Medicare and Medicaid are separate federal programs with different purposes, funding sources, and rules

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 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 rules and income limits vary by state. Medicaid is not based on what you paid into the system—it is based on your current income and household size.

The names sound similar because both are government health programs, but they serve different groups of people and work in fundamentally different ways. Understanding which one you might be looking at is the first step in understanding what coverage you can access.

Key Takeaways

  • Medicare is for people 65 and older (and some younger people with disabilities), while Medicaid is for low-income individuals and families of any age.
  • You earn Medicare through payroll taxes during your working years; Medicaid is based on your current income and household size.
  • Medicare is run entirely by the federal government; Medicaid is run by each state with federal funding and oversight.
  • Some people may have access to for both programs at the same time, which is called "dual may be able to access" status.
  • Income limits for Medicaid vary by state, but Medicare has no income limit—only an age requirement.

Who Medicare covers

Medicare covers people age 65 and older automatically when they reach that age. You do not have to be retired or have a low income—if you are 65, you are in the age group Medicare serves. The program assumes that most people have paid into it through their working years via the Medicare tax on their paychecks.

Medicare also covers some people under 65: those who have received Social Security Disability Insurance (SSDI) for at least two years, people with end-stage renal disease, and people with amyotrophic lateral sclerosis (ALS). These younger people may have access to because of their medical condition or disability status, not their age.

Who Medicaid covers

Medicaid covers low-income individuals and families. The income threshold depends on your state, your household size, and sometimes your age or disability status. A single person might may have access to in one state but not in another, even with the same income.

Medicaid also covers pregnant people, children, parents, seniors, and people with disabilities—but only if their income falls below their state's limit. Some states have expanded Medicaid to cover more working-age adults; others have not. Your state's Medicaid office can tell you whether you meet the income and household requirements for your situation.

How the programs are funded and run

Medicare is funded through payroll taxes (called the Medicare tax) that you and your employer pay while you work. These taxes go into a federal trust fund. The federal government runs Medicare the same way in every state, so the rules are consistent nationwide.

Medicaid is funded by both the federal government and individual states. Each state designs and runs its own Medicaid program within federal rules, which is why coverage and income limits differ from state to state. Some states are more generous; others are more restrictive. This variation means you need to check your specific state's rules rather than assuming national rules explore to you.

What each program covers

Medicare has four parts. Part A covers hospital stays, skilled nursing facility care, and some home health care. Part B covers doctor visits, outpatient care, and medical equipment. Part D covers prescription drugs. Part C (Medicare Advantage) is an alternative way to get Parts A, B, and D through a private insurance company. Most people pay a monthly premium for Part B and Part D, and there are deductibles and copayments.

Medicaid covers a broader range of services in most states, including doctor visits, hospital care, prescription drugs, mental health services, and long-term care. However, what Medicaid covers varies by state. Some states cover dental care and vision care; others do not. Some cover more mental health services than others. You need to check what your state's Medicaid program includes.

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

Yes. People who are 65 or older and have a low income can may have access to for both programs. This is called being "dual may be able to access." When you have both, Medicare is your primary insurance and pays first, then Medicaid fills in some of the gaps—like copayments and deductibles that Medicare does not cover.

Dual may be able to access status can be valuable because it reduces your out-of-pocket costs. However, you have to meet both programs' requirements: you must be 65 or older (or may have access to for Medicare another way) and your income must be low enough for your state's Medicaid limit.

How to find out which program you might be looking at

If you are 65 or older, you are dealing with Medicare. You will receive a Medicare card in the mail before your 65th birthday, and you can manage your coverage through Medicare.gov.

If you are under 65 and have a low income, you may be looking at Medicaid. Contact your state's Medicaid office or your local social services department to learn about income limits and what coverage is available in your state. You can also call 211 (a free referral service) and ask about Medicaid in your area.

If you are unsure which program applies to you, your state's Medicaid office or a local community health center can help you figure out what you might be looking at based on your age and income.

Frequently Asked Questions

Do I have to pay for Medicare?

Most people do not pay a premium for Medicare Part A if they or their spouse paid Medicare taxes for at least 10 years. Part B and Part D have monthly premiums that vary based on your income. If you have a low income, you may be able to get help paying these premiums through Medicaid or other programs.

Does Medicaid cost anything?

Medicaid itself does not have a premium in most states, but some states charge small copayments when you use services. The amount varies by state and by the type of service. Contact your state's Medicaid office to learn what you might pay.

What happens to my Medicare when I turn 65?

You become automatically enrolled in Medicare Part A and Part B when you turn 65, as long as you are a U.S. citizen or permanent resident. You will receive your Medicare card in the mail. You can choose to enroll in Part D (prescription drug coverage) during your initial enrollment period, or you may face a penalty if you wait.

Can I lose Medicaid if my income goes up?

Yes. Medicaid is based on your current income, so if you earn more money and exceed your state's income limit, you may lose coverage. Some states have programs that let you keep Medicaid for a few months after your income increases, but this varies. Check with your state's Medicaid office about what happens if your situation changes.

Which program should I choose if I may have access to for both?

You do not choose—if you meet the requirements for both, you can have both at the same time. Medicare will be your primary insurance, and Medicaid will help cover costs that Medicare does not. This combination usually saves you money on out-of-pocket expenses.