Medicare and Medicaid are both government health insurance programs, but they serve different people and work in fundamentally different ways. Medicare is federal health insurance based on age or disability. Medicaid is a joint federal and state program based on income. Many people confuse the two because the names sound similar and both were created in 1965, but the eligibility rules, costs, and coverage details are distinct.
Who Qualifies for Medicare
Medicare covers three groups: people 65 and older, people under 65 with certain disabilities, and people of any age with permanent kidney failure requiring dialysis or a transplant (or ALS). Age is the primary gateway. Once you turn 65, you qualify regardless of your income, employment history, or how much money you have in savings. For most people, it’s automatic if you’ve been receiving Social Security benefits.
Your Initial Enrollment Period lasts seven months, starting three months before you turn 65 and ending three months after the month you turn 65. Missing this window can result in late-enrollment penalties that permanently increase your premiums, so the timeline matters.
Who Qualifies for Medicaid
Medicaid is designed for people with limited income. The rules vary by state because each state runs its own Medicaid program within federal guidelines. In the 41 states (including Washington, D.C.) that have expanded Medicaid under the Affordable Care Act, most adults with incomes up to 138% of the federal poverty level qualify. For an individual, that’s roughly $22,000 a year. In the 10 states that haven’t expanded, eligibility is more restrictive and often excludes childless adults entirely.
The federal poverty level for 2026 is $15,960 for an individual, $21,640 for a family of two, and $33,000 for a family of four. Your state may set its threshold as a percentage of these numbers. Unlike Medicare, Medicaid has no fixed enrollment period. You can apply any time of year, and coverage can begin as soon as you’re approved.
What Medicare Covers
Medicare is divided into parts, each covering a different category of care:
- Part A (Hospital Insurance) covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health care. Most people pay no monthly premium for Part A if they or a spouse paid Medicare taxes while working.
- Part B (Medical Insurance) covers doctor visits, outpatient care, preventive services like screenings and vaccines, durable medical equipment (wheelchairs, walkers, hospital beds), and home health care. The standard Part B premium is $185 per month in 2025, with an annual deductible of $257.
- Part C (Medicare Advantage) bundles Part A, Part B, and usually Part D into a single plan run by a private insurance company. These plans often include extras like vision or dental coverage but limit you to a network of providers.
- Part D (Drug Coverage) helps pay for prescription medications and many vaccines. Part D plans are also run by private insurers following Medicare rules.
One major gap in Medicare: it does not cover long-term nursing home care. It will pay for short-term stays in a skilled nursing facility after a qualifying hospital stay, but if you need ongoing custodial care (help with bathing, dressing, eating), Medicare won’t cover it.
What Medicaid Covers
Every state Medicaid program must cover a set of federally mandated services, including inpatient and outpatient hospital care, physician visits, lab work and X-rays, and home health services. Beyond that, states can choose to offer additional benefits. Common optional services include prescription drugs, physical therapy, occupational therapy, and case management.
The biggest practical difference is long-term care. Medicaid is the primary payer for nursing home care in the United States. If you need to live in a nursing facility and meet your state’s income and asset requirements, Medicaid will cover it. This is something Medicare simply does not do on an ongoing basis. Medicaid also covers personal care services that help people stay in their homes rather than moving to a facility.
For long-term care eligibility, states typically impose asset limits. In California, for example, a single nursing home applicant must have assets under $130,000 in 2026. States also use a “look-back period” to review whether you transferred assets (like giving money to family members) to appear financially eligible. These rules are designed to prevent people from sheltering wealth to qualify.
What You Pay Out of Pocket
Medicare is not free. Even though most people don’t pay a Part A premium, Part B costs $185 per month in 2025, and you’ll also pay the $257 annual deductible before Part B starts covering its share. If you add Part D drug coverage or a Medicare Advantage plan, those come with their own premiums and copays. Higher earners pay more: the government adjusts Part B and Part D premiums upward based on income.
Medicaid, by contrast, has very low or zero costs for enrollees. Most people on Medicaid pay nothing for covered services, though some states charge small copays. There are no monthly premiums for most Medicaid recipients, and no deductibles. This reflects the program’s purpose: covering people who can’t afford health insurance on their own.
Federal vs. State Control
Medicare is a federal program. The rules are the same whether you live in Texas or Vermont. The Centers for Medicare and Medicaid Services (CMS) sets the benefit structure, premiums, and eligibility criteria nationwide.
Medicaid operates under a shared federal-state structure. The federal government sets minimum requirements, but each state designs its own version of the program. This means income limits, covered services, and application processes differ depending on where you live. A person who qualifies for Medicaid in one state might not qualify if they move to another. States also have different names for their programs (Medi-Cal in California, MassHealth in Massachusetts, for instance).
Having Both at the Same Time
Some people qualify for Medicare and Medicaid simultaneously. These individuals are called “dual eligibles,” and roughly 12 million Americans fall into this category. This typically happens when someone is 65 or older (or has a qualifying disability) and also has a low income.
When you’re dual eligible, Medicare serves as the primary insurer, covering hospital stays, doctor visits, and prescriptions. Medicaid then fills in the gaps, potentially covering long-term care, personal care services, and Medicare premiums and copays that you’d otherwise pay out of pocket. Through programs like the Qualified Medicare Beneficiary program, Medicaid can pay your Part B premium entirely, saving you $185 per month.
Navigating both programs at once can be confusing because you’re dealing with two different systems. The federal Medicare-Medicaid Coordination Office exists specifically to simplify this overlap and reduce conflicts between the two sets of rules.
Quick Comparison
- Based on: Medicare is based on age or disability. Medicaid is based on income.
- Run by: Medicare is run by the federal government. Medicaid is run by each state with federal oversight.
- Cost to you: Medicare charges premiums, deductibles, and copays. Medicaid is free or very low cost.
- Long-term care: Medicare does not cover ongoing nursing home stays. Medicaid does.
- Enrollment: Medicare has specific enrollment windows tied to turning 65. Medicaid accepts applications year-round.
- Consistency: Medicare benefits are the same in every state. Medicaid benefits vary by state.