The Core Difference: Who Pays and Who Gets Covered

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 and people with end-stage renal disease. You pay into Medicare through payroll taxes during your working years, and the program pays your medical bills when you turn 65.

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 may be able to access and covered services vary by state. Medicaid is funded through general tax revenue, not through payroll deductions.

The simplest way to remember the difference: Medicare is based on age or disability status; Medicaid is based on income. You can have both at the same time — this is called "dual coverage" — but they are separate programs with separate rules.

Key Takeaways

  • Medicare covers people 65 and older, some younger people with disabilities, and people with end-stage renal disease, regardless of how much money they have.
  • Medicaid covers low-income people of any age, but income limits and covered services differ from state to state.
  • Medicare has four parts (A, B, C, and D) that cover hospital care, doctor visits, Medicare Advantage plans, and prescription drugs.
  • Medicaid covers doctor visits, hospital care, and long-term care, but the exact services depend on which state you live in.
  • You can be covered by both Medicare and Medicaid at the same time if you meet the income and age or disability requirements for both.

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

Medicare Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. Most people do not pay a monthly premium for Part A because they paid Medicare taxes while working. You pay a deductible when you are admitted to the hospital.

Medicare Part B covers doctor visits, outpatient care, medical equipment, and preventive services. Part B requires a monthly premium, which is typically deducted from your Social Security check. You also pay a deductible and a percentage of the cost for each service.

Medicare Part C, also called Medicare Advantage, is an alternative to Parts A and B offered by private insurance companies approved by Medicare. These plans often include prescription drug coverage and may offer extra benefits like dental or vision, but they usually have network restrictions.

Medicare Part D covers prescription drugs. You can add it to Original Medicare (Parts A and B), or it may be included in your Medicare Advantage plan. Part D requires a monthly premium and has a deductible.

How Medicaid Works: Coverage Varies by State

Medicaid covers doctor visits, hospital care, emergency services, lab work, X-rays, and preventive care. Most state programs also cover long-term care in nursing homes or assisted living, which Medicare does not. Some states cover dental, vision, and hearing aids; others do not.

Income limits for Medicaid vary by state and by family size. A single person might have a monthly income limit of $1,500 in one state and $2,500 in another. Some states expanded Medicaid to cover adults earning up to 138 percent of the federal poverty level; others have not.

Medicaid is "means-tested," meaning your income and assets are reviewed to determine whether you may have access to. Medicare is not means-tested — a millionaire and a person living in poverty both get the same Medicare coverage at 65.

Each state Medicaid program has its own name and rules. In California it is called Medi-Cal, in New York it is called Medicaid, and in Texas it is called CHIP for children and Medicaid for adults. The federal government sets minimum standards, but states have flexibility in what they cover and how much they pay providers.

Cost Differences: Premiums, Deductibles, and Out-of-Pocket Limits

Medicare Part A has no monthly premium for most people, but you pay a deductible of $1,600 per hospital stay (this amount changes yearly). Part B costs around $165 per month for most people, plus a $240 annual deductible. Part D costs vary by plan but typically range from $7 to $100 per month.

Medicare has an out-of-pocket spending limit. Once you reach it in a calendar year, Medicare covers 100 percent of your costs for the rest of that year. For 2024, the limit is around $8,850 for Original Medicare.

Medicaid has no monthly premium in most states. You may pay a small copay for a doctor visit or prescription — typically $1 to $5 — but many services are free. States cannot charge copays for emergency services, hospital stays, or preventive care.

If you have both Medicare and Medicaid, Medicaid usually pays the Medicare premiums and deductibles you cannot afford. This is why dual coverage is valuable for low-income seniors.

Who Qualifies: Age, Income, and Disability

You become may be able to access for Medicare automatically at 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. If you are under 65, you may may have access to if you have been receiving Social Security Disability Insurance (SSDI) for 24 months, or if you have end-stage renal disease or ALS.

Medicaid may be able to access depends on your state, but generally you must be a U.S. citizen or may have access to immigrant, have a Social Security number, and meet income limits. In states that expanded Medicaid, adults earning up to 138 percent of the federal poverty level (around $1,900 per month for a single person in 2024) may may have access to. In states that did not expand, income limits are much lower — sometimes as low as $800 per month.

Some groups are covered by Medicaid in all states: children under 19, pregnant people, parents of dependent children, and people over 65 with low income. Other groups, like childless adults, are covered only in states that expanded Medicaid.

Coverage Gaps: What Medicare and Medicaid Do Not Cover

Medicare does not cover long-term care in a nursing home unless it is skilled nursing care following a hospital stay, and even then only for up to 100 days. It does not cover routine dental, vision, or hearing aids, though some Medicare Advantage plans offer these as add-ons. It does not cover most prescription drugs that are not on the Part D formulary.

Medicaid covers long-term care in most states, but it does not cover care in an assisted living facility in many states — only nursing homes. Medicaid also does not cover private-pay home care unless it is medically necessary. Dental and vision coverage varies widely by state.

Neither program covers cosmetic surgery, weight loss surgery (unless medically necessary), or most fertility treatments. Both have restrictions on experimental treatments and may require prior authorization before you receive care.

What Happens When You Turn 65: Medicare Enrollment

You should enroll in Medicare during your initial enrollment period, which begins three months before the month you turn 65 and ends three months after. If you enroll late, you may pay a permanent penalty on your premiums.

If you are already on Medicaid when you turn 65, you will keep Medicaid while also enrolling in Medicare. Your Medicaid will then help pay your Medicare premiums and deductibles. You do not have to choose between them.

If you are still working at 65 and have employer health insurance, you may be able to delay Medicare enrollment without penalty, but you should check with your employer's benefits office. Once you stop working or lose coverage, you have a limited time to enroll.

Frequently Asked Questions

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

Yes. If you are 65 or older and have low income, you may may have access to for both. Medicaid will pay your Medicare premiums, deductibles, and copays. People with both are called "dual may be able to access" and are often in a better financial position than those with only one program.

What is the income limit for Medicaid?

It depends on your state. In states that expanded Medicaid, the limit is usually around 138 percent of the federal poverty level, or roughly $1,900 per month for a single person. In states that did not expand, limits are much lower. You can find your state's limit by searching "[your state] Medicaid income limits" or calling your state Medicaid office.

Do I have to pay for Medicare?

Part A is free for most people who paid Medicare taxes while working. Part B, Part C, and Part D all have monthly premiums. If you cannot afford the premiums, Medicaid may pay them for you if you may have access to for both programs.

Does Medicare cover nursing home care?

Medicare covers skilled nursing care for up to 100 days following 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 if you have low income and assets.

What happens to my Medicaid when I turn 65?

You keep your Medicaid and enroll in Medicare. You will have both programs, and Medicaid will help pay your Medicare costs. You do not lose Medicaid just because you reach 65.