Medicare and Medicaid are two separate federal programs with different purposes, funding sources, and who they serve

Medicare is a federal health insurance program for people age 65 and older, regardless of income. It is also available to 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 by state. Medicaid is funded through general tax revenue, not through individual payroll contributions.

The confusion between the two is understandable—they have similar names and both help pay medical bills—but they operate on entirely different rules. A person can be covered by both programs at the same time, a situation called "dual may be able to access."

Key Takeaways

  • Medicare is for people 65 and older (or younger with certain disabilities), while Medicaid is for low-income individuals and families of any age.
  • Medicare is federally funded and uniform across all states; Medicaid is jointly funded by federal and state governments and varies significantly by state.
  • You pay into Medicare during your working years through payroll taxes; Medicaid is based on current income and assets, not past contributions.
  • Medicare has four parts (A, B, C, and D) covering hospital, medical, private insurance, and prescription drug costs; Medicaid coverage varies by state but typically includes doctor visits, hospital care, and prescription drugs.
  • Some people may have access to for both programs and are called "dual may be able to access," which can reduce out-of-pocket costs.

Who Qualifies: Age and Income Requirements

Medicare may be able to access is straightforward: you generally may have access to at age 65 if you or your spouse paid Medicare taxes for at least 10 years (40 quarters). You do not need to be retired, and your income does not matter. If you are under 65, you may still may have access to if you have been receiving Social Security Disability Insurance (SSDI) for 24 months, have end-stage renal disease, or have amyotrophic lateral sclerosis (ALS).

Medicaid may be able to access depends on your state and your income level. Most states cover adults earning up to 138% of the federal poverty line, though some states have lower limits. Your household size, assets, and whether you are pregnant, disabled, or caring for children also affect whether you may have access to. Because each state sets its own rules, a person who qualifies in one state may not may have access to in another.

If you are 65 or older and have low income and limited assets, you may may have access to for both Medicare and Medicaid. Your state Medicaid program can help pay your Medicare premiums and cost-sharing (deductibles and copayments), which is why dual coverage can significantly reduce your medical expenses.

How They Are Funded and Structured

Medicare is funded through a dedicated payroll tax—1.45% from employees and 1.45% from employers, plus an additional 0.9% tax on high earners' wages. This money goes into the Medicare Trust Fund. When you turn 65, you become may have access to to benefits based on your work history, not on current need.

Medicaid is funded through a combination of federal and state money. The federal government pays a percentage of each state's costs (the federal medical assistance percentage, or FMAP), which varies by state. States must cover certain groups and services but can choose to expand coverage beyond the federal minimum. This is why Medicaid looks different in each state.

Medicare is administered nationally by the Centers for Medicare & Medicaid Services (CMS), a federal agency. Medicaid is administered by each state's health department or social services agency, which is why you apply through your state, not through a federal office.

What Medicare Covers

Medicare has four parts, and coverage depends on which parts you enroll in. Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. Part B covers doctor visits, outpatient services, medical equipment, and preventive care. Part D covers prescription drugs. Part C (Medicare Advantage) is an alternative to Original Medicare (Parts A and B) offered by private insurance companies; it usually includes prescription drug coverage and may offer additional benefits like dental or vision.

Medicare has deductibles and copayments. For example, Part A has a deductible for hospital stays, and Part B has a monthly premium and a deductible. Part D has a deductible and copayments for drugs. If you have Medicaid as well, Medicaid may pay these costs for you.

Medicare does not cover long-term care (nursing home stays beyond the skilled nursing facility benefit), dental care, vision care, or hearing aids, though some Medicare Advantage plans offer limited versions of these services.

What Medicaid Covers

Medicaid must cover certain core services in every state: doctor visits, hospital care, laboratory and X-ray services, nursing facility care, home health services, and family planning. States can add coverage for dental, vision, hearing aids, mental health services, substance abuse treatment, and other services. Some states are more generous than others.

Medicaid typically has low or no copayments for covered services, especially for low-income beneficiaries. This is one reason Medicaid can be more affordable than Medicare for people with limited income—Medicare requires you to pay premiums and cost-sharing even if you have low income.

Medicaid covers long-term care in nursing homes and assisted living facilities, which Medicare does not. This is a major difference for older adults who need extended care. However, Medicaid requires you to spend down your assets to a very low level before it will pay for long-term care, and it has strict rules about protecting your home and a small amount of savings.

Enrollment and Timing

You enroll in Medicare automatically if you are receiving Social Security benefits at age 65. If you are not receiving Social Security, you must enroll yourself through Social Security Administration (SSA) or Medicare.gov. There is a seven-month Initial Enrollment Period centered on your 65th birthday. If you miss this window, you may face permanent late-enrollment penalties on your premiums.

Medicaid enrollment is continuous in most states—you can apply any time, and coverage begins the month you meet the requirements. Some states have waiting lists for certain services, but the program itself does not have enrollment deadlines the way Medicare does. You apply through your state's Medicaid office or through your state's health insurance marketplace.

If you are turning 65 and have Medicaid, you should contact your state Medicaid program to understand how Medicare enrollment affects your Medicaid coverage. In some states, Medicaid ends when you turn 65; in others, it continues if you still meet income limits.

Cost Differences Between the Two Programs

Medicare requires you to pay premiums, deductibles, and copayments. Part B has a monthly premium (the standard amount is adjusted yearly), and Part A has a deductible for hospital stays. Part D has a monthly premium and drug copayments. These costs exist even if you have low income.

Medicaid typically has much lower or no out-of-pocket costs, especially for people with very low income. However, Medicaid coverage varies by state, so what is covered in one state may not be covered in another. Some states charge small copayments for certain services.

If you are dual may be able to access (covered by both Medicare and Medicaid), Medicaid usually pays your Medicare premiums and cost-sharing, which can make your healthcare much more affordable. This is why some low-income seniors actively seek Medicaid coverage even though they already have Medicare.

Frequently Asked Questions

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

Yes. If you are 65 or older and meet your state's Medicaid income and asset limits, you can be covered by both programs. Medicaid can pay your Medicare premiums and cost-sharing, reducing what you pay out of pocket. People with both programs are called "dual may be able to access."

What happens to my Medicaid when I turn 65 and become may be able to access for Medicare?

This depends on your state. Some states automatically end Medicaid when you turn 65, while others continue it if you still meet income limits. Contact your state Medicaid office before your 65th birthday to understand what will happen to your coverage.

Do I have to pay for Medicare if I did not work long enough to earn it?

If you do not have 40 quarters of Medicare-taxed work history, you can still buy Part A coverage, though the premium is higher than for people who earned it. You can also enroll in Part B regardless of work history. Your state Medicaid program may help pay these premiums if you have low income.

Which program covers prescription drugs?

Medicare Part D covers prescription drugs, though you must enroll in a specific Part D plan and pay a premium and copayments. Medicaid covers prescription drugs in every state, though the list of covered drugs and copayments vary by state. If you have both programs, Medicaid usually pays your Part D costs.

Can I switch from Medicare to Medicaid or vice versa?

No. Medicare and Medicaid are separate programs with different may be able to access rules. You cannot choose one over the other. If you meet the requirements for both, you are covered by both. If you only meet the requirements for one, you are covered by that one.