Medicaid vs. Medicare: What’s the Difference?

Medicare is a federal health insurance program mostly geared toward adults age 65 and older, while Medicaid is a joint federal and state program that offers healthcare coverage for low-income families and individuals. If you’re approaching retirement age or you’re looking for affordable coverage, understanding how each program works can help you determine your options.

Learn about the key differences between these programs so you can make an informed decision about your healthcare coverage.

What is Medicaid?

Medicaid is a joint federal and state government program that covers medical expenses for low-income children, some seniors, pregnant women, and people with disabilities.^[1] Each state runs its own Medicaid program, so it can broadly determine who qualifies, which services to include, how to deliver care, and how much to reimburse providers.

States also must follow rules set by the federal government. For example, every Medicaid plan includes basic benefits like inpatient and outpatient hospital care, labs, physician services, X-rays, and home health services.

State governments may also choose to include additional benefits, such as prescription drug coverage, dental care, occupational therapy, and physical therapy.^[2]

Who qualifies for Medicaid

Medicaid eligibility requirements depend mostly on income and family size. A person generally qualifies for Medicaid if their income falls below the federal poverty level (FPL), though most states have expanded eligibility under the Affordable Care Act.

People in 40 states and Washington, D.C., may now qualify for Medicaid with incomes of up to 138% of the FPL ($20,783 in 2024).^[3]

How to enroll in Medicaid

You may enroll in Medicaid any time of the year by visiting your state’s Medicaid agency. Or you can create an account with the health insurance marketplace.

If you qualify for Medicaid based on the answers in your application, the system forwards your information to the state agency. A representative from the agency will then contact you about enrolling.^[4]

What is Medicare?

Medicare is a federal health insurance program for people age 65 and older and some people with disabilities. The federal government funds the program using revenue from payroll taxes, policy premiums, and other revenue sources.

Medicare has four parts that each offer specific coverage:^[5]

• Medicare Part A is known as hospital insurance because it covers inpatient hospital care and related services.

• Medicare Part B is also known as medical insurance. It covers outpatient medical services such as doctor appointments, preventive care, and medical equipment.

• Medicare Part C is a private insurance option known as Medicare Advantage. Private insurance companies sell these plans, which may include more benefits than Parts A and B.

• Medicare Part D will help cover the cost of prescription drugs and vaccines.

Who qualifies for Medicare?

Anyone who’s at least 65 years old generally qualifies for Medicare coverage. You may be able to get Medicare at an earlier age if you have a disability, end-stage renal disease, or amyotrophic lateral sclerosis (ALS).^[6]

How to apply for Medicare

When you apply for Social Security benefits, you’re also signing up for Medicare coverage. The Social Security Administration reviews your application and checks whether you need to pay a premium for Part A. The agency can automatically enroll you in Part A and will ask whether you’d like Part B coverage, too.

Medicaid vs. Medicare coverage differences

The main difference between Medicaid and Medicare is that each program covers different groups of people. Medicare is a federal program that generally insures people who are 65 and older and people with certain disabilities, while Medicaid is a joint state and federal program that typically pays medical costs for some people with limited incomes and resources.

Here are some examples of what Medicare covers:^[7]

• Inpatient hospital care

• Skilled nursing care

• Hospice care

• Lab tests

• Surgery costs

• Home healthcare

• Outpatient services 

• Physician visits 

• Durable medical equipment

• Some preventive services

• Prescriptions 

Here are some examples of what Medicaid covers:^[8]

• Long-term care

• Transportation to medical care

• Inpatient and outpatient hospital services

• Laboratory and X-ray services

• Nursing facility services

• Doctor visits

• Home health services

• Certified pediatric and family nurse practitioner services

Medicaid vs. Medicare cost differences

Most states don’t charge premiums for Medicaid coverage. But some states may require recipients to share in the costs of some services, such as non-preventive doctor visits, non emergency visits to an emergency room, inpatient hospital visits, and prescription medications.

Medicare premiums depend on which parts you’re enrolled in and how long you (or your spouse) worked and paid Medicare taxes. For 2024, the monthly Medicare premiums are:^[9][10]

• Part A premium: $0 if you paid Medicare taxes long enough while working, which is usually at least 10 years. If you pay a premium, it’ll be either $278 or $505 per month.

• Part B premium: $174.70 or more per month, depending on your income.

• Part C premium: Varies by the Medicare Advantage plan and the private insurance company you choose.

• Part D premium: Varies depending on which plan you choose, but the average is around $56 per month.

What is dual coverage, and how does it work?

Dual coverage means you have coverage from both Medicare and Medicaid programs. You may qualify for simultaneous coverage under Medicare and Medicaid based on your age, health status, and financial circumstances.

When you have dual coverage, Medicare kicks in first and pays for any covered services. Then Medicaid pays any remaining costs. As a result, you usually won’t have any out-of-pocket healthcare costs.

Medicaid vs. Medicare FAQs