The Core Difference: Who Pays and Who Gets Coverage

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 the program covers hospital stays, doctor visits, and prescription drugs.

Medicaid is a joint federal and state program that covers low-income individuals and families of any age. Each state sets its own income limits and decides which services to cover, so what Medicaid pays for in one state may differ from another. Unlike Medicare, you do not pay into Medicaid through taxes — it is funded by general tax revenue and is means-tested, meaning your income and assets determine whether you may have access to.

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.

Key Takeaways

  • Medicare covers people 65 and older, some younger people with disabilities, and people with end-stage renal disease, regardless of income.
  • Medicaid covers low-income individuals and families of any age, with income limits and covered services that vary by state.
  • Medicare is funded by payroll taxes you paid during your working years; Medicaid is funded by general tax revenue and is means-tested.
  • You can be on both Medicare and Medicaid at the same time if you meet the age or disability requirement for Medicare and the income requirement for Medicaid.
  • Each state runs its own Medicaid program with different rules, so the same situation may may have access to you in one state but not another.

Who Qualifies for Medicare

You are automatically covered by Medicare when you turn 65 if you are a U.S. citizen or permanent resident who has lived in the country for at least five years. You do not have to be retired or have a certain income level. If you are already receiving Social Security benefits when you turn 65, Medicare enrollment happens automatically. If you are not yet receiving Social Security, you must sign up for Medicare during your initial enrollment period, which begins three months before the month you turn 65 and ends three months after.

Some people under 65 also may have access to for Medicare. This includes people who have received Social Security Disability Insurance (SSDI) benefits for 24 months, people with end-stage renal disease (permanent kidney failure requiring dialysis or transplant), and people with ALS (amyotrophic lateral sclerosis). If you fall into one of these categories, you should contact Social Security to confirm your Medicare coverage.

Missing your initial enrollment period can result in a permanent penalty on your premiums, so if you are approaching 65 and have not yet signed up, contact Medicare or your local Social Security office right away.

Who Qualifies for Medicaid

Medicaid income limits vary by state and change yearly. In most states, a single adult with no children can earn no more than 138% of the federal poverty level to may have access to, though some states have set their limits lower. If you have children, the income limit is usually higher. Some states also cover pregnant people and parents at higher income levels. To find your state's current income limits, contact your state Medicaid office or visit your state health department website.

Beyond income, Medicaid also looks at your assets — the money and property you own. Most states allow you to own a home and a car without losing coverage, but they set limits on how much cash or savings you can have. These asset limits also vary by state and sometimes by age or family size.

Medicaid is not automatic. You must explore through your state's Medicaid office, your county social services department, or sometimes through your state's health insurance marketplace. The process asks for proof of income (recent pay stubs, tax returns, or a letter from your employer), proof of citizenship or immigration status, and proof of residency.

What Medicare Covers

Medicare has four parts, and what you pay depends on which parts you choose. Part A covers hospital stays, skilled nursing facility care, hospice, and some home health services. Part B covers doctor visits, outpatient care, medical equipment, and preventive services. Part D covers prescription drugs. Part C, also called Medicare Advantage, is an alternative to Parts A and B offered by private insurance companies — it covers the same services but often includes prescription drug coverage and may have lower out-of-pocket costs.

Most people pay a monthly premium for Part B and Part D. Part A is usually free if you or your spouse paid Medicare taxes for at least 10 years. You also pay deductibles and copayments when you use services. For example, Part A has a deductible for hospital stays, and Part B has an annual deductible plus a 20% copayment for most services after you meet the deductible.

Medicare does not cover dental care, vision care, hearing aids, or long-term custodial care (help with daily activities like bathing or dressing). Some Medicare Advantage plans include dental or vision coverage, but you pay extra for it.

What Medicaid Covers

Medicaid must cover certain core services in every state: doctor visits, hospital stays, emergency services, lab work, X-rays, family planning, and pregnancy and childbirth care. States can choose to cover additional services such as dental care, vision care, hearing aids, mental health treatment, substance use treatment, and long-term care in nursing homes or at home.

Because each state designs its own Medicaid program, the services available to you depend on where you live. For example, one state may cover dental care for all adults, while another covers it only for children. Some states cover physical therapy and occupational therapy; others do not. If you are on Medicaid and need a specific service, ask your state Medicaid office whether it is covered in your state.

Medicaid typically has no monthly premium for the person covered, though some states charge small copayments for certain services. Pregnant people and children usually have no copayments at all.

Can You Have Both Medicare and Medicaid

Yes. If you are 65 or older and have a disability, or if you are under 65 with a disability and may have access to for Medicare, you can also be on Medicaid if your income and assets fall within your state's limits. People with both programs are sometimes called "dual may be able to access."

If you are dual may be able to access, Medicare is your primary insurance and pays first. Medicaid then covers some of the costs that Medicare does not pay, such as copayments, deductibles, and services Medicare does not cover. This can significantly reduce your out-of-pocket costs. Some states also offer special programs for dual-may be able to access people that coordinate care and may offer additional benefits.

To learn about you may have access to for both, contact your state Medicaid office. They can review your income and assets and tell you whether you are may be able to access.

How State Differences Affect Medicaid Coverage

Because Medicaid is run by each state with federal funding and guidelines, the same income and assets can make you may be able to access in one state but not another. For example, if you earn $1,500 per month as a single adult, you might may have access to for Medicaid in a state that has expanded Medicaid under the Affordable Care Act, but not in a state that has not expanded. As of now, some states have not expanded Medicaid, meaning they cover only certain groups like children, pregnant people, and people with disabilities — not all low-income adults.

The services covered also differ. If you move from one state to another, your Medicaid coverage may change. Before you move, contact the Medicaid office in your new state to understand what coverage will be available to you there. You may also lose coverage temporarily during a move, so plan ahead and explore in your new state as soon as you arrive.

Frequently Asked Questions

Do I have to pay for Medicare?

Most people do not pay a premium for Part A if they or their spouse paid Medicare taxes for at least 10 years. You do pay a monthly premium for Part B (about $165 per month in 2024, though it varies by income) and for Part D prescription drug coverage. You also pay deductibles and copayments when you use services.

What happens to my Medicaid if I start working?

If your income rises above your state's Medicaid limit, you will lose coverage. However, most states have a work incentive program that allows you to keep Medicaid for a period of time even after your income exceeds the limit, or that raises the income limit for people who are working. Contact your state Medicaid office to ask about work incentive programs in your state.

Can I switch from Medicare to Medicaid?

No. Medicare and Medicaid are separate programs with different rules. You cannot choose one over the other. If you are 65 or older, you are in Medicare. If your income is low enough, you can also be in Medicaid at the same time. You cannot drop Medicare to go on Medicaid only.

How do I know which services my state's Medicaid covers?

Contact your state Medicaid office directly or visit your state health department website. You can also call 211 (a free referral service) and ask for information about Medicaid services in your state. Your state Medicaid office can send you a list of covered services or direct you to a website where you can find this information.

What if I do not may have access to for either program?

If your income is too high for Medicaid and you are under 65, you may be able to purchase health insurance through your state's health insurance marketplace. You may also be may be able to access for a tax credit or subsidy to help pay the premium, depending on your income. Visit healthcare.gov to learn about plans available in your area.