Medicare vs. Medicaid: How are they different?

Medicare and Medicaid sound similar, and both provide health coverage for doctors’ visits, medications, and procedures.

However, the eligibility requirements differ for these two programs. Some individuals may qualify for both Medicaid and Medicare.

Medicare is also primarily a federal program, while each state runs its own Medicaid program.

By knowing the differences between Medicare and Medicaid, including your eligibility for either or both, you can evaluate all your options for making healthcare more affordable.

Key differences between Medicare and Medicaid

Medicare is a federal government-funded insurance program for Americans ages 65 years and older, as well as younger people with certain chronic disabilities and health conditions.

Medicaid is funded by both the federal and state governments to provide low cost or free healthcare to adults and families living in low income households.

There are federal requirements that all Medicaid programs must follow, but each state’s Medicaid coverage may vary.

Medicare is funded by a combination of the federal budget and payroll taxes. Federal guidelines mandate how much a doctor or hospital can charge for care, as well as what types of medical expenses Medicare covers. This means Medicare coverage is the same regardless of the state you live in.

For more information about Medicare and Medicaid, visit the Centers for Medicare & Medicaid Services (CMS) website.

Side-by-side comparison of Medicare vs. Medicaid

More about Medicare

In 2021, more than 62 million people participated in Medicare, according to KFF.

Eligibility

Typically, if you are over 65 years old and a citizen of the United States, you’re eligible to enroll in Medicare.

Your premiums and Medicare plan will depend on how many years of Medicare taxes you’ve paid throughout your working life.

However, if you are younger than 65 years old and have any of the following health conditions, you may be eligible for Medicare regardless of your Medicare tax contributions:

• a disability
• amyotrophic lateral sclerosis (ALS) disease
• late-stage renal disease after you receive 3 months of regular dialysis or a kidney transplant

You may also qualify for Medicare if you’re entitled to or already receiving retirement or disability benefits.

How to enroll

If you already receive benefits from the Social Security or Railroad Retirement Board, you will automatically receive Medicare coverage for hospital insurance (Part A) and medical insurance (Part B) from the day you turn age 65 years.

If you are under 65 years old, have a disability, and have been entitled to Social Security or Railroad Retirement Board benefits for 24 months, you will also automatically receive Medicare Part A and Part B.

You will receive your Medicare card about 3 months before your birthday or on the 25th month of your disability benefit entitlement. You do not need to do anything yourself.

If you do not receive these benefits as expected, you can contact Medicare by calling 1-800-772-1213.

What it covers

Medicare comes as two primary packages, depending on how much you want to pay for the coverage and how much choice you would like.

Original Medicare is the federal government-funded coverage that includes:

• Part A: inpatient hospital services, including hospital visits, hospice care, some at-home care services, and some nursing facility care
• Part B: outpatient medical services such as emergency room treatment and transport, as well as preventive and diagnostic services and treatment for chronic health conditions

Medicare Advantage, or Part C, is another Medicare insurance option that allows you more coverage options.

Medicare Part D provides prescription drug coverage.

How much it costs

Medicare may require monthly premiums. How much you will pay will depend on your circumstances.

Your costs may look like this:

• Part A: $0 for the majority of people. If you do not qualify for free Part A, premiums start at $278 in 2024. The deductible will be $1,632 in 2024.

• Part B: To sign up for Part A, you must sign up for Part B. Part B premiums in 2024 start at $174.70, with the deductible at $240. You may qualify for premium-free or lower-premium Medicare Part B if you’re eligible for and enrolled in the Medicare Savings Program.

• Medicare Advantage: Plan premiums and deductibles can start at $0, but there may be out-of-pocket costs for some services, such as prescription medications. It’s important to note that beneficiaries are still responsible for paying their Medicare Part B premium.

If you need help covering the cost of medications, the free Optum Perks Discount Card could help you save up to 80% on prescription drugs. Follow the links on drug names for savings on that medication, or search for a specific drug here.

More about Medicaid

As of June 2023, more than 85 million people were enrolled in Medicaid.

Eligibility

Whether you are eligible for Medicaid depends on your income, and this threshold varies depending on your state of residence. States calculate eligibility as a percentage of the federal poverty level, which is $24,860 for a family of three or $14,580 for an individual adult for 2023.

Other factors that might make you eligible for Medicaid include the following:

• You have a disability.
• You are age 18 years or younger or older than age 65 years.
• You are or may be pregnant.
• You or a loved one requires nursing home care.
• You were in a foster child program.

The Healthcare.gov site provides a tool to let you check your eligibility for Medicaid and other support programs for individuals and families living in low income households. You can check your eligibility and specific available benefits for your state.

There are also separate Medicaid programs that provide coverage for specific types of care, including emergency services and family planning.

How to enroll

To apply for Medicaid, find your state’s Medicaid agency.

You will need to create an account and then fill out an application with the Health Insurance Marketplace, which will inform you whether you or anyone in your household is eligible to receive Medicaid.

Your state agency will then contact you about further steps for enrollment.

What it covers

The specific coverage Medicaid provides varies between states. If you’re unsure whether your state’s agency covers the care you need, contact a Medicaid caseworker who can gather more information about your needs and advise you on next steps.

The following benefits are currently included in every state:

• inpatient hospital services
• outpatient hospital services
• hospice and nursing home services
• family planning such as birth control
• healthcare-related transport

How much it costs

Medicaid covers the costs of medical and hospital services. However, certain services may require a small contribution in the form of a copayment. This will depend on your income and individual medical needs.

The out-of-pocket maximums may range from $4 for doctor appointments to $75 for in-hospital procedures.

Can you have Medicare and Medicaid at the same time?

It is possible to be dually eligible for both Medicare and Medicaid. Medicaid may cover the care and medications Medicare does not.

If you think you may qualify for both, apply for both.

Can you use Optum Perks with Medicare or Medicaid?

You cannot use your Optum Perks discount with Medicare or Medicaid. However, the discounted price may be lower than your cost with Medicare or Medicaid benefits.

Summary

Medicaid and Medicare are government-funded U.S. healthcare programs that provide healthcare coverage for eligible participants.

Medicaid eligibility depends mainly on your income, whereas Medicare typically covers U.S. citizens over 65 years old. Younger people with a disability or chronic health condition may also qualify for Medicare.

The CMS website can provide detailed information about the benefits you may be eligible to receive under each program and instructions on how to apply.