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 or end-stage renal disease. You pay into Medicare through payroll taxes during your working years, and it functions like an insurance program you have earned.

Medicaid is a joint federal and state program that pays for health care for people with low incomes. Unlike Medicare, Medicaid is means-tested — your income and assets determine whether you may have access to. Each state runs its own Medicaid program within federal guidelines, so coverage and income limits vary significantly by where you live.

The simplest way to think about the difference: Medicare is based on age or disability status and how much you paid in taxes. Medicaid is based on how much money you have right now.

Key Takeaways

  • Medicare covers people 65 and older, plus some younger people with disabilities, regardless of income; Medicaid covers people with low incomes at any age.
  • Medicare is funded by payroll taxes and is the same nationwide; Medicaid is funded by federal and state money and rules vary by state.
  • You can have both Medicare and Medicaid at the same time — this is called being "dual may be able to access."
  • Medicare has four parts (A, B, C, D) covering different services; Medicaid covers vary by state but typically include doctor visits, hospital care, and prescriptions.
  • Income limits for Medicaid differ by state and family size, while Medicare has no income limit.

Who Each Program Covers

Medicare covers anyone age 65 or older who is a U.S. citizen or permanent resident and has worked at least 10 years in jobs where Medicare taxes were withheld. It also covers people under 65 who have been receiving Social Security Disability Insurance (SSDI) for 24 months, and people of any age with end-stage renal disease or ALS.

Medicaid covers people whose income falls below their state's threshold. That threshold changes based on family size and sometimes on other factors like whether you are pregnant, a parent, or have a disability. Some states have expanded Medicaid to cover adults earning up to 138% of the federal poverty level; others have not. A single person in one state might may have access to while earning the same amount in another state would not.

You can be enrolled in both programs at the same time. People who are 65 or older and have low income often may have access to for both Medicare and Medicaid. When you have both, Medicare is your primary insurance and Medicaid fills in gaps — paying copays, deductibles, and services Medicare does not cover.

How Each Program Is Funded and Structured

Medicare is funded through three sources: payroll taxes (2.9% split between employer and employee), premiums you pay monthly, and general federal tax revenue. The program is administered nationally by the Centers for Medicare & Medicaid Services (CMS), a federal agency. Because it is federally run, the same coverage rules apply everywhere in the country.

Medicaid is funded by a combination of federal and state money. The federal government sets minimum standards, but each state designs its own program. This means a service covered in one state might not be covered in another. For example, some states cover dental care through Medicaid; others do not. Some states cover vision care; others limit it. You need to check your specific state's Medicaid program to know what is covered where you live.

What Services Each Program Covers

Medicare Part A covers hospital stays, skilled nursing facility care, hospice, and some home health services. Part B covers doctor visits, outpatient services, and some preventive care. Part D covers prescription drugs. Part C (Medicare Advantage) is an alternative to Parts A and B offered by private insurers; it includes prescription drug coverage and often adds dental, vision, or hearing benefits.

Medicaid coverage varies by state but typically includes doctor visits, hospital care, emergency services, prescription drugs, and preventive care. Many states also cover dental care, vision care, mental health services, and substance use treatment. Some states cover long-term care in nursing homes; others do not. You must check your state's Medicaid program to see what is covered in your situation.

Neither program covers everything. Both have copays, deductibles, or coinsurance amounts you pay out of pocket. Medicare does not cover dental, vision, or hearing aids (though some Part C plans do). Medicaid coverage of these services depends on your state.

Income Limits and How They Work

Medicare has no income limit. A person earning $200,000 a year can have Medicare at age 65, just as someone earning $20,000 can. However, higher earners pay higher premiums for Part B and Part D.

Medicaid has strict income limits that vary by state and family size. The federal poverty level for 2024 is roughly $15,000 for a single person and $31,000 for a family of four, but states set their own thresholds. Some states cover people earning up to 138% of poverty; others cover only those at or below 100% of poverty. A few states have even lower limits. You can check your state's specific income limit by contacting your state Medicaid office or using your state's online screening tool.

Costs: Premiums, Deductibles, and Out-of-Pocket Expenses

Medicare Part A has no monthly premium if you or your spouse paid Medicare taxes for at least 10 years. Part B has a monthly premium (around $175 in 2024, though it varies by income). Part D (prescription drug coverage) has a monthly premium that varies by plan. You also pay deductibles and copays when you use services.

Medicaid costs vary by state. Some states charge no premiums or copays; others charge small amounts. Low-income people on Medicaid typically pay less out of pocket than Medicare beneficiaries, but coverage and cost-sharing rules differ by state. If you are dual may be able to access (on both Medicare and Medicaid), Medicaid usually pays your Medicare premiums and cost-sharing.

How to Enroll in Each Program

You are automatically enrolled in Medicare Part A when you turn 65 if you are already receiving Social Security. If you are not yet receiving Social Security, you must sign up during your initial enrollment period, which begins three months before the month you turn 65 and ends three months after. Missing this window can result in permanent late-enrollment penalties.

Part B and Part D require separate enrollment. You can enroll during your initial enrollment period or during the general enrollment period (January 1 to March 31 each year), though late enrollment penalties may apply.

Medicaid enrollment works differently in each state. Some states have continuous enrollment year-round; others have specific enrollment periods. You can contact your state Medicaid office, call 211, or visit your state's Medicaid website to learn how to enroll. If you are already receiving Supplemental Security Income (SSI), you are usually enrolled in Medicaid automatically.

Frequently Asked Questions

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

Yes. People who are 65 or older and have low income often may have access to for both. When you have both, Medicare is primary and Medicaid covers gaps. This combination is sometimes called "dual coverage" and can significantly reduce your out-of-pocket costs.

What happens to my Medicaid if I turn 65?

You do not automatically lose Medicaid when you turn 65. If you still meet your state's income and asset limits, you remain on Medicaid. You will also become may be able to access for Medicare at 65. Both programs can continue to cover you.

Does my state's Medicaid cover the same things as other states?

No. While all states must cover certain core services, coverage varies significantly. Dental, vision, hearing aids, and long-term care coverage differ by state. You need to check your specific state's Medicaid program to know what is covered where you live.

What if I do not may have access to for Medicaid but cannot afford Medicare?

If your income is too high for Medicaid but you struggle to pay Medicare premiums, you may be able to get help through Medicare Savings Programs (MSP), which are state-run programs that pay some or all of your Medicare premiums and cost-sharing. Contact your state Medicaid office to learn whether you may have access to.

How do I know which program to contact with a question about my coverage?

If your question is about Medicare, contact Medicare directly at 1-800-MEDICARE or visit Medicare.gov. If your question is about Medicaid, contact your state Medicaid office — the number is on your Medicaid card or you can call 211 to find it.