Medicare and Medicaid are separate federal programs with different rules, funding sources, and who they cover

Medicare is a federal health insurance program for people age 65 and older, regardless of income. It also covers some younger people with disabilities and people with end-stage renal disease. You pay into Medicare through payroll taxes during your working years, and it functions like an earned benefit.

Medicaid is a joint federal and state program that covers low-income individuals and families of any age. Each state runs its own Medicaid program within federal guidelines, so may be able to access and coverage vary significantly by state. Unlike Medicare, Medicaid is means-tested — your income and assets determine whether you may have access to.

The two programs overlap in some cases. Some people may have access to for both Medicare and Medicaid (called "dual may be able to access"), but the programs operate independently and cover different services in different ways.

Key Takeaways

  • Medicare is primarily for people 65 and older and is funded through payroll taxes you pay during your working life.
  • Medicaid is for low-income individuals and families and is jointly funded by federal and state governments, with may be able to access rules that differ by state.
  • Medicare has the same basic structure nationwide, while Medicaid programs vary significantly depending on which state you live in.
  • Some people may have access to for both programs simultaneously, though they work as separate insurance plans.
  • You do not automatically receive either program — you must meet specific requirements and enroll to receive coverage.

How Medicare is funded and who pays for it

Medicare is funded through the Federal Insurance Contributions Act (FICA) payroll tax. When you work, you and your employer each contribute a percentage of your wages to Medicare. Self-employed people pay both portions. These contributions go into a trust fund that pays for Medicare benefits when you turn 65.

You do not need to be poor to receive Medicare — it is based on age and work history, not income. If you worked and paid Medicare taxes for at least 10 years (40 quarters), you are may have access to to Medicare Part A (hospital insurance) at no monthly premium when you turn 65. Parts B, D, and supplemental coverage have monthly premiums that vary based on your income and the plan you choose.

Because Medicare is federal, the same basic program structure exists in every state. Your coverage and costs are the same whether you live in California or Maine.

How Medicaid is funded and who pays for it

Medicaid is funded jointly by the federal government and individual states. The federal government sets minimum standards for coverage, but each state designs its own program, sets its own income limits, and decides which services to cover beyond the federal minimum. This is why a person who qualifies for Medicaid in one state may not may have access to in another.

Medicaid is a needs-based program. You must have income and assets below your state's limits to may have access to. Those limits change based on family size and sometimes based on your age or disability status. Some states have expanded Medicaid to cover more people; others have not.

Because states run Medicaid, the program you receive depends entirely on where you live. A single parent in New York may have different income limits and covered services than a single parent in Texas.

What each program covers

Medicare has four parts. Part A covers hospital stays, skilled nursing facility care, and some home health services. Part B covers doctor visits, outpatient care, and preventive services. Part D covers prescription drugs. Part C (Medicare Advantage) is an alternative to Parts A and B offered by private insurers. Medicare does not cover long-term custodial care, dental, vision, or hearing aids unless you have a supplemental plan.

Medicaid coverage varies by state but must include certain core services: hospital care, doctor visits, emergency services, lab work, X-rays, and family planning. Many states cover additional services like dental, vision, mental health, substance abuse treatment, and long-term care — services Medicare typically does not cover. This is one reason some people prefer Medicaid coverage even if they could afford private insurance.

The trade-off is access. Medicare is accepted by most providers nationwide. Medicaid acceptance varies by state and provider; some doctors limit the number of Medicaid patients they see or do not accept it at all.

Income and asset limits for each program

Medicare has no income or asset limits. You can be a millionaire and still receive Medicare at 65 if you paid into it during your working years. Your income only affects how much you pay in premiums for Parts B and D — higher earners pay higher premiums through an income-related adjustment.

Medicaid has strict income and asset limits that vary by state and family size. In 2024, the federal poverty level for a single person is around $14,600 annually, but many states set Medicaid limits higher or lower than this. Some states cover people up to 138% of the federal poverty level; others cover only those at or below 100%. You will need to check your specific state's limits, which your state Medicaid office or a local community health center can tell you.

Medicaid also counts assets — savings, property, vehicles — toward may be able to access in most states. If your assets exceed your state's limit, you may not may have access to, even if your income is low. Medicare does not count assets at all.

When you might have both Medicare and Medicaid

Some people may have access to for both programs. This typically happens when someone is 65 or older with low income, or when someone under 65 with a disability has both low income and a work history that qualifies them for Medicare. These "dual may be able to access" individuals receive Medicare as their primary insurance and Medicaid as a secondary payer.

Having both programs can be beneficial because Medicaid often covers services Medicare does not — like long-term care, dental, and vision. However, you must navigate two separate systems, and coordination between them is not always seamless. Your state Medicaid program can tell you whether you may have access to for both.

How to find out which program you might may have access to for

For Medicare, contact Social Security at 1-800-772-1213 or visit ssa.gov. You can learn about your work history and whether you have earned enough credits for Medicare Part A. You can also call Medicare directly at 1-800-MEDICARE (1-800-633-4227) to ask questions about coverage and enrollment.

For Medicaid, contact your state Medicaid office directly — the phone number and website vary by state. You can also call 211 (a national referral service) and ask for your state's Medicaid office, or search "Medicaid" plus your state name online. Your state will tell you the income and asset limits, what services are covered, and how to enroll if you meet the requirements.

If you are turning 65, you should enroll in Medicare even if you are still working and have employer coverage. There are penalties for late enrollment that can increase your premiums permanently. If you think you might may have access to for Medicaid, apply through your state — there is no penalty for applying, and the process is free.

Frequently Asked Questions

Can I have Medicare and Medicaid at the same time?

Yes. If you are 65 or older with low income, or under 65 with a disability and low income, you may may have access to for both. Medicare is your primary insurance, and Medicaid covers some costs Medicare does not, like long-term care and dental. Your state Medicaid office can tell you if you may have access to for both programs.

Do I have to pay for Medicare and Medicaid?

Medicare Part A is free if you paid into it for 10 years, but Parts B and D have monthly premiums. Medicaid is free or very low-cost depending on your state and income. Neither program charges an enrollment fee, and you should never pay anyone to help you enroll.

What happens to my Medicare if I move to a different state?

Medicare coverage stays the same no matter where you move — it is a federal program. Your Medicaid coverage may change because each state has different rules. Contact your new state's Medicaid office to learn about coverage and whether you still may have access to based on the new state's income limits.

Can I lose my Medicare or Medicaid coverage?

Medicare coverage is permanent once you turn 65 and enroll, as long as you pay your premiums. Medicaid can end if your income or assets exceed your state's limits, or if you fail to recertify when your state asks you to. Your state will notify you if your Medicaid is ending and give you time to respond.

What if I do not may have access to for either program?

If you are under 65 and do not may have access to for Medicaid, you can purchase private health insurance through your state's health insurance marketplace (healthcare.gov) or directly from insurers. You may be able to reduce your premium through tax credits if your income is between 100% and 400% of the federal poverty level.