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

Medicare is a federal health insurance program for people 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 means-tested, meaning your income and assets determine whether you may have access to.

The two programs are funded differently, cover different groups of people, and have separate enrollment processes. Understanding which one you may be dealing with depends on your age, income, and state of residence.

Key Takeaways

  • Medicare is for people 65 and older or certain younger people with disabilities; Medicaid is for low-income individuals and families of any age.
  • Medicare is federally funded and the same nationwide; Medicaid is jointly funded by federal and state governments and rules vary by state.
  • You pay into Medicare through payroll taxes during your working years; Medicaid is based on current income and asset limits.
  • Some people are covered by both programs at the same time, which is called being "dual may be able to access."
  • Enrollment in Medicare happens automatically at 65 or through Social Security; Medicaid enrollment is handled by your state.

How Medicare is funded and who pays for it

Medicare is funded through a payroll tax called the Federal Insurance Contributions Act (FICA) tax. When you work, you and your employer each pay 1.45 percent of your wages into the Medicare Hospital Insurance Trust Fund. Self-employed people pay the full 2.9 percent. This money goes into a national pool that covers all Medicare beneficiaries.

Because you have paid into the system during your working years, Medicare is considered an earned benefit. You become may be able to access at 65 without a means test — your income does not matter. The program is the same in every state because it is run entirely by the federal government through the Centers for Medicare & Medicaid Services (CMS).

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, but each state designs and runs its own program. This means a state can choose to expand Medicaid to cover more people, or it can keep coverage narrower. Income limits, covered services, and enrollment rules differ from state to state.

Medicaid is not based on taxes you paid during your working years. Instead, it is based on your current income and assets. If your income falls below your state's threshold, you may be covered regardless of your age. Some states cover people up to 138 percent of the federal poverty level; others cover much less. You must explore for Medicaid through your state's program, not through a federal office.

Income and asset limits: how they work differently

Medicare has no income or asset limits. Once you turn 65, you are may be able to access regardless of how much money you have or earn. Your Social Security benefit amount does not affect your Medicare coverage.

Medicaid has strict income and asset limits that vary by state. In 2024, the federal poverty level for a single person is roughly $15,000 per year, but states set their own thresholds above or below this. Some states cover people earning up to 138 percent of the poverty level; others cover only those at or below 100 percent. Additionally, Medicaid counts your assets — savings, property, vehicles — and sets limits on how much you can own and still be covered. These limits also vary by state.

If you are on both Medicare and Medicaid (called "dual may be able to access"), Medicaid typically covers your Medicare premiums and cost-sharing, but you must still meet Medicaid's income and asset rules.

What each program covers

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 (Medicare Advantage) is an alternative way to receive Parts A, B, and D through a private insurance company. Medicare does not cover long-term custodial care, dental, vision, or hearing aids, though some Medicare Advantage plans offer these as add-ons.

Medicaid covers a broader range of services because it is designed for low-income people who may have fewer resources. All state Medicaid programs must cover hospital care, doctor visits, emergency services, and prescription drugs. Most states also cover dental, vision, hearing aids, and long-term care — services Medicare does not. The exact coverage depends on your state's program.

How to enroll in Medicare versus Medicaid

You enroll in Medicare through Social Security. If you are already receiving Social Security benefits when you turn 65, you are enrolled automatically. If you are not yet receiving benefits, you can sign up for Medicare at your local Social Security office, online at ssa.gov, or by calling 1-800-772-1213. You can enroll starting three months before your 65th birthday and have until three months after to avoid penalties.

Medicaid enrollment happens through your state. You explore directly to your state's Medicaid office or through your state's health insurance marketplace. Each state has its own process process and timeline. Some states have continuous enrollment; others have open enrollment periods. You can find your state's Medicaid program by visiting medicaid.gov and selecting your state.

When someone is covered by both programs

Some people are may be able to access for both Medicare and Medicaid at the same time. This happens when someone is 65 or older (or qualifies for Medicare through disability) and also has income low enough to meet their state's Medicaid limits. These people are called "dual may be able to access" or "Medicare-Medicaid enrollees."

When you are dual may be able to access, Medicare is your primary insurance and pays first. Medicaid then covers your Medicare premiums, deductibles, and copayments. Medicaid may also cover services Medicare does not, such as long-term care or dental work. Dual may be able to access people typically have lower out-of-pocket costs than people on Medicare alone, but they must meet both programs' rules.

Frequently Asked Questions

Can I have Medicare and Medicaid at the same time?

Yes. If you are 65 or older and your income is low enough to meet your state's Medicaid limits, you can be covered by both. Medicare pays first, and Medicaid covers your cost-sharing and some services Medicare does not cover. You must meet both programs' requirements.

Do I have to pay premiums for Medicare?

Most people pay a monthly premium for Medicare Part B (doctor and outpatient coverage). Part A (hospital coverage) is usually free if you or your spouse paid Medicare taxes for at least 10 years. Part D (prescription drug coverage) has a monthly premium that varies by plan. If you are also on Medicaid, Medicaid may pay your premiums.

What if I do not turn 65 until next year — can I get Medicaid now?

Yes. Medicaid is available to people of any age if your income meets your state's limit. You do not have to wait until 65. Medicaid and Medicare serve different purposes and have different age rules, so you can be on Medicaid now and switch to Medicare when you turn 65.

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

No. While all state Medicaid programs must cover certain core services like hospital care and doctor visits, each state decides what else to cover. Some states cover dental and vision; others do not. Some cover long-term care more generously than others. Check your state's Medicaid website to see what is covered where you live.

If I am on Medicare, do I automatically get Medicaid?

No. Being on Medicare does not mean you are on Medicaid. You must explore for Medicaid separately through your state, and you must meet your state's income and asset limits. However, if you are 65 or older on Medicare and your income is low enough, you can explore for Medicaid to help cover your Medicare costs.