Medicaid vs. Medicare
Two programs with similar names but fundamentally different purposes — here's how to tell them apart and what each one covers.
Two different programs, often confused
Medicaid and Medicare were both created in 1965 under the Social Security Act and both involve federal funding — which is part of why they are so frequently confused. Their names sound nearly identical, and both programs provide health coverage to millions of Americans. But they serve different populations, have different funding structures, and are administered in fundamentally different ways.
The core distinction: Medicaid is a needs-based program administered jointly by the federal government and individual states. It provides coverage primarily to people with low incomes and limited resources, regardless of age. Medicare is an entitlement program administered entirely by the federal government. It primarily covers people who are age 65 or older, or who have certain qualifying disabilities, regardless of income or assets.
How Medicaid and Medicare differ
| Category | Medicaid | Medicare |
|---|---|---|
| Who it covers | Low-income individuals and families of any age; people with disabilities; seniors with limited resources | People age 65+; younger people with certain qualifying disabilities after 24 months; people with ESRD or ALS |
| How it's funded | Joint federal-state funding; federal share (FMAP) ranges from 50% to over 75% depending on state wealth | Federally funded through payroll taxes, general revenues, and premiums paid by beneficiaries |
| Who administers it | Each state administers its own program within federal guidelines | Administered entirely by the federal Centers for Medicare & Medicaid Services (CMS) |
| Income limits | Yes — based on Federal Poverty Level; varies by state and eligibility category | No income limits to enroll; however, higher-income beneficiaries pay higher premiums |
| Age requirements | No age requirement — covers newborns through seniors based on need | Generally age 65+, or younger with certain disability or illness criteria |
| Long-term care coverage | Yes — Medicaid is the largest payer of nursing home care; also covers HCBS and personal care | Limited — covers skilled nursing facility care for short-term rehabilitation only (up to 100 days under specific conditions); does not cover custodial care |
| Prescription drug coverage | All states cover prescription drugs; formularies vary | Through Medicare Part D (separate prescription drug plans) or Medicare Advantage plans |
| Out-of-pocket costs | Generally minimal or none; states may charge small copays for some services | Part A and Part B deductibles, copayments, and premiums apply; can be substantial without supplemental coverage |
| Where you apply | Your state Medicaid agency or Healthcare.gov | Social Security Administration (online at ssa.gov, by phone, or in person at a Social Security office) |
Can I have both Medicaid and Medicare?
Yes. Individuals who qualify for both Medicaid and Medicare are called "dual eligibles" or "duals." Approximately 12 million Americans are enrolled in both programs simultaneously. Dual eligibles are typically low-income seniors or low-income people with disabilities who meet the income and resource criteria for Medicaid while also being age 65+ or qualifying for Medicare based on disability.
When you have both programs, Medicare acts as the primary payer — it pays first for covered services. Medicaid then acts as the secondary payer, covering Medicare cost-sharing such as deductibles, copayments, and coinsurance, and paying for services that Medicare does not cover (such as most long-term care). For low-income Medicare beneficiaries who do not qualify for full Medicaid, Medicare Savings Programs (QMB, SLMB, and QI) may help pay Medicare Part B premiums and cost-sharing.
Which one is right for you?
The answer depends on your age, income, and health situation. Age 65 or older? Apply for Medicare through the Social Security Administration. Also low-income with limited assets? Apply for Medicaid too — it can cover Medicare cost-sharing and provide long-term care coverage that Medicare does not. Under 65 with a low income, Medicaid is likely your primary option. Had a qualifying disability for 24 months? You may qualify for Medicare regardless of age. In practice, many people should explore both programs at once.