What Is The Difference Between Medicare And Medicaid?
What is the difference between Medicare and Medicaid? Actually, both of these government programs have health coverage, but they do not serve the same populations and have different rules, which confuses a lot of people with it.
Even for healthcare coverage seekers, understanding these programs is important because their eligibility and benefits don’t come in the same package. The confusion could even lead some people to miss out on important healthcare coverage they qualify for.
While both programs help cover medical expenses, people should be aware of the main differences between Medicare vs Medicaid to determine which program best suits their needs, or if they may be eligible for both.
1. What is Medicare?
Medicare is a lifeline for many people, offering essential coverage regardless of age or income level.
1.1. The Medicare program
Medicare is the federal health insurance program that millions of Americans rely on. If you’re 65 or older, or if you have certain disabilities or conditions, Medicare is developed to help cover your health care costs.
Unlike private insurance, which varies by provider and plan, Medicare has standardized coverage across the country. No matter where you live, Medicare benefits follow the same rules.
So, where does the funding come from? Medicare is a system built to make health care more affordable. It’s funded by payroll taxes, congressional funding, and payments from people enrolled in the program: monthly premiums, deductibles, and coinsurance.
As of recent data from the Centers for Medicare & Medicaid Services (CMS), Medicare enrollment has reached 68.2 million beneficiaries. A significant majority, 89.4%, of those enrolled in Medicare are individuals aged 65 and older.
1.2. Who qualifies for Medicare?
Most people think of Medicare as something for seniors. They’re right. If you’re 65 or older, you’re typically eligible for Medicare. Did you know Medicare also provides coverage for younger individuals with specific health conditions? Let’s take a closer look:
People 65 and Older
You can apply for Medicare when you turn 65. Many people qualify for premium-free Part A (hospital insurance) if they or their spouse worked and paid Medicare taxes for at least 10 years. But even if you don’t meet that work history requirement, you can still get Medicare by paying a premium.
Younger People with Disabilities
Age isn’t the only qualifier. If you’ve been receiving Social Security Disability Insurance (SSDI) for at least 24 months, you automatically get Medicare. That’s a big relief for those who rely on health coverage but aren’t yet 65.
People with End-Stage Renal Disease (ESRD) or ALS (Lou Gehrig’s Disease)
Some serious health conditions make you eligible for Medicare at any age. If you have ESRD, or your kidneys have failed, and you need dialysis or a transplant—you can get Medicare. Similarly, if you have ALS, you’re automatically enrolled in Medicare as soon as your disability benefits begin.
1.3. What does Medicare cover?
Medicare is made up of different parts, each covering specific healthcare services.
Medicare Part A – Hospital Insurance
Part A helps cover inpatient care in hospitals, skilled nursing facilities (not long-term care), hospice care, and some home health care services. To receive these benefits, you must meet certain conditions.
Cost: Most people do not have to pay a monthly premium for Part A because they (or their spouse) paid Medicare taxes while working. However, if you don’t qualify for premium-free Part A, you may be able to purchase it.
Medicare Part B – Medical Insurance
Part B covers medically necessary services such as doctor visits, outpatient care, lab tests, screenings, durable medical equipment, and preventive services like vaccinations and cancer screenings. If a service is deemed necessary for diagnosis or treatment, Part B helps pay for it.
Cost: Part B requires a monthly premium. Most people pay the standard premium amount. If you don’t sign up when you first become eligible, you may have to pay a late enrollment penalty.
Medicare Part C – Medicare Advantage
Private companies approved by Medicare offer Medicare Advantage Plans (Part C). These plans include all the coverage of Part A and Part B and often provide additional benefits, such as vision, dental, hearing, and wellness programs. Many Medicare Advantage Plans (Part C) also provide prescription drug coverage (Part D).
Cost: Medicare pays private insurance companies a set amount for Medicare Advantage Plans, but each plan may have different out-of-pocket costs and rules for coverage. These costs can vary depending on the plan you choose.
Medicare Part D – Prescription Drug Coverage
Part D helps pay for prescription medications. Since 2006, all Medicare beneficiaries have had the option to enroll in a prescription drug plan, regardless of their income or health status.
Cost: The cost of Part D coverage varies by plan. Medicare beneficiaries can choose a prescription drug plan that fits their medication needs and budget.
As more people choose Medicare Advantage plans, the number of traditional Medicare beneficiaries without extra coverage dropped from 5.6 million in 2018 to 3.2 million in 2022. Those without supplemental coverage are often under 65 and have lower incomes than other traditional Medicare beneficiaries.
>>> Check more: Medicare vs Medi-Cal
2. What is Medicaid?
Medicaid is developed to help people access essential healthcare to maintain their well-being.
2.1. The Medicaid program
Medicaid is a health insurance program that provides coverage for certain low-income individuals and families who meet federal and state eligibility requirements. In October 2024, over 72 million were enrolled in Medicaid across the 50 states and Washington, D.C. that reported enrollment data.
Instead of giving money directly to individuals, Medicaid pays healthcare providers for covered services. Depending on state rules, some recipients may need to contribute a small co-payment for certain medical services.
>>> Check more: How to Get A Free Tablet With Medicaid
2.2. Who qualifies for Medicaid?
What is Medicaid eligibility? You might be eligible for free or low-cost Medicaid coverage depending on your income and family size.
Medicaid provides health coverage in every state to certain individuals and families, including children, parents, pregnant individuals, seniors with limited income, and people with disabilities. Some states, like California, have expanded coverage to include other low-income adults.
Medicaid is available to:
Pregnant Women
Those who think they may be pregnant, whether married or single, can apply. If enrolled at the time of birth, both the mother and child will receive coverage.
Children and Teenagers
Parents or guardians of children under 18 with limited income may apply. Some states extend coverage up to age 21. Teenagers living independently may also be eligible.
Aged, Blind, and/or Disabled Individuals
Those aged 65 or older, blind, or disabled with limited income and resources may qualify for Medicaid. Coverage is also available for those requiring nursing home care or hospice services.
Families and Individuals in Special Situations
Families with children under 18 who have limited income can apply, even if they are not receiving welfare benefits. Medicaid may also assist individuals facing high medical bills who meet specific eligibility requirements.
2.3. What does Medicaid cover?
Medicaid provides a range of healthcare services, including federally mandated benefits and optional benefits that vary by state.
Federally Mandated Benefits
All state Medicaid programs must cover essential medical services, including:
- Inpatient and outpatient hospital services
- Lab tests and X-rays
- Doctor visits
State-Determined Benefits
Each state may choose to offer additional benefits, such as:
- Prescription drugs
- Case management
- Physical therapy
- Occupational therapy
Dental Coverage
Children under 21: Medicaid must provide dental care as part of the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit. This includes:
- Pain and infection relief
- Tooth restoration
- Dental health maintenance
- Required dental referrals for examinations and treatments
Adults (21 and older): Dental coverage is optional. Most states offer emergency dental services, but fewer than half provide comprehensive dental care.
Ambulance and Medical Transportation Services:
- Emergency Ambulance Services: Medicaid covers ambulance transportation when provided by licensed providers using state-approved vehicles.
- Non-Emergency Ambulance Services: Covered if a doctor provides a statement confirming medical necessity.
3. Key Differences Between Medicare and Medicaid
| Feature | Medicare | Medicaid |
| Purpose | Federal health insurance program | State and federally funded assistance program |
| Eligibility | Individuals aged 65 and older and some with disabilities, regardless of income level | Individuals of all ages with eligible low-income |
| Funding | Funded by the federal government through payroll taxes, premiums, and general revenue | Jointly funded by federal and state governments. Each state sets its own guidelines |
| Coverage | Hospital care (Part A) Doctor visits and outpatient care (Part B) Prescription drugs (Part D) Optional private plans (Part C – Medicare Advantage) | Inpatient and outpatient medical services Lab work and X-rays Doctor visits Some states offer prescription drugs, physical therapy, and occupational therapy |
| Cost to Patients | Premiums, deductibles, and co-payments apply Some low-income beneficiaries may qualify for assistance | Typically free or low-cost Some states require small co-payments for certain services |
| Administration | Federally administered by the Centers for Medicare & Medicaid Services (CMS) | State-administered with federal oversight. Rules vary by state |
What is the difference between Medicare and Medicaid? The distinction between Medicare and Medicaid is that they serve different purposes,. Therefore, ruling if one is better than the other is entirely aimed at individual situations concerning eligibility and healthcare needs.
Medicare
Medicare is a federal health insurance program for those aged 65 and older, as well as some individuals under 65 with certain disabilities or conditions.
The program is managed by the Centers for Medicare & Medicaid Services and is funded through trust funds held by the U.S. Treasury, with contributions from payroll taxes and other government-authorized funds.
Medicare beneficiaries share costs through monthly premiums, deductibles, and coinsurance.
Medicaid
Medicaid is a joint federal and state program that assists individuals with limited income and resources in covering medical expenses.
While the federal government sets general rules, each state administers its own Medicaid program, resulting in variations in eligibility and benefits.
Medicaid covers services not typically included in Medicare, such as nursing home care and personal care services. Most Medicaid recipients pay little to nothing for covered medical expenses, although some may have small co-payments for certain services.
>>> Read more: Medicare Free Cell Phone: How Seniors Can Get Free Service & Phones
4. Can You Have Both Medicare and Medicaid?
Individuals who are 65 or older and meet their state’s income and resource requirements for Medicaid can qualify for both Medicare and Medicaid. These individuals are known as dual eligibles and benefit from comprehensive healthcare coverage at a lower cost.
In this case, Medicare is the primary payer for medical services, covering hospital stays, doctor visits, and medical treatments. Medicaid helps to pay for costs that Medicare does not cover, such as copays, deductibles, and additional services like long-term care.
Conclusion
When exploring healthcare coverage, people should consider several factors to determine whether Medicare vs Medicaid, or both programs best meet their needs.
So, what is the difference between Medicare and Medicaid? There are advantages and disadvantages to each program. Individuals looking for broad access to healthcare providers and standardized benefits may find it better to go with Medicare, while those needing additional financial assistance and state-specific support might benefit more from Medicaid.
