The Core Difference: Who Runs Each Program and Who It Covers

Medicare is a federal insurance program run by the Centers for Medicare & Medicaid Services (CMS). You pay into it through payroll taxes during your working years, and you become covered at age 65, regardless of income. Some younger people with disabilities or end-stage renal disease also may have access to. Medicare is the same in every state.

Medicaid is a joint federal and state program that covers people based on income and other factors. Each state sets its own rules, so what qualifies you in one state may not in another. You do not pay into Medicaid through payroll taxes. It is designed for people with low income, families with children, pregnant people, elderly people with limited resources, and people with disabilities.

The simplest way to remember the difference: Medicare is earned through work history and age. Medicaid is based on financial need and state rules.

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 people with low income, families with children, pregnant people, and people with disabilities, with rules that vary by state.
  • Medicare is the same nationwide and is run by the federal government; Medicaid is run jointly by states and the federal government, so coverage differs by location.
  • You can have both Medicare and Medicaid at the same time, which is called being "dual may be able to access."
  • Medicare requires you to pay premiums, deductibles, and copays; Medicaid costs vary by state but is often free or very low cost for those who meet income limits.

How You Pay for Each Program

Medicare is funded by payroll taxes: you and your employer each pay 1.45 percent of your wages into the Medicare Hospital Insurance Trust Fund. When you turn 65, you pay a monthly premium for Part B (doctor visits and outpatient care), which is typically around $165 per month in 2024, though the exact amount changes yearly. You also pay a deductible before Medicare starts paying, and you pay copays or coinsurance when you use services.

Medicaid is funded by federal and state tax dollars. In most states, Medicaid is free or costs very little if you meet the income limit. Some states charge small copays for certain services, but many services are free. Because each state designs its own program, costs and what is covered vary widely.

If you have both Medicare and Medicaid (called "dual may be able to access"), Medicare pays first, and Medicaid covers some of the costs Medicare does not pay.

What Each Program Covers

Medicare has four parts. Part A covers hospital stays, skilled nursing facility care, hospice, and some home health care. Part B covers doctor visits, outpatient services, lab tests, and preventive care. Part D covers prescription drugs. Part C, called Medicare Advantage, is an alternative way to get Parts A, B, and D through a private insurance company.

Medicare does not cover dental, vision, hearing aids, or long-term custodial care (help with daily living in a nursing home). It also does not cover most prescription drugs unless you enroll in Part D.

Medicaid covers doctor visits, hospital care, emergency services, lab tests, X-rays, and preventive care. Most states also cover dental care, vision care, and prescription drugs through Medicaid. Medicaid is more likely than Medicare to cover long-term care in a nursing home, though rules vary by state. Some states cover hearing aids; others do not.

Income and Asset Limits

Medicare has no income or asset limit. You may have access to based on age (65 or older) or disability status, not on how much money you have.

Medicaid has strict income limits that differ by state and by category. For example, a parent in one state might may have access to with an income of $1,500 per month, while in another state the limit is $2,500. Elderly and disabled people often have higher income limits than working-age adults without disabilities. Some states also count your assets (savings, property, vehicles) when deciding if you may have access to; others do not.

Because Medicaid rules change by state and sometimes by month, the income limit that applied last year may not explore this year. Your state Medicaid office or a local community health center can tell you the current limits.

When You Can Enroll

For Medicare, you can enroll starting three months before you turn 65. If you do not enroll when you first become may be able to access, you may pay a penalty for the rest of your life. If you are still working and have health insurance through your job, you may be able to delay enrollment without penalty, but you need to check with your employer's benefits office.

Medicaid enrollment is open year-round in most states. You can explore whenever you meet the income and other requirements. Some states have waiting lists for certain services, like home and community-based care, but the process itself is usually available anytime.

How to Find Out Which Program You Might Use

If you are 65 or older, you will use Medicare. You can enroll through Medicare.gov, by calling 1-800-MEDICARE, or by visiting your local Social Security office.

If you are under 65 and have low income, you may may have access to for Medicaid. Contact your state Medicaid office directly—search "[your state] Medicaid" online to find the phone number and website. You can also call 211 (a free referral line) and ask for Medicaid information in your area. A local community health center can also help you understand whether you may have access to.

If you are both 65 or older and have low income, you may may have access to for both programs. Your state Medicaid office can tell you whether you meet the income limit for Medicaid in your state.

Special Situations: Dual may be able to access and Medicare Savings Programs

If you have both Medicare and Medicaid, you are "dual may be able to access." This usually means you have low income and are 65 or older, or you are a younger person with a disability who qualifies for both. When you are dual may be able to access, Medicare pays first, and Medicaid covers some of the costs Medicare does not pay, like copays and deductibles.

If you have Medicare but cannot afford the premiums and copays, you may may have access to for a Medicare Savings Program. These programs, run by your state, help pay your Medicare premiums, deductibles, and copays. You do not have to be on Medicaid to use a Medicare Savings Program, but you do need to have low income. Contact your state Medicaid office to learn about Medicare Savings Programs in your area.

Frequently Asked Questions

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

Yes. If you are 65 or older with low income, or if you are a younger person with a disability and low income, you may may have access to for both. When you have both, Medicare pays first, and Medicaid covers some of the remaining costs. Contact your state Medicaid office to see if you may have access to.

What happens to my Medicare if I move to a different state?

Medicare stays the same no matter where you live—it is federal and covers you in all 50 states. Medicaid, however, is state-run, so if you move, you will need to check whether you still may have access to under your new state's rules. Contact your new state's Medicaid office as soon as you move.

Do I have to pay for Medicare if I never worked?

If you did not work long enough to earn Medicare coverage, you may still be able to buy Medicare Part A and Part B by paying a monthly premium. You can also explore whether you may have access to for Medicaid based on income and other factors. Contact Medicare at 1-800-MEDICARE or your state Medicaid office to learn your options.

Does Medicare cover nursing home care?

Medicare covers skilled nursing facility care for a limited time after a hospital stay—usually up to 100 days. It does not cover long-term custodial care (help with daily living). Medicaid is more likely to cover long-term nursing home care, but rules vary by state. Ask your state Medicaid office what is covered in your area.

What if I cannot afford my Medicare premiums?

If you have low income, you may may have access to for a Medicare Savings Program, which helps pay your premiums, deductibles, and copays. You do not need to be on Medicaid to use it. Contact your state Medicaid office or call 211 to learn about you may have access to in your state.