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Medicare and Medicaid have been around for almost 60 years, but it's still easy to confuse these similar-sounding, government-backed health care programs. However, their costs and services differ, as can the makeup of their beneficiaries (with some exceptions).
In this article, we'll walk through what Medicare and Medicaid are, who's eligible for their services and what they cover when it comes to your health.
Key Takeaways
- Medicare and Medicaid are both health insurance programs, but they tend to serve different populations.
- Medicare is primarily geared toward those over age 65, plus some people under 65 with certain disabilities.
- Medicaid, on the other hand, is for low-income individuals.
- Some people can qualify for both Medicare and Medicaid and receive benefits from both. These beneficiaries are known as “dual eligibles.”
Both Medicare and Medicaid offer health care coverage, but they do so in different ways:
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Medicare is designed primarily to help older Americans cover the costs of medical care.
Those age 65 and older are eligible for Medicare, as are those under that age threshold who have disabilities or specific diseases (as mentioned above).
Medicare has two main parts:
Medicare Part A and Part B, known as "original Medicare," offer the same coverage and are priced the same across the United States. They are overseen by the Centers for Medicare and Medicaid Services, an agency of the federal government.
Other parts include:
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Medicaid is a government assistance program administered by both the federal and state governments. As such, rules of coverage and cost vary from one state to another.
Although each state can determine eligibility guidelines for Medicaid, low-income families, pregnant women, children and people receiving Supplemental Security Income – money provided to individuals who are disabled or blind or who meet specific financial guidelines – are always covered.
According to CMS, patients with Medicaid usually pay none of the costs for covered medical expenses, or they may pay a small copayment. Since the enactment of the Affordable Care Act, states have been allowed to expand their Medicaid programs to cover all people with household incomes below a certain level. Some states have done so, while others have not.
Whether you qualify for Medicaid coverage depends partly on whether your state has expanded its program. CMS says that in states that have expanded Medicaid coverage, you can qualify for Medicaid if your household income is below 133% (effectively 138% per current calculations) of the federal poverty level. Some states, however, may use a different income limit.
Coverage can vary by state, but Medicaid generally covers areas such as:
To apply for Medicaid, you'll need to work through your state's Medicaid agency. Medicaid.gov provides links to each state's office.
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The short answer: Yes.
About 20% of Medicare beneficiaries qualify for both Medicare and Medicaid. These individuals are called "dual eligibles" and are afforded benefits from both programs and lower out-of-pocket costs.
Medicare acts as your primary insurer, notes Diane Omdahl, Wisconsin-based president and founder of 65 Incorporated, a Medicare consulting firm. If you also qualify for Medicaid, it will be your secondary payer.
"It works like a supplement plan, picking up the costs that Medicare Parts A and B don't cover," she explains.
However, she recommends talking to a consultant or a representative of your State Health Insurance Assistance Program, known as SHIP, for guidance and to ensure you're getting the benefits you need.
Older adults have a seven-month window (three months before your 65th birthday, the month of your birthday and three months after), known as the initial enrollment period, to apply for Medicare. If you don't enroll within this window, you may have to pay a late enrollment penalty.
Once you've enrolled in Medicare, you can make changes to your coverage during the annual enrollment period, October 15 through December 7. If you've enrolled in Medicare but need to make changes outside of the enrollment period, you may qualify for a special enrollment period (January 1 through March 31).
Medicare beneficiaries pay a portion of their medical costs through deductibles for hospitalization and other services, in addition to monthly premiums for coverage. Most people on Medicare don't have to pay a premium for Part A, but everyone must pay a premium for Part B. In 2024, the standard monthly Part B premium is $174.70, and the annual Part B deductible is $240.
Medicare can be complicated and challenging to navigate for some people, particularly given the many coverage options. It can be a confusing process. Be sure to compare plans, benefits and costs. The cheapest premium doesn’t always result in the lowest total cost. Make sure to enter your prescriptions to see how your costs will vary by plan and look closely at copayments and deductibles. If you are new to Medicare, you first need to enroll by taking one of the following actions:
Original Medicare (Parts A and B) does not cover most dental services, such as routine dental care or oral procedures. Certain dental-related procedures are covered under Medicare Part A and Part B as long as it is integral to another Medicare-covered procedure or service. Examples include:
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