Medicare and Medicaid represent two vitally necessary government-subsidized health care programs in the United States, targeting health coverage for certain populations. Their names sound very similar, but they have differing purposes and different eligibility criteria. Knowing how these programs differ is important when deciding on healthcare coverage.
Overview of Medicare
Medicare is a federal health insurance program primarily designed for individuals aged 65 years and older, as well as specific younger individuals with disabilities and those with certain medical conditions. Medicare was enacted in 1965 and is administered by the Centers for Medicare & Medicaid Services. It is open to any person regardless of their income level.
Medicare has four separate parts:
- Part A, or hospital insurance: This includes inpatient hospital care, skilled nursing facility care, hospice care, and some home health care. There are no premium costs for most individuals under Part A, as it is usually financed through individuals or their spouses who have paid Medicare taxes for at least ten years.
- Part B, or medical insurance: It covers care received outside of hospitals, doctor visits, preventive services, and some home health care. In most cases, beneficiaries pay a monthly premium for Part B, which is usually deducted from Social Security benefits.
- Part C, or Medicare Advantage: It is when private insurance covers the benefits of both Parts A and B. It often has additional benefits to cover vision and sometimes even dental care.
- Part D (Prescription Drug Coverage): This is the part that includes private insurance plans, which Medicare has certified, to provide coverage for prescription medications.
Overview of Medicaid
On the other hand, Medicaid is a joint federal-state program that assists low-income individuals and families in paying for medical care. Unlike Medicare, Medicaid’s qualification is fundamentally based on a person’s income. Additionally, every state offers its version, with federal stipulations, of the program. Benefits and eligibility vary considerably from state to state.
Medicaid provides for the following services, including:
- Inpatient and outpatient hospital services
- Physician services
- Laboratory and X-ray services
- Home health care
- Nursing home care
- Preventive services
Most Medicaid beneficiaries do not pay premiums for covered services although some may have small co-payments for certain services.
Key differences between Medicare and Medicaid
| Feature | Medicare | Medicaid |
| Administered by | Federal government | Jointly by federal and state governments |
| Eligibility | Primarily age (65+) or disability | Based on income and resources |
| Coverage | Hospital and medical insurance | Comprehensive health care services |
| Costs | Premiums, deductibles, and coinsurance apply | Typically no premiums; low or no co-payments |
| Flexibility | Standardized across the U.S. | Varies by state |
Medicare eligibility
Most people are eligible to join Medicare at age 65, or, if they are younger and disabled, they can also be eligible. These include:
- ESRD (End-Stage Renal Disease)
- ALS (Amyotrophic Lateral Sclerosis)
There is no limit to the amount of income that one has to be eligible for Medicare; however, those with higher incomes may pay a higher premium cost for Part B and Part D.
Medicaid eligibility
Medicaid eligibility is more complex and does vary by state. Generally, in order to qualify, individuals must meet certain income and resource limits which is commonly based on Supplemental Social Security Income (SSI) which limits people to $943 per month in income. Under the Affordable Care Act, many states also expanded Medicaid to include people with incomes up to 138 percent of the federal poverty level under this program. Eligibility categories include:
- Low-income families and children
- Pregnant women
- Persons with disabilities
- Elderly persons requiring long-term care
You must also be a resident of the state where you receive Medicaid and must also be a U.S citizen to be fully eligible.
Dual-Eligibility
Some people may be eligible for both Medicare and Medicaid. These are known as “dual-eligibility.” That means one will get coverage from both, which substantially reduces health care’s out-of-pocket costs. Most of the dual-eligible people have their Medicare premiums covered under Medicaid, and there may be some more additional benefits that Medicare wouldn’t offer.
Additionally, the traditional Medicare and Medicare Advantage plans can be paired with Medicaid for those that are dual-eligible. Also, an increasing number of people are registering for Medicare Advantage plans created specifically for people who are dual-eligible.
The differences between Medicare and Medicaid are very important for people to know who are navigating the health care system in the United States. While Medicare primarily includes elderly citizens and the disabled, Medicaid involves low-income individuals and families. All these publically sponsored health coverage plans have different eligibility criteria and benefits. So, an individual needs to assess their position and aim for the correct one. Those who are fortunate enough to fall under both programs can combine both benefits and be adequately covered under health care, which would help lighten the load of the pocketbook of the exorbitant cost of treatment.
