Medicaid vs. Medicare: Understanding the Differences (2022)

Both Medicare and Medicaid are government-funded health insurance programs, but both have varying eligibility requirements and coverage. Medicare is for those 65 and older or for individuals with disabilities, while Medicaid is for those who fall under specified income thresholds.

Review and understand the difference between Medicare and Medicaid to know whether you qualify for either.

Advertising & Editorial Disclosure
Last Updated: 10/20/2022
Edited By     |  
Written By     |  

Medicare and Medicaid are similar in that they are government-funded health programs, but there are key differences in eligibility, coverage and costs. For instance, Medicare has an age qualifier, requiring individuals to be 65 or older. On the other hand, Medicaid has an income qualifier, and individuals must fall under a certain income.

Knowing the difference between Medicaid and Medicare will allow you to evaluate your eligibility and understand the available resources.

Key Takeaways

seniors

Medicare is a government program that provides health insurance to people 65 and older or people with disabilities.

goodCredit

Medicaid is a government-funded health insurance program that covers those who earn up to 138% of the federal poverty level.

money2

The out-of-pocket cost of Medicaid is often free for covered services. The costs for services under Medicare will vary depending on the coverage.

What Is the Difference Between Medicare & Medicaid?

There are more differences between Medicare and Medicaid than just eligibility requirements. Both programs differ in terms of governing powers, enrollment, coverage and costs.

Review the Medicare vs. Medicaid chart below to understand the differences between both programs and find what suits you best.

TABLE COMPARING MEDICARE AND MEDICAID
  • Characteristic
    Medicare
    Medicaid
  • Administration

    • Federal government
    • Federal guidelines
    • State management
  • Eligibility

    • 65 or older
    • Qualifying disabilities
    • Low income
    • Limits vary by state
  • Enrollment

    • Open enrollment
    • Special qualifying circumstances
    • Anytime, no special enrollment
      period
  • Coverage

    • Part A: Hospitals
    • Part B: Doctors procedures
    • Part C: Medicare Advantage
    • Part D: Prescriptions
    • Preventative medicine
    • Hospitals
    • Doctor visits
    • Prescriptions
    • Vision/Dental (sometimes)
    • Long term care
  • Costs

    • Varies by plan
    • Low to no cost
  • Duration

    • 65+ for lifetime
    • Until income improves

Medicare & Medicaid Eligibility

While Medicare and Medicaid both have differing basic qualifiers, with one being age or disability and the other being income, there are more factors to consider. Recognizing the nuances of both programs’ eligibility requirements can help you determine what suits your situation best and what to expect prior to applying.

Medicare Eligibility

Medicare policies are available to those older than 65. This means that if you retire earlier, for instance, at age 60, you will not benefit from Medicare right away. The earliest you can sign up for Medicare is three months before you turn 65.

However, there are exceptions for those under 65. Individuals with amyotrophic lateral sclerosis (ALS) or end-stage renal disease (ESRD) can apply for Medicare regardless of age.

tip icon
CAN YOU QUALIFY FOR BOTH MEDICARE AND MEDICAID?

If you are receiving Medicaid and turn 65, you may also qualify for Medicare and have dual eligibility. Medicare will pay for costs first, then Medicaid supplements your policy. This supplement can mean partially- or fully-covered premiums, copays or deductibles, which can vary depending on your income.

Medicaid Eligibility

Compared to Medicare’s very straightforward eligibility requirements, Medicaid has some requirements that vary from state to state. Generally, however, Medicaid has a list of eligible groups that should be covered, including low-income families, qualified pregnant women and children and individuals who receive Supplemental Security Income (SSI).

Medicaid eligibility depends on factors like your state, income, household size and whether you have a disability. Income thresholds depend on your state, but most states have adopted the Medicaid expansion, which increases the income requirement to include those earning up to 138% of the federal poverty level.

For instance, in the lower 48 states, 138% of the federal poverty level equates to $13,590 annual income for individuals or $27,750 for a family of four. In Alaska, this equates to $16,990 annually for individuals or $34,690 for a family of four.

To check your state-specific information on benefits, go to Medicaid.gov and choose your state.

Medicaid Expansion Status by State

Medicare vs. Medicaid: Coverage & Costs

Medicare and Medicaid have differing out-of-pocket costs, which can affect which program suits you best. Since Medicaid is designed for low-income individuals, the barrier to entry is lower. Medicare costs may be higher as it is designed for seniors who likely have more medical needs.

Medicare Coverage & Costs

With Medicare, there are two coverage types: Original Medicare and a Medicare Advantage plan. Original Medicare, also known as Part A and Part B, includes hospital and medical insurance from the government. Medicare Part D covers medications and is optional. However, there are many gaps in Original Medicare, as it does not cover preventative services, dental, vision and more.

Medicare Advantage plans also referred to as Part C, are offered by private companies and bundle Part A, B and sometimes D, along with extra benefits that can include vision, dental or hearing coverage. It acts more like a traditional health plan but comes with coinsurance, deductibles and copays, and there are many top providers of Medicare Advantage plans. If you are eligible for Original Medicare, you will also be eligible for Medicare Advantage.

Understanding Medicare Parts
  • Medicare Part
    Coverage
    Cost
  • Part A

    • Hospitalization
    • Skilled Nursing Facility
    • Hospice
    • Home Health Care
    • Premiums are often free but can cost up to
      $499/month
    • $1,556 deductible for each benefit period
    • Inpatient coinsurance is tiered based on
      days
  • Part B

    • Doctor Visits
    • Outpatient Care
    • Medical Equipment
    • Preventative Services
    • Home Health Care
    • $170.10 Standard Premium (increases
      with income)
    • $233 per year deductible
  • Part C

    • Medicare Advantage Plans
    • Vary by plan
    • Average $19 per month (2022)
  • Part D

    • Prescription Drug Coverage
    • Premiums and costs vary

The costs for Part A can be free under certain circumstances, such as if:

  • You or your spouse has paid Medicare taxes for 10 or more years
  • You or your spouse have Medicare-covered government employment
  • You are eligible for Social Security or Railroad Benefits but have not filed for them
  • You are receiving retirement benefits from Social Security or the Railroad Retirement Board

Additionally, Medicare can be free for those under 65 if:

  • You are eligible for Social Security Benefits or Railroad Benefits for two years
  • You are a kidney dialysis or transplant patient

There are more parts to Medicare aside from parts A, B, C and D — but the aforementioned plans are the main parts.

Medicaid Benefits & Costs

Compared to Medicare, the costs and coverage under Medicaid are straightforward. If you have Medicaid, you will pay nothing for covered services. Children can also benefit from a program related to Medicaid known as the Children’s Health Insurance Program (CHIP).

tip icon
MANDATORY MEDICAID BENEFITS:
  • Inpatient hospital services
  • Outpatient hospital services
  • EPSDT: Early and periodic screening, diagnostic and treatment services
  • Nursing facility services
  • Home health services
  • Physician services
  • Rural health clinic services
  • Federally qualified health center services
  • Laboratory and X-ray services
  • Family planning services
  • Nurse midwife services
  • Certified pediatric and family nurse practitioner services
  • Freestanding birth center services (when licensed or otherwise recognized by the state)
  • Transportation to medical care
  • Tobacco cessation counseling for pregnant women

These benefits are federally-mandated, which means all states must include these benefits. However, states are also free to add more benefits beyond these requirements. Check with your state’s Medicaid agency for a list of benefits to ensure you can maximize your coverage.

Insurance Rates

Compare Health Insurance Rates

Ensure you are getting the best rate for your insurance. Compare quotes from the top insurance companies.

widget-location-pin

Medicaid vs. Medicare FAQs

Knowing the difference between Medicare and Medicaid is essential to make the right decision — especially for those eligible for both.

About the Author


expert-profile

Mark Fitzpatrick is a senior content manager with MoneyGeek specializing in insurance. Mark has years of experience analyzing the insurance market and creating original research and content. He graduated from Boston College with a Bachelor of Arts and Johns Hopkins University with a Master of Arts.


sources