Medicare and Medicaid are two separate government health insurance programs that cover different groups of Americans. Medicare is federal health insurance primarily for people 65 and older, while Medicaid helps cover medical costs for people with limited income. Both were signed into law on July 30, 1965, by President Lyndon B. Johnson as amendments to the Social Security Act, and together they form the backbone of publicly funded healthcare in the United States.
Despite their similar names, the two programs differ in who runs them, who qualifies, what they cover, and how much they cost. Some people qualify for both at the same time.
How Medicare Works
Medicare is entirely federal. The program is run by the Centers for Medicare & Medicaid Services, and the rules are the same no matter which state you live in. You qualify primarily based on age: once you turn 65, you’re eligible. Certain people under 65 also qualify if they have specific disabilities or conditions, such as end-stage kidney disease or ALS.
Most people are automatically enrolled in Medicare when they turn 65 if they’re already receiving Social Security benefits. If not, you can sign up through the Social Security Administration during your initial enrollment period, which starts three months before your 65th birthday.
The Four Parts of Medicare
Medicare is split into distinct parts, each covering different types of care.
Part A is hospital insurance. It helps cover inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care. Most people don’t pay a monthly premium for Part A if they or a spouse paid Medicare taxes while working.
Part B is medical insurance, covering doctor visits, outpatient care, preventive services like screenings and vaccines, durable medical equipment (wheelchairs, walkers, hospital beds), and home health care. Part B does carry a monthly premium. In 2025, the standard premium is $185.00 per month, with an annual deductible of $257.
Part C, commonly called Medicare Advantage, is an alternative way to get your Medicare coverage. These are plans offered by private insurance companies approved by Medicare. They bundle Part A and Part B benefits into a single plan and usually include prescription drug coverage as well. Many Medicare Advantage plans also offer extras like dental, vision, or hearing benefits that Original Medicare does not.
Part D covers prescription drugs. If you stick with Original Medicare (Parts A and B) rather than a Medicare Advantage plan, you can add a separate Part D plan to help pay for medications and certain vaccines.
What Medicare Does Not Cover
One of the biggest gaps in Original Medicare is long-term care. Medicare generally does not pay for extended stays in a nursing home. It covers short-term skilled nursing care after a hospital stay, but if you need ongoing help with daily activities like bathing or dressing, Medicare won’t foot the bill.
Routine dental care is another notable exclusion. Cleanings, fillings, tooth extractions, dentures, and implants are not covered in most cases, and you pay the full cost out of pocket. Routine vision and hearing services are similarly limited under Original Medicare, though some Medicare Advantage plans fill these gaps.
How Medicaid Works
Medicaid operates very differently from Medicare. It’s a joint program between the federal government and individual states, which means eligibility rules, covered services, and even the application process vary depending on where you live. The federal government sets minimum standards, but states have significant flexibility to expand coverage and set their own income thresholds.
Eligibility is based on income and, in some cases, resources like savings. States generally use a percentage of the federal poverty level to draw the line, such as 133% or 185% of the poverty guidelines, though the exact cutoff depends on the state and the group being covered (children, pregnant women, adults, people with disabilities). To apply, you contact your state’s Medicaid office or apply through your state’s health insurance marketplace.
Funding is shared between the federal and state governments. The federal government reimburses each state for a portion of its Medicaid spending based on a formula tied to the state’s per capita income. Poorer states receive a higher federal match. The federal share ranges from a minimum of 50% to a maximum of 83%, with states covering the rest. At least 40% of the state’s share must come from state funds, while up to 60% can come from local governments.
What Medicaid Covers
Medicaid tends to be more comprehensive than Medicare in several important ways, particularly for people with low incomes. The most significant difference is long-term care. Medicaid is the primary payer for nursing home care in the United States. Many states set higher income limits for nursing home residents specifically, so people who didn’t previously qualify for Medicaid may become eligible when they need nursing home care. Most, but not all, nursing homes accept Medicaid.
Medicaid also typically covers services that Original Medicare excludes or limits, including dental care, vision, hearing, and transportation to medical appointments, though the specifics depend on your state. For people with very low incomes, Medicaid often has no premiums and minimal or no copays.
Qualifying for Both Programs
Roughly 12 million Americans are “dually eligible,” meaning they’re enrolled in both Medicare and Medicaid at the same time. This happens when someone meets Medicare’s age or disability requirements and also has a low enough income to qualify for Medicaid.
For dual-eligible beneficiaries, the two programs work in layers. Medicare serves as the primary payer for doctor visits, hospital stays, and other acute care. Medicaid then wraps around Medicare by helping cover Medicare premiums and copays and by paying for services Medicare doesn’t cover, like long-term care. This combination significantly reduces out-of-pocket costs.
There are also specific Medicaid programs designed to help Medicare beneficiaries with limited incomes pay their Medicare costs, even if they don’t qualify for full Medicaid benefits. These programs have their own income thresholds, generally ranging from 100% to 200% of the federal poverty level.
Key Differences at a Glance
- Who it’s for: Medicare covers people 65 and older (plus some younger people with disabilities). Medicaid covers people with limited income regardless of age.
- Who runs it: Medicare is entirely federal. Medicaid is a federal-state partnership, so rules vary by state.
- Cost to you: Medicare has premiums, deductibles, and copays. Medicaid has little to no out-of-pocket cost for most enrollees.
- Long-term care: Medicare generally does not cover it. Medicaid is the largest payer for nursing home care in the country.
- How to enroll: Medicare enrollment goes through the Social Security Administration. Medicaid enrollment goes through your state’s Medicaid office.