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What’s the Difference Between Medicare and Medicaid?

Combined, Medicaid and Medicare programs (alongside the Children’s Health Insurance Program, or “CHIP”) cover over 135 million Americans. These government health insurance programs can help beneficiaries cover doctor visits, dental services, outpatient care, and more. 

Despite their similar purpose and names, Medicaid and Medicare are different programs. Medicare covers some things Medicaid might not, and vice versa. Below, we explore the difference between each program to help you decide which is right for you.

Key Takeaways

  • Medicare and Medicaid are government programs meant to make medical care more affordable and approachable for individuals and families meeting certain requirements.
  • Medicare is a federal health insurance program meant for people 65 or older and some others, including those with certain qualifying conditions or disabilities.
  • Medicaid is a state and federal medical insurance program aimed at covering medical costs for low-income individuals and families. State governments run it, though overarching federal regulations limit how states can shape the program.
  • While it is possible to be eligible for both programs, you must apply for each separately and ensure you meet the right qualifications to receive coverage.

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What’s the Difference Between Medicare and Medicaid?

While Medicare and Medicaid sound alike and offer similar benefits, they are two distinct programs with unique benefits and limitations.

Medicare is a federal health insurance program designed for people 65 or older and some younger people with certain conditions or disabilities. Unlike Medicaid, Medicare is an exclusively federal program with set standards for all participants. That means Medicare coverage is consistent across states.

In contrast, Medicaid is a joint federal and state program meant to help some people with limited income and resources cover medical costs. The federal government has created some general rules that all state Medicaid programs follow, but each state is responsible for running its own program. As a result, eligibility requirements and Medicaid benefits vary from state to state.

Aside from their scope and limitations, these two programs differ in another key way: how costs are covered. Those with Medicare must still pay part of their medical costs through monthly premiums, deductibles and coinsurance. However, those with Medicaid usually don’t need to pay more than a small co-payment for covered expenses.

Who Is Eligible for Medicare?

Most people eligible for Medicare are 65 or older, but this isn’t the only population that can benefit from the program. Others who may be eligible for Medicare include:

  • People under 65 with qualifying disabilities
  • People under 65 who have received Social Security Disability Insurance (SSDI) for at least 24 months
  • Individuals of any age living with End-Stage Renal Disease (ESRD), including those needing regular dialysis for kidney failure or a kidney transplant
  • Individuals of any age living with Amyotrophic Lateral Sclerosis (ALS) who have begun receiving SSDI benefits

Even if you know you’re eligible for Medicare, you still need to take the steps necessary to enroll in the program. There may be penalties if you miss the enrollment period for some types of Medicare. Coverage details can also vary depending on which parts of Medicare you enroll in. Options include:

  • Original Medicare: Consists of Medicare Part A (hospital insurance) and Medicare Part B (medical insurance)
  • Medicare Advantage: Includes Medicare Part C (Medicare Advantage Plan)
  • Medicare Prescription Drug Coverage: Includes Medicare Part D (drug coverage)

Different options come with different benefits and limitations. It’s best to explore all of your options before making a final decision on where to apply.

While there are no income limits for receiving Medicare benefits – i.e., people with any income level may be eligible – the amount beneficiaries pay out-of-pocket can vary.

Medicare OptionPremiumDeductibleCopaymentsCoinsurance
Part A$0 (for most people)$1,600Starts at $0 n/a
Part B$164.90+ monthly$226Varies20% of the cost of each Medicare-covered service
Part C VariesVariesVariesVaries
Part DVaries based on incomeVariesVariesVaries

You can visit Medicare.Gov to learn more about whether you might be eligible for coverage.

Who Is Eligible for Medicaid?

Since Medicaid is primarily designed for low-income beneficiaries, financial status is usually the primary factor considered when an individual applies. Each state is responsible for setting income thresholds for Medicaid eligibility in different groups based on the federal poverty level (FPL).

Other factors that might influence Medicaid eligibility include:

  • Disability status; individuals with certain disabilities may be eligible for coverage
  • Family size
  • Pregnancy status
  • Age; children and older adults may have different eligibility requirements than other groups

Additionally, some states may consider things like citizenship or immigration status when determining eligibility. Many have expanded their Medicaid programs to cover all adults living with income below a certain level, as per the Affordable Care Act, to make coverage more accessible.

However, even if a person’s income falls below what’s required to be eligible, they may still not be able to receive Medicaid coverage. Possessing other assets, like property or savings, can prevent some individuals from qualifying.

You can visit Medicaid.Gov to determine whether you might be eligible.

Can You Be Enrolled in Both Medicare and Medicaid?

Yes, you can enroll in Medicare and Medicaid simultaneously if you are considered “dual eligible.” Those with dual eligibility meet the requirements for both programs and can have most of their healthcare costs covered.

Since Medicare is a federal program and Medicaid is a state and federal program, it’s possible to enroll in both. Individuals with low income and disabilities, conditions, or those who have reached 65 can take advantage of each program.

Medicare is the primary payer for healthcare costs, which means it pays first. Anything left over can be covered by Medicaid, depending on state regulations, leaving little to no financial burden on the recipient.

This setup can allow participants to cover Medicare premiums and other out-of-pocket costs (including deductibles, copayments, etc.) with funds from the Medicaid program. Additionally, Medicaid covers some services, such as long-term care in a nursing facility and home care services, not covered by Medicare. As a result, dual eligibility offers comprehensive healthcare coverage that can be difficult for beneficiaries to find elsewhere.

While dual eligibility may be an ideal option, it’s not available to everyone. Qualifying for both programs can be challenging, and state laws or coverage can vary. A healthcare professional or advisor can help you understand specific eligibility requirements that may apply to you.

Questions Others Are Asking

Do you automatically get Medicaid with Social Security?

Unfortunately, you do not automatically receive Medicaid coverage with Social Security benefits. While both Medicaid and Social Security are government programs, they have their own eligibility requirements and functions. However, many states offer Medicaid eligibility to those receiving Social Security benefits, meaning that these individuals don’t need to meet other requirements to take advantage of both programs.

Medicaid is a state and federal health insurance program meant to help low-income individuals and families receive coverage for medical expenses. Eligibility for Medicaid is based on income levels and other qualifications (having a disability, being pregnant, etc.).

On the other hand, Social Security is available to those who have paid into the Social Security system throughout their work history. This is usually done via payroll taxes. Once an individual reaches a certain age, or if they have a qualifying disability, they can begin to receive Social Security benefits like retirement income, survivor benefits, and more.

So, someone can have dual eligibility for Medicaid and Social Security, but the two programs are different. Receiving Social Security doesn’t automatically mean you’re eligible for Medicaid, and vice versa. Still, if you live in a state that offers Medicaid eligibility to Social Security recipients, you can likely access both programs without taking extra steps.

Is Medicaid free?

Medicaid aims to provide free or low-cost medical coverage for individuals and families with low income, disabilities, children, and more. Whether or not the program and its coverage are free depends on the circumstances and the state in question.

Some states may charge premiums or copayments for some covered services or groups. However, federal laws prevent states from creating rules that make paying for services too expensive for Medicaid recipients. Also, Medicaid can cover some Medicare costs beneficiaries are expected to pay, making some services more affordable for those with dual eligibility.

Even if Medicaid services aren’t completely free, the program is designed to be a low-cost option for individuals and families to cover important medical expenses. For many, it’s almost certainly more cost-effective than working with private insurance companies.

Is Medicaid federal or state-run?

Medicaid is both a federal program and a state-run program. The federal government establishes guiding rules and overarching requirements that states use to create their own programs. States are responsible for the regular operation of Medicaid in their jurisdiction, meaning that specific rules and coverage options vary.

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