Medicare vs Medicaid - What is the difference between medicare and medicaid?

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The biggest difference between Medicare and Medicaid is who’s eligible. Medicare is based on age or disability. Medicaid is based on income:

You’re eligible for Medicare if you’re 65 or over or have a qualifying disability, such as end-stage renal disease or ALS.
You’re eligible for Medicaid If your income is below a certain level depending on your state.

There are times when you might be eligible for both  Medicare and  Medicaid. One example is if you’re elderly, receive care in a nursing home and meet income requirements. However, most people have either coverage depending on their age and income.

Let’s take a look at the two programs, how they differ and who’s eligible for each.

Key Takeaways

Medicare is a federal health insurance program available to those over 65 and younger people with specific illnesses.
Medicaid is a federal/state health insurance program for people with low income.
You could be eligible for both Medicare and Medicaid if you meet age and income requirements for each program.
Annual enrollment for Medicare runs from Oct. 15 to Dec. 7. On the other hand, Medicaid doesn’t have an open enrollment period, you can sign up any time of the year.

What is Medicare?

Medicare is a federal health insurance program available for people when they reach 65. The program is also for younger people with specific illnesses, such as end-stage renal disease (ESRD) and amyotrophic lateral sclerosis (ALS), also called Lou Gehrig’s Disease.

As you near 65, Medicare will send you information about signing up. You can choose between Original Medicare (Parts A and B) with prescription drug coverage (Part D) or Medicare Advantage (Part C), which includes Part A and Part B (with some exceptions) and usually prescription drug coverage.

Here’s what Parts A, B, and D cover:

Part A (hospitals) — This coverage protects you if you’re hospitalized.
Part B (medical) — This covers doctor office visits, outpatient surgical procedures, ambulance services, lab work, mental health services, and more.
Part D (prescription drug coverage) — Offered by private companies, Part D helps pay for prescription drugs. Part D is optional and is available to those with Part A and/or B. Most Medicare Advantage (Part C) plans include prescription drug coverage, so you are not allowed to add a standalone Part D plan unless the MA plan you selected is a Private Fee-for-Service (PFFS) Medicare Advantage plan without drug coverage, a Medicare Medical Savings Account (MSA) plan, or a Medicare Cost plan.

Another part of Medicare that’s an option for beneficiaries with Parts A and B is Medigap. Medigap is a Medicare Supplement Insurance plan that helps you pay for your out-of-pocket costs for Medicare services.

You have many Medigap options that vary by premium, deductible and out-of-pocket costs.

A bonus to Medigap is that it may pay for foreign travel emergency care. If you travel to foreign countries and need emergency medical care, your Medicare won’t cover it, but some Medigap may policies up to 80% of the care costs.

Meanwhile, Medicare Advantage is increasingly becoming a popular choice for Medicare beneficiaries. More than 26 million Medicare beneficiaries had a Medicare Advantage plan in 2021.

“For 2022, the average Medicare beneficiary has access to 39 Medicare Advantage plans, more than double the number of plans per person in 2017, and the largest number of options available in more than a decade,” according to the Kaiser Family Foundation.

A benefit of Medicare Advantage is it offers everything under one plan:

Part C (Medicare Advantage) — Private insurance companies provide Medicare Advantage plans. These plans usually combine the coverage you’d get from Parts A, B and D. Some Medicare Advantage plans may also provide additional benefits such as vision and/or dental. The Centers for Medicare and Medicaid Services (CMS) rates each plan. CMS gives the plan a quality rating of up to five stars, so you can compare plans.

In previous years, one potential drawback has been that some rural areas don’t have many Medicare Advantage plan options.

What is Medicaid?

Medicaid is a federal/state health insurance program for low-income Americans. You have the same protections found in most employer-sponsored health plans.

Medicaid coverage can be provided by the state or a private insurance company. Medicaid managed care, which is offered by a private insurer, has become increasingly common.

Even if you enroll in a Medicaid plan offered by an insurance company, you need to sign up through your state.

Federal poverty level guidelines for the 48 Contiguous States and the District of Columbia
Persons in Household	Federal poverty level for continental U.S.	138% of federal poverty level
1	$14,580	$26,975
2	$19,720	$36,482
3	$24,860	$45,991
4	$30,000	$55,500

Source: Federal Register

Regardless of the plan, the federal government requires Medicaid plans cover hospitalizations, home health care, physician appointments, labs and x-rays, maternity and pediatric and preventive care. Medicaid also covers child dental care.

Typically, Medicaid is available to anyone with an income below 100% of the federal poverty level. Thirty-eight states have also expanded Medicaid eligibility. The Affordable Care Act allows states to expand Medicaid eligibility for up to 138% of the federal poverty level, so it’s easier for people in those states to get Medicaid.

Additionally, you may be eligible if your income is below 200% of the federal poverty level and you’re pregnant, disabled, elderly, or a parent or caregiver.

Disability can make you dual eligible

You could be eligible for Medicare and Medicaid if you’re on disability:

You’re eligible for Medicare if you’re on Social Security Disability insurance (SSDI). However, you have to receive two years’ worth of SSDI payments before becoming eligible.
You’re eligible for Medicaid if you’re approved for Supplemental Security Income (SSI). There’s no waiting period, so you can get Medicaid immediately.

What is the difference between Medicare and Medicaid

Medicare and Medicaid are public health insurance programs, but they differ in multiple ways. Here are some differences:

Eligibility

Eligibility is the major difference between Medicare and Medicaid.

Medicare is based on age or disability. Medicaid is based on income. You could be eligible for both if you meet income and age requirements for each program.

Medicare doesn’t have family plans

Medicare doesn’t provide family coverage. So, if you’re on Medicare and you have a dependent, that person can’t get on your plan.

Meanwhile, Medicaid covers dependents. In fact, the Children’s Health Insurance Program covers nearly seven million children.

Open enrollment

Medicare Annual Enrollment is from October 15 to December 7. Once you are enrolled in Medicare, you make changes to your plan during Annual Enrollment. You also have an initial enrollment period to sign up for a Medicare plan that starts three months before the month you turn 65, includes the month you turn 65 and ends three months after the month you turn 65. If your birthday is on the first of the month, your initial enrollment period starts four months before you turn 65 and ends two months after you turn 65 (with coverage starting the first day of the month before you turn 65).

Medicaid, on the other hand, doesn’t have an open enrollment period. Instead, you can sign up for a Medicaid plan any time of the year if you’re eligible.

Medicare gives many options

Medicare offers a wealth of choices. Once you decide whether you want a Medicare Advantage or Original Medicare plus Part D, you’re able to narrow your focus and select the best Medicare plan for you.

Premiums, deductibles and out-of-pocket costs can vary greatly, so make sure you compare.

Medicaid, on the other hand, will likely give you one or very few choices. That plan could be through the state, or it could be a managed care plan offered by a private insurer.

Differences aren’t just between Medicare and Medicaid. The different types of Medicare plans also vary. Here’s how Medicare and Medicaid plans compare:

Medicare vs. Medicaid

Type of plan	What is covered	Whoâs eligible	Average monthly premium	Out-of-pocket/ deductible
Medicare Part A	Hospitalization	People 65 and over and younger people with specific disabilities and people on SSDI	Most people pay $0	$1,632 annual deductible
Medicare Part B	Medical coverage	People 65 and over and younger people with specific disabilities and people on SSDI	$174.70	$240 annual deductible and then pay 20% of Part B costs*
Medicare Part C (Medicare Advantage)	Medicare Part A and Part B, including additional benefits	People with Part A and Part B	Varies by plan	Varies by plan. Once you pay the plan’s limit, the plan pays 100% of your covered health services for the rest of the calendar year.
Medicare Part D	Prescription drug coverage	People with Parts A and/or B	Varies by plan	Varies by plan
Medigap	Supplemental coverage to help pay for out-of-pocket costs associated with Original Medicare	People with Parts A and B	Varies by plan	Varies by plan
Medicaid	Varies by state	Based on income, which varies by state	Depends on income and can be as low as $0	Minimal if any

*For Part B premiums, people who file individual tax returns with income above $103,000 or joint tax returns more than $206,000 pay higher premiums. .*Copayments may be required for doctors’ visits, specialist visits, labs, etc.

How Medicaid works with Medicare

If you have both Medicare and Medicaid, you don’t have to worry about which one pays first. There’s a system called coordination of benefits (COB) that decides the insurer that pays first.

If you have both Medicare and Medicaid, Medicare pays for care first. Medicaid is considered the secondary payer. Just make sure to get care from providers who accept both plans. Otherwise, you could pay more if the provider doesn’t take both.

How to sign up for Medicare and Medicaid

You can sign up for Medicare by going to Medicare.gov.

One option is to just get Part A, which covers hospitalizations and is free to nearly all Americans 65 and over. The only people who pay premiums for Part A are those who didn’t pay 10 years’ worth of Medicare taxes.

So, if you decide to get Original Medicare or have other coverage and want to delay paying for Medicare, you could sign up for only Medicare Part A initially.

If you’re still working or on your spouse’s insurance, you may decide to stay on that plan for physician services and wait to sign up for Part B until later. You can do that, but beware that you may pay higher premiums once you sign up for Part B. CMS will charge you a 10% premium penalty for every 12 months that you don’t enroll in Part B unless you qualify for and enroll during a Special Enrollment Period. That penalty will get added to your premiums once you get Part B.

Here’s another reason to sign up for Medicare when you turn 65. You may have to wait until the General Enrollment Period if you don’t sign up when you become eligible.

Sources:

Kaiser Family Foundation (KFF). “ Medicare Advantage 2022 Spotlight: First Look.” Accessed August 2022.

Medicaid.gov. “April 2022 Medicaid & CHIP Enrollment Data Highlights.” Accessed August 2022.

Medicare.gov. “Costs.” Accessed October 2023.

Medicare.gov. “Avoid late enrollment penalties.” Accessed October 2023.

Medicare Advantage and Part D plans and benefits offered by the following carriers: Aetna Medicare, Anthem Blue Cross Blue Shield, Aspire Health Plan, Centene Corporation, Dean Health Plan, Devoted Health, GlobalHealth, Health Care Service Corporation, Cigna-HealthSpring, Humana, Molina Healthcare, Mutual of Omaha, Oscar Health Insurance, Premera Blue Cross, Medica Central Health Plan, SCAN Health Plan, Scott and White Health Plan now part of Baylor Scott & White Health, UnitedHealthcare

Disclaimer:

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Les Masterson

Contributor

Les, a former managing editor, insurance, at QuinStreet, has more than 20 years of experience in journalism. In his career, he has covered everything from health insurance to presidential politics.