The core difference: who pays and who gets covered

Medicare is a federal insurance program you pay into through payroll taxes during your working years. You become covered at 65, regardless of income. Medicaid is a joint federal-state program that covers people with low income, regardless of age. The two programs operate separately, cover different groups, and have different rules in every state.

The confusion is understandable: both are government health programs, both cover hospital and doctor visits, and both use the word "care." But they are funded differently, run by different agencies, and determine who gets in based on completely different criteria.

Key Takeaways

  • Medicare covers people 65 and older, some younger people with disabilities, and people with end-stage renal disease, regardless of income.
  • Medicaid covers people with low income and limited assets, and the income limit varies significantly by state.
  • Medicare is run by the federal Centers for Medicare & Medicaid Services; Medicaid is run by your state with federal funding and oversight.
  • You pay Medicare taxes while working and pay premiums at 65; Medicaid has no premium for most people but has cost-sharing that varies by state.
  • Some people may have access to for both programs at the same time, a status called "dual may be able to access."

Who Medicare covers

You become covered by Medicare automatically at 65 if you are a U.S. citizen or permanent resident and have worked at least 10 years in jobs where you paid Medicare taxes. You do not have to be retired, and your income does not matter. If you are under 65, you can still get Medicare if you have been receiving Social Security Disability Insurance (SSDI) for 24 months, or if you have end-stage renal disease or amyotrophic lateral sclerosis (ALS).

Medicare has four parts. Part A covers hospital stays, skilled nursing care, and hospice. Part B covers doctor visits, outpatient care, and medical equipment. Part D covers prescription drugs. Part C, also called Medicare Advantage, is an alternative way to get Parts A, B, and D through a private insurance company instead of the government directly.

Who Medicaid covers

Medicaid covers people with low income and limited assets. The income threshold varies by state and changes yearly. In some states, a single adult with no children can earn up to roughly $1,400 per month and still may have access to; in others, the limit is much lower. Your state's Medicaid program sets its own rules within federal guidelines, so what qualifies you in one state may not in another.

Medicaid also covers specific groups regardless of income in some cases: pregnant people, children under 19, parents of dependent children (in states that have expanded Medicaid), and people over 65 with very low income. Many states have expanded Medicaid to cover all adults under 65 with income up to 138 percent of the federal poverty line, but not all states have done so. You can find your state's rules on your state Medicaid website or by calling your local Medicaid office.

How funding and administration work differently

Medicare is funded by payroll taxes you and your employer pay during your working years, plus premiums you pay once you are covered. It is administered entirely by the federal Centers for Medicare & Medicaid Services (CMS), so the rules are the same everywhere in the country.

Medicaid is funded jointly by the federal government and your state. Your state decides how much to contribute, sets many of its own rules within federal limits, and runs the program through your state Medicaid agency. This is why Medicaid rules, covered services, and payment rates differ significantly from state to state. A service covered in one state may not be covered in another, and the income limit for a single adult can differ by hundreds of dollars.

Costs and out-of-pocket expenses

Medicare has premiums, deductibles, and copayments. Most people pay a monthly premium for Part B (the amount changes yearly based on income). You pay a deductible before Part A or Part B coverage kicks in, and you pay copayments or coinsurance for most services. Prescription drug coverage under Part D also has premiums and cost-sharing. The exact amounts change every year.

Medicaid typically has no premium for most people, but your state may charge small copayments for doctor visits, emergency room use, or prescription drugs. Some states charge nothing out of pocket. The cost-sharing rules vary by state and sometimes by the type of service. Pregnant people and children often have no cost-sharing at all.

What happens if you have both Medicare and Medicaid

Some people may have access to for both programs at the same time. This usually happens when someone turns 65 and is already on Medicaid, or when someone on Medicare has income low enough to also may have access to for Medicaid. People with both are called "dual may be able to access."

If you are dual may be able to access, Medicare is your primary payer for most services, and Medicaid covers some of the costs Medicare does not. Medicaid may pay your Medicare premiums and cost-sharing, and it may cover services Medicare does not, such as long-term care or dental work (depending on your state). The coordination between the two programs can be complex, so if you think you might may have access to for both, contact your state Medicaid office to understand how they work together in your situation.

How to find out which program you might use

If you are 65 or older, or if you have been on SSDI for 24 months, you are covered by Medicare. You do not have to do anything at 65 if you are already receiving Social Security; Medicare starts automatically. If you are not yet receiving Social Security, you can sign up for Medicare at Medicare.gov or by calling 1-800-MEDICARE.

If you are under 65 and have low income, contact your state Medicaid office to learn the income and asset limits where you live. You can find your state office through Medicaid.gov or by calling 211 (a free referral line that connects you to local programs). Your state office can tell you whether you meet the income threshold and what documents you need to provide.

Frequently Asked Questions

Can I have both Medicare and Medicaid at the same time?

Yes. If you are 65 or older and have low income, or if you are on Medicare due to disability and have low income, you may may have access to for both. Medicaid can help pay your Medicare premiums and cover services Medicare does not. Contact your state Medicaid office to learn about you may have access to.

Does Medicare cover long-term care or nursing home stays?

Medicare covers skilled nursing care for a limited time after a hospital stay, but not long-term custodial care in a nursing home. Medicaid covers long-term nursing home care if you meet the income and asset limits. This is one major difference between the two programs.

What if I turn 65 but do not have 10 years of work history?

You may still get Medicare based on your spouse's work history if you are married, or based on an ex-spouse's history if you were married for at least 10 years. If neither applies, you may be able to purchase Medicare coverage. Contact Medicare at 1-800-MEDICARE to explore your options.

Why does my state's Medicaid income limit differ from another state?

Each state sets its own income and asset limits within federal guidelines. States also decide whether to expand Medicaid to cover more people. This is why someone with the same income might may have access to in one state but not another. Your state Medicaid website shows your state's specific rules.

Do I have to pay back Medicaid if I receive it?

Generally, no. Medicaid is not a loan. However, some states have recovery programs that seek repayment from your estate after you die if you received long-term care services. The rules vary by state. Ask your state Medicaid office about estate recovery in your area.