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 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, and you do not pay premiums — the program is funded by taxes.

The simplest way to remember the difference: Medicare is earned through work history and age. Medicaid is based on income and need. You can be on both at the same time — this is called "dual may be able to access" — but they serve different purposes and cover different things.

Key Takeaways

  • Medicare covers people 65 and older, or younger people with specific disabilities or conditions, and is funded by payroll taxes you paid during work.
  • Medicaid covers people with low income and is jointly funded by federal and state governments, with income limits that differ by state.
  • Medicare has the same rules nationwide; Medicaid rules, income limits, and covered services vary significantly by state.
  • Medicare Part A covers hospital stays, Part B covers doctor visits and outpatient care, Part D covers prescriptions, and Part C is an alternative private plan option.
  • Medicaid covers doctor visits, hospital care, prescriptions, and long-term care services like nursing homes, with coverage details depending on your state.

How Medicare Works: Parts A, B, C, and D

Medicare has four parts, and understanding what each covers prevents gaps in your protection. Part A covers inpatient hospital stays, skilled nursing facility care after a hospital stay, hospice care, and some home health services. You pay a deductible per hospital stay, and costs increase the longer you stay. Part A is automatic at 65 if you have worked 10 years or paid Medicare taxes.

Part B covers doctor office visits, outpatient surgery, diagnostic tests, and preventive care like screenings and vaccines. You pay a monthly premium (the amount increases if your income is higher), an annual deductible, and then 20 percent of the cost after that. Part B is optional but recommended; if you delay signing up without a valid reason, you pay a penalty for life.

Part D is prescription drug coverage. You choose a plan from private insurers, and coverage varies by plan — some drugs cost more, some less, and you pay different amounts depending on which tier the drug is on. You must enroll during your initial enrollment window or pay a penalty if you go without coverage.

Part C, also called Medicare Advantage, is an alternative to Parts A and B. Private insurers offer these plans, and they bundle hospital and doctor coverage into one plan, often with lower out-of-pocket costs. The trade-off is a smaller network of doctors and hospitals. Part C includes prescription coverage, so you do not need Part D separately.

How Medicaid Works: Coverage Varies by State

Medicaid is the largest source of health coverage for low-income people in the United States, but the program is not uniform. Each state sets its own income limits, decides which services to cover beyond the federal minimum, and runs its own enrollment process. This means a person with the same income might be covered in one state and not in another.

All state Medicaid programs must cover doctor visits, hospital care, lab work, X-rays, and emergency services. Most states also cover prescription drugs, mental health services, and dental care, though the details differ. Many states cover long-term care in nursing homes or assisted living, which Medicare does not.

Income limits vary widely. Some states cover people earning up to 138 percent of the federal poverty line; others set the limit much lower. Your state's Medicaid program or your local social services office can tell you the exact income limit and what counts as income. Assets also matter in some states — if you have too much in savings or own property, you may not be covered.

What Medicare Does Not Cover (And Medicaid Often Does)

Medicare has significant gaps. It does not cover long-term care in a nursing home unless you need skilled nursing care when ready after a hospital stay, and even then only for up to 100 days. It does not cover dental care, vision care, hearing aids, or most preventive services beyond the annual wellness visit. It does not cover custodial care — help with bathing, dressing, or meals — unless it is part of a skilled nursing stay.

Medicaid fills many of these gaps. Most state Medicaid programs cover dental care, vision care, and long-term care in nursing homes or assisted living facilities. This is why many people on Medicare purchase supplemental insurance (called Medigap) to cover what Medicare does not, or why dual-may be able to access people rely on Medicaid to cover costs Medicare leaves behind.

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

Medicare has monthly premiums for Part B and Part D, annual deductibles, and coinsurance (you pay a percentage of costs). Part A is free if you paid Medicare taxes for 10 years, but you pay a deductible per hospital stay. There is no annual out-of-pocket limit in Original Medicare, meaning you could pay thousands in a year with a serious illness.

Medicaid has no monthly premiums in most states. Some states charge small copays for doctor visits or prescriptions — usually $1 to $5 — but many waive copays for preventive care or for people with disabilities. Medicaid has no annual out-of-pocket limit because the program covers the cost after you pay your copay.

If you are on both Medicare and Medicaid (dual may be able to access), Medicare is your primary insurance and pays first. Medicaid pays the Medicare premiums, deductibles, and coinsurance you cannot afford, which is why dual coverage is valuable for people with very low income.

Enrollment: When and How to Sign Up

You become may be able to access for Medicare at 65. You should enroll during your initial enrollment period, which is the three months before the month you turn 65, the month you turn 65, and the three months after. If you miss this window, you pay a penalty on your Part B and Part D premiums for as long as you have Medicare, unless you have a valid reason for the delay (such as still working and covered by employer insurance).

You enroll in Medicare through Social Security — online at ssa.gov, by phone at 1-800-772-1213, or in person at a Social Security office. You choose your Part B coverage, your Part D plan, and whether you want Part C instead of Parts A and B.

Medicaid enrollment is handled by your state. You explore through your state's Medicaid office, your local social services department, or sometimes through a community health center. Some states have continuous enrollment; others have enrollment periods. Your state's Medicaid website lists the income limits, required documents, and how the process works.

When You Might Be on Both Programs

You are dual may be able to access if you are 65 or older and have low enough income to may have access to for Medicaid, or if you are under 65, on Medicare due to disability, and have low income. About 12 million people in the United States are on both programs.

Being dual may be able to access means Medicare is your primary insurance — it pays first for covered services. Medicaid then pays your Medicare premiums, deductibles, and coinsurance up to the limits your state sets. Medicaid also covers services Medicare does not, like long-term care and dental care. If you are dual may be able to access, you do not choose between the programs; you use both.

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 on Medicare due to disability with low income, you may be on both. Medicare pays first, then Medicaid covers what Medicare does not. This is called dual may be able to access status.

What is the income limit for Medicaid?

Income limits vary by state and change yearly. Some states cover people earning up to 138 percent of the federal poverty line; others set lower limits. Contact your state's Medicaid office or visit your state's Medicaid website to find the current limit for your household size.

Do I have to pay for Medicare?

Part A is free if you paid Medicare taxes for 10 years. Part B and Part D have monthly premiums. If your income is higher, your premiums are higher. You also pay deductibles and coinsurance for services. Medicaid has no premiums in most states.

Does Medicare cover nursing home care?

Medicare covers skilled nursing care for up to 100 days after a hospital stay. It does not cover long-term custodial care in a nursing home. Medicaid covers long-term nursing home care in most states if you meet the income and asset limits.

What happens if I do not enroll in Medicare at 65?

You pay a penalty on your Part B and Part D premiums for as long as you have Medicare, unless you have a valid reason for the delay, such as employer insurance. The penalty is 10 percent of the Part B premium for each year you were not enrolled, and 1 percent of the Part D premium per month.