This article was updated on March 8, 2021.
Medicare and Medicaid are often mistaken to be the same thing. While they are both government programs that help pay for healthcare coverage, they are quite different.
The key differences:
- Medicare is the primary medical coverage provider for seniors and those with a disability.
- Medicaid is designed for people with limited income.
- Medicare has four parts that each cover different things: hospitalization, medically necessary services, supplemental coverage, and prescription drugs.
- The CARES Act extended the abilities of Medicare and Medicaid due to the COVID-19 pandemic.
What is Medicare?
A federal health insurance program for people who are:
- 65 or older
- Under 65 with certain disabilities
- Of any age and have End-Stage Renal Disease (ESRD) or ALS
Coverage
Your personal medical needs dictate what coverage you need. Depending on the coverage you choose and may include:
- Care and services received as an inpatient in a hospital or skilled nursing facility (Part A)
- Doctor visits, care, and services received as an outpatient, and some preventive care (Part B)
- Prescription drugs (Part D)
Note: Medicare Advantage plans (Part C) combine Part A and Part B coverage, and often include drug coverage (Part D) all in one plan.
Cost
It depends on the coverage you choose. Costs include premiums, deductibles, copays, and coinsurance.
Eligibility
There are several ways to become eligible for Medicare. Most people will become eligible by aging into the system when they turn 65, but you can also become eligible if you have a long-term disability.
You will most likely be eligible for Medicare once you turn 65 as long as you are a United States citizen (including U.S. territories like Puerto Rico and Guam) or have been a permanent resident for at least 5 years. In order to be eligible for Medicare, you must have accrued 40 work credits (or about 10 years) in which you paid Medicare taxes through payroll.
To find out if you’re eligible for Medicare benefits, use Medicare’s eligibility calculator.
Note: Depending on your level of income and assets, you may be eligible for financial assistance with your Medicare costs. Read more about financial assistance here.
What is Medicaid?
A joint federal and state program that helps pay health care costs for certain people and families with limited income and resources. Different programs under the Medicaid umbrella are designed to help specific populations.
Coverage
Each state creates its own Medicaid programs that follow federal guidelines. There are mandatory benefits and optional benefits. These benefits include:
- Care and services received in a hospital or skilled nursing facility
- Care and services received in a federally-qualified health center, rural health clinic, or freestanding birth center (licensed or recognized by your state)
- Doctor, nurse midwife, and certified pediatric and family nurse practitioner services, etc.
Cost
The cost of Medicaid is dependent on your income and the rules in your state. Costs may include premiums, deductibles, copays, and coinsurance, similar to Medicare. Though certain groups are exempt from most out-of-pocket costs.
Eligibility
Eligibility depends on the rules in your state. To know more about your state’s Medicaid programs read here.
