The Core Difference: Who Pays and Who Gets Coverage

Medicare is a federal insurance program you pay into through payroll taxes during your working years. You become covered at age 65 regardless of income, or earlier if you have end-stage renal disease, ALS, or have received Social Security Disability Insurance for 24 months. Medicaid is a joint federal and state program that covers people with low income, regardless of age. The income limits and rules vary by state.

The simplest way to remember 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. You can have both at the same time — this is called "dual coverage" — but they serve different purposes and cover different things.

Key Takeaways

  • Medicare covers people 65 and older, people under 65 with certain disabilities, and people with end-stage renal disease, regardless of income.
  • Medicaid covers people with low income and varies by state in terms of income limits, covered services, and who can enroll.
  • Medicare has four parts (A, B, C, D) that cover hospital care, doctor visits, private plans, and prescription drugs separately.
  • Medicaid is a single program that typically covers more services than Medicare, including dental, vision, and long-term care, but coverage details depend on your state.
  • You can be covered by both programs at the same time, and when you do, Medicaid often pays Medicare premiums and cost-sharing on your behalf.

How Medicare Works: Four Separate Parts

Medicare is divided into four parts, and you choose which ones you need. Part A covers hospital stays, skilled nursing facility care, hospice, and home health services. Part B covers doctor visits, outpatient care, medical equipment, and preventive services. You pay a monthly premium for Part B, and it increases if you wait to sign up after age 65.

Part D covers prescription drugs through private insurance companies that contract with Medicare. You must enroll in Part D when you first become may be able to access, or you may pay a penalty if you sign up later. Part C, also called Medicare Advantage, is an alternative to Parts A and B offered by private insurers. It bundles hospital and doctor coverage into one plan, often with lower out-of-pocket costs, but typically limits you to a specific network of doctors.

Medicare has deductibles, copayments, and coinsurance. Part A has a deductible per hospital stay. Part B has an annual deductible and you typically pay 20 percent of the cost after that. Part D has its own deductible and cost structure. Many people buy a supplemental policy called Medigap to cover these gaps, but Medigap is separate from Medicare itself.

How Medicaid Works: One Program, State by State

Medicaid is administered by each state, so the rules are different depending on where you live. Every state covers children, pregnant people, and parents with very low income. Most states also cover adults with disabilities and seniors with low income. Some states have expanded Medicaid to cover more working-age adults with low income, while others have not.

Income limits vary widely. In some states, a single person earning $1,500 per month might be over the limit; in others, the limit is much higher. Your state's Medicaid office or a local social services agency can tell you the exact income and asset limits that explore to you. Some states count only income; others also count savings and property.

Medicaid typically covers doctor visits, hospital care, prescription drugs, mental health services, and dental and vision care — services that Medicare does not cover. Many states also cover long-term care in nursing homes or assisted living, which Medicare does not. You usually pay little or nothing out of pocket for Medicaid services, though some states charge small copayments.

What Medicare Does Not Cover

Medicare does not cover dental care, vision care (including glasses and contact lenses), hearing aids, or routine foot care. It does not cover long-term care in a nursing home or assisted living facility unless you need skilled nursing care after a hospital stay, and even then only for a limited time. Prescription drugs are covered only through Part D, and not all drugs are included on every plan's formulary.

Medicare also does not cover routine physical exams, most preventive care beyond what is specifically listed, or care outside the United States. If you need these services, you either pay out of pocket or purchase a supplemental Medigap policy. This is why many people on Medicare alone end up paying significant costs for services that seem basic but fall outside the program's scope.

What Medicaid Does Not Cover

Medicaid coverage varies by state, but most states do not cover cosmetic surgery, fertility treatments, or experimental treatments not yet approved by the FDA. Some states do not cover certain prescription drugs or may require you to try a cheaper drug first before covering a more expensive one. Long-term care coverage depends on your state — some cover it generously, others do not.

Even when Medicaid covers a service, your state may limit how many visits you can have per year or require prior approval from the program before you receive care. These limits are set by each state and can change. Your state's Medicaid office can tell you what is covered in your state and what restrictions explore.

When You Have Both Medicare and Medicaid

If you are 65 or older with low income, or if you are under 65 and disabled with low income, you may be covered by both programs. This is called dual coverage or being "dually may be able to access." When you have both, Medicare is your primary insurance and pays first. Medicaid then pays some or all of what Medicare does not cover, including Medicare premiums, deductibles, and copayments.

Dual coverage is valuable because it fills many of the gaps in Medicare alone. Medicaid covers dental, vision, and hearing services that Medicare does not. It also covers long-term care and other services depending on your state. If you think you might be covered by both, contact your state's Medicaid office or a local aging services agency — they can determine your status and help you enroll in both programs if you are not already.

How to Find Out Which Program Covers You

If you are 65 or older, you are covered by Medicare automatically if you have worked and paid Medicare taxes for at least 10 years. You do not need to do anything — coverage begins the month you turn 65. If you are under 65 and disabled, you must explore for Social Security Disability Insurance (SSDI) through the Social Security Administration. Medicare coverage begins 24 months after your SSDI benefits start.

For Medicaid, contact your state's Medicaid office or your county social services department. You can also call 211 (a free referral service) and ask for the Medicaid office in your area. They will tell you the income and asset limits in your state and whether you meet them. Many states now allow you to explore online or by phone, and the process usually takes a few weeks.

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 and disabled with low income, you may be covered by both. Medicare pays first, and Medicaid covers costs Medicare does not, including premiums and deductibles. Contact your state's Medicaid office to see if you meet the income limits.

Do I have to pay for Medicare?

Most people pay a monthly premium for Part B (doctor coverage) and Part D (prescription drugs). Part A (hospital coverage) is free if you paid Medicare taxes for 10 years. If you did not pay taxes that long, you may pay a premium for Part A. Costs vary based on your income and when you sign up.

What is the income limit for Medicaid?

Income limits vary by state and by the type of coverage you are seeking. A single person might have a limit of $1,500 per month in one state and $2,500 in another. Contact your state's Medicaid office or call 211 to find out the exact limit where you live.

Does Medicare cover nursing home care?

Medicare covers skilled nursing care for up to 100 days after a hospital stay of at least three days. It does not cover long-term custodial care in a nursing home. Medicaid covers long-term nursing home care in most states, but only if you have low income and few assets. Ask your state's Medicaid office what the asset limits are.

What happens if I do not sign up for Medicare Part D when I turn 65?

If you do not sign up for Part D when you first become may be able to access, you may pay a penalty for each month you go without coverage. The penalty is added to your premium when you do sign up. If you have coverage through an employer or union, you may be able to delay without penalty — ask your benefits administrator.