite differently and typically cover different populations.

Medicare is primarily a health insurance plan for retirees, while Medicaid is an assistance program for low-income families and individuals.

That’s just for starters. Dig into the details to compare Medicare vs. Medicaid, learn what these programs cover, who is eligible and how to enroll.

What is Medicare?

Medicare is a federal program that provides health insurance coverage for all Americans 65 and older, as well as some younger people with disabilities.

Original Medicare has two parts.

Part A

Medicare Part A is the hospital insurance portion of Medicare. It covers inpatient care in a hospital or skilled nursing facility care and hospice care.

Part B

Medicare Part B is medical insurance. It covers medically necessary services, including doctor’s visits, ambulance transportation, medical equipment and outpatient care, as well as preventive health care.

Original Medicare covers a large portion of your medical expenses, but not everything. With Medicare Part B, you are typically responsible for 20% of the Medicare-approved charges for doctor’s visits and other services, which is why some retirees purchase what are called Medigap policies to supplement their coverage.

Medicare Parts A and B also don’t cover long-term care, dental health, eye exams, glasses, hearing aids, routine foot care or prescription medications. To get vision, dental and prescription drug coverage, you can enroll in a privately run Medicare Advantage Plan, also known as Medicare Part C. 

Stand-alone drug coverage, also known as Medicare Part D, is also available.

Who is eligible for Medicare? 

You are eligible for Medicare coverage once you reach age 65, but you may be able to get it earlier if you have a disability, ALS or end-stage renal disease.

You can apply for Medicare during your seven-month initial enrollment period, which begins three months before your 65th birthday month and continues three months after your birthday month.

How much does Medicare cost?

The cost of Medicare depends on a range of factors, including the type of Medicare coverage.

Part A

For most people, Medicare Part A is free, though you do have to meet a deductible and cover coinsurance costs. To qualify for free coverage, you or your spouse must have paid Medicare taxes for at least 40 quarters, the equivalent of 10 years of work. If not, you may be able to buy Medicare Part A for up to $506 per month in 2023, depending on how long you or your spouse worked and paid Medicare taxes.

Part B

The standard Part B premium for 2023 is $169.40 per month. However, those with high incomes pay higher premiums. This plan also has a deductible and coinsurance.

Part C

Medicare Advantage Plans combine your Part A and Part B coverage and may include coverage for other services that Original Medicare doesn’t pay for, such as prescription medications or hearing aids. Premiums for these privately run plans vary by plan and location. For example, plans in Florida range in cost from $0 per month to $150 per month, and deductibles and coinsurance costs apply. Typically, you still need to pay the Part B premium, but some Part C plans will help pay some or all of the Part B premium.

Part D

Medicare Part D provides prescription drug coverage for people with Medicare. These policies cover a portion of your costs when you purchase medications from the plan’s approved prescription drug list (called a formulary). 

The cost of a Part D plan depends on your income, plan features and where you live, but generally ranges between $15 and $100 per month.

What is Medicaid?

Medicaid is a government-run health insurance program for certain low-income and disabled people. 

During the pandemic, enrollment in Medicaid skyrocketed, as more Americans saw their incomes drop and the government took steps to keep people covered. But as states resume Medicaid eligibility checks that were paused during the pandemic, advocates fear they will mistakenly end coverage for millions of eligible people. 

Medicaid is administered by the states, within federal guidelines, and funded jointly by states and the federal government. In general, the program covers a wide range of services and has low or no premiums. Cost-sharing in the form of copays and deductibles is nominal.

Medicaid programs vary by state, but there are federally mandated services that all Medicaid programs must cover, including:

• Certified pediatric and family nurse practitioner services.
• Home health services.
• Inpatient and outpatient hospital services.
• Laboratory and X-ray services.
• Nursing facility services.
• Nurse midwife services.
• Physician services.
• Transportation to medical care.

Some states offer additional coverage for prescription medications, dental care, physical therapy and more.

Who is eligible for Medicaid?

In every state, Medicaid provides coverage for low-income individuals, families with children, pregnant women, elderly individuals and people with disabilities. But the exact eligibility requirements are dependent on your family size, your income and where you live.

“Each state has its own requirements for Medicaid,” said Jay Zigmont, a certified financial planner and founder of Live, Learn, Plan. “With the Affordable Care Act, some states chose to increase eligibility for Medicaid, while others did not.”

Tip: To find out if you’re eligible for Medicaid, check with your state Medicaid agency or HealthCare.gov.

How much does Medicaid cost?

States are allowed to charge premiums and require copayments, coinsurance and deductibles depending on your income relative to the federal poverty level. But those costs are capped and typically modest. In general, the care you receive through Medicaid will be free or low-cost.

Medicare vs. Medicaid: Key differences

Although Medicare and Medicaid share some similarities, they are very different programs. These are the main differences between them.

Program type

Medicare is an insurance program, while Medicaid is an assistance program.

Eligibility

Medicare is reserved for people 65 and older as well as younger individuals who have a qualifying disability. People of all ages may qualify for Medicaid, but it’s generally reserved for low-income families and individuals with disabilities.

Cost

In general, Medicare will have higher premiums than Medicaid. However, you may be eligible for financial assistance through your state that will help pay for your premiums and out-of-pocket health care costs.

Medicare vs. Medicaid

Medicare doesn’t cover all of your expenses. That includes long-term care, which is covered by Medicaid. Some seniors with low incomes may qualify for both Medicare and Medicaid.

“It is possible and common to have both if you are over 65 or disabled,” said Zigmont. “They cover different things, so you may need both depending on your situation.”

With dual eligibility, most — if not all — of your health care costs will be covered. That includes long-term care in a nursing home.

Which do you need: Medicare or Medicaid?

Medicare and Medicaid are both government-run health programs, but they serve different populations: 

• To qualify for Medicare, you usually need to be 65 or older or have a disability or end-stage renal disease. 
• For Medicaid, you can qualify at any age, but you need to meet state income restrictions.

If you need help finding a health care plan, locating financial assistance programs or enrolling in Medicaid or Medicare, contact your state health insurance assistance program (SHIP).

Are you approaching 65? How to sign up for Medicare

Medicare vs. medicaid FAQs

Can you be dual-enrolled in Medicare and Medicaid?

Yes, it is possible to have both Medicare and Medicaid if you qualify for both. If you are dual-enrolled, most of your health care costs will be covered, including long-term care in a nursing home.

What are the four parts of Medicare?

Original Medicare has two parts — Medicare Part A (hospital insurance) and Part B (medical insurance).

You can also enroll in a privately run Medicare Advantage Plan, also known as Medicare Part C, for vision, dental and prescription drug coverage, and in Medicare Part D for drug coverage.

What does Medicare not cover?

Original Medicare doesn’t cover dental health, eye exams, glasses, hearing aids, long-term care, routine foot care or prescription medications.

To get dental, vision and prescription drug coverage, you can enroll in a privately run Medicare Advantage Plan.

You can also enroll in Medicare Part D for prescription drug coverage.