Medicare vs. Medicaid: How They Differ

Medicare and Medicaid are very different programs the U.S. government created to cover the medical bills of two distinct groups of Americans.

Medicare is a health insurance program that mostly serves people over the age of 65. Medicaid is an assistance program that mostly serves low-income people of any age.

To qualify for Medicaid, you usually need to be below a certain income level. Your income level usually doesn’t impact whether or not you qualify for Medicare.

The federal government runs Medicare. State and local governments run Medicaid within federal guidelines.

These are just the most basic differences between the Medicare and Medicaid programs. Keep reading to learn more about:

• Differences in Medicare and Medicaid eligibility
• Enrollment differences between Medicare and Medicaid
• Medicare vs. Medicaid benefits and coverage
• Differences between the costs of Medicare and Medicaid

Eligibility differences between Medicare and Medicaid

One of the biggest differences between Medicaid and Medicare is who qualifies for coverage. Here’s all you need to know about how Medicare and Medicaid eligibility differs.

Medicare eligibility

Who qualifies for Medicare? People who are 65 or older qualify for Medicare as long as they’re U.S. citizens or lawful permanent residents.

Some people under 65 also qualify for Medicare. A few examples are those:

• Who are permanently disabled and have received disability benefits for two years or more
• With amyotrophic lateral sclerosis (ALS), or Lou Gehrig’s disease
• With end-stage renal disease (ESRD)
• Who are at least 62 years old and who have a spouse receiving Medicare

Medicaid eligibility

As for who qualifies for Medicaid, that differs from state to state, but it always provides health coverage to some:

• Low-income people (including children)
• People with disabilities
• Pregnant women
• Seniors

Many states extend Medicaid coverage beyond what federal law requires. For example, most have expanded their programs to cover nearly all low-income residents. Other state Medicaid programs cover people receiving home- and community-based services and children in foster care.

To put into perspective just how many people qualify for Medicaid, more than 72.5 million Americans currently benefit from its assistance. Medicare, on the other hand, covers about 60 million people.

Can you have both Medicare and Medicaid?

Yes, some people qualify for Medicare and Medicaid. In fact, the federal government estimates 12 million Americans have “dual eligibility” and get both kinds of health coverage.

To qualify for both Medicare and Medicaid, you usually either need to be a:

• Low-income senior (over the age of 65)
• Person of any age with a disability

If you have Medicare and Medicaid coverage, Medicaid may help with your Medicare premiums and out-of-pocket expenses, like deductibles and copays. It should cover some other medical costs, too, such as nursing facility care beyond Medicare’s 100-day limit.

Medicare pays first for services that both programs cover, by the way. Medicaid then fills in the rest — up to your state’s payment limit.

Medicare vs. Medicaid enrollment

Two more important differences between Medicare and Medicaid are how and when you enroll in them.

Medicare enrollment

If you want Medicare coverage, you have to sign up during certain enrollment periods.

Most people first become eligible for Original Medicare, which is another name for Medicare Part A and Part B, during something called the initial enrollment period, or IEP. This seven-month window of time includes:

• The three months before you turn 65
• The month you turn 65
• The three months after you turn 65

People who miss signing up for Medicare Parts A and B — or for a Medicare Advantage plan — during the IEP have to wait until the next general enrollment period rolls around to do so. The Medicare general enrollment period goes from Jan. 1 to March 31 every year.

Another way to get Medicare after the IEP is to qualify for a special enrollment period.

Will you start receiving Social Security or Railroad Retirement Board (RRB) benefits at least four months before your 65th birthday? If so, you don’t need to worry about the dates above. You'll automatically get Original Medicare.

If you want Medicare but you don’t get Social Security or RRB benefits four months before you turn 65, you can apply online or at a local Social Security office.

Most people enroll in Medicare prescription drug coverage during the enrollment periods detailed above, too, if they decide to enroll in prescription drug coverage at all.

You can choose not to enroll in a prescription drug plan when you first become eligible for it. If you do that, though, you’ll pay a late fee if you change your mind in the future. You won’t just pay it once, either. You’ll continue to pay this monthly fine as long as you have drug coverage. The same happens if you don’t get Part B coverage right away.

Medicaid enrollment

You don’t have to worry about any dates or deadlines when signing up for Medicaid.

You do have to apply and qualify for this health coverage, though. And you qualify for Medicaid based on your income.

These income requirements differ from state to state. To find out what your state requires, contact your local Medicaid agency.

You’ll also contact your state Medicaid agency to apply for this kind of coverage. Another way to apply for Medicaid is through the health insurance marketplace set up by the Affordable Care Act, or Obamacare.

Differences in Medicare and Medicaid benefits and coverage

Both Medicare and Medicaid cover a lot of medical procedures and costs. They do so in different ways and to different extents, though.

Medicare benefits

Medicare coverage is a lot more complicated than Medicaid coverage. Medicare is made up of four main parts: A, B, C and D.

Part A

Medicare Part A helps pay for hospital costs, first and foremost.

Specifically, it pays for inpatient hospital care. It also pays for:

• Skilled nursing facility care
• Some home health services
• Hospice care

Part B

Medicare Part B covers medically necessary procedures, as well as preventive care. That means it pays for:

• Doctor visits
• Lab tests
• X-rays
• Durable medical equipment

Part B also covers some:

• Ambulance services
• Outpatient hospital care
• Clinical research
• Mental health services

Part C

Medicare Part C also is known as Medicare Advantage. You get Medicare Advantage or Part C plans through private insurance companies. They provide the same coverage Part A and Part B provide. Sometimes they cover care Original Medicare doesn’t, like dental work, hearing tests and prescription drugs.

Part D

Medicare Part D covers prescription drugs. Not all Part D plans cover all drugs, though. Some plans may cover the medications you take, while other plans won't. Because of this, it's important to review a plan's list of covered drugs, or "formulary,” before you join it.

Medicaid benefits

Medicaid coverage is more straightforward than Medicare coverage, but that doesn’t mean it’s always easy to understand. That’s because although all state Medicaid programs have to provide certain benefits, they can choose whether or not to provide others.

Here are some of the Medicaid benefits every state must offer:

• Inpatient and outpatient hospital services
• Doctor visits
• Lab tests
• X-rays
• Family planning services
• Home health services
• Nursing facility services

And here are some of the optional Medicaid benefits states can offer:

• Chiropractic care
• Dental care
• Eyeglasses
• Prescription drugs
• Physical therapy
• Speech, hearing and language disorder services
• Other diagnostic, screening, preventive and rehabilitative services

Medicare and Medicaid cost differences

Another key difference between Medicare and Medicaid is how much they cost.

The main difference between the two programs is people who get Medicare pay a larger part of the costs for covered procedures and services than Medicaid recipients do.

In fact, people who get Medicaid usually pay no part of the costs for covered medical care. Sometimes they’re charged a small copay, but that’s about it.

Medicare recipients, though, often have to pay premiums, deductibles and other out-of-pocket costs for coverage. And not only that, but they often pay them for multiple Medicare “parts.” For example:

• Most Americans don't pay a premium for Part A. Those who do pay up to $437 each month. 
• The majority do pay a premium for Medicare Part B. The standard amount is $135.50 per month, though it could be higher depending on your income. 
• Medicare Part D recipients usually pay monthly premiums, too. How much they pay depends on the drug plan they choose.

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