Medicare is a federal health insurance program based on age or disability. Medicaid is a joint federal-state program based on income. They serve different populations, are funded differently, and cover different things, though some people qualify for both at the same time.
Who Each Program Covers
Medicare covers people 65 and older, regardless of income. It also covers younger people who have received Social Security disability benefits for 24 months, as well as people with permanent kidney failure (end-stage renal disease) or ALS at any age. Your income and savings don’t factor into Medicare eligibility. If you’ve worked and paid payroll taxes for at least 10 years, you qualify at 65.
Medicaid covers people with limited income and, in some cases, limited assets. The specific income cutoff depends on where you live. In the 41 states (including Washington, D.C.) that expanded Medicaid under the Affordable Care Act, most adults with incomes up to 138% of the federal poverty level qualify. For a single person in 2025, that’s about $21,597 a year. In the 10 states that haven’t expanded Medicaid, eligibility is far more restrictive and often limited to specific groups like pregnant women, children, and people with disabilities.
Children, pregnant women, and people receiving Supplemental Security Income (SSI) for a disability generally qualify for Medicaid across all states, though the income thresholds and rules still vary.
How They’re Funded and Managed
Medicare is entirely federal. The Centers for Medicare & Medicaid Services runs the program, and it has uniform standards for costs and coverage nationwide. Funding comes from two trust funds held by the U.S. Treasury, supported by payroll taxes and funds authorized by Congress. If you’re on Medicare in Texas, your benefits look the same as someone on Medicare in Maine.
Medicaid is a partnership between the federal government and individual states. The federal government sets baseline rules, but each state designs and runs its own program. That means eligibility thresholds, covered services, and how much you pay out of pocket can differ dramatically depending on your state. Both the federal and state governments share the cost, with the federal government covering a larger share in lower-income states.
What Medicare Covers (and What It Costs You)
Medicare is divided into parts. Part A covers hospital stays, skilled nursing facility care (short-term only), hospice, and some home health services. Most people pay no monthly premium for Part A if they or a spouse paid Medicare taxes while working. Part B covers doctor visits, outpatient care, preventive services, and medical equipment. The standard Part B premium in 2025 is $185 per month, with an annual deductible of $257. Part D covers prescription drugs through private insurance plans, each with its own premium and formulary.
You can also choose Medicare Advantage (Part C), which bundles Parts A, B, and often D into a single plan run by a private insurer. These plans sometimes offer extras like dental or vision coverage but restrict you to a network of providers.
Even with all its parts, Medicare has a significant gap: it generally does not cover long-term care. If you need ongoing help with daily activities like bathing, dressing, or eating, whether at home or in a nursing facility, Medicare won’t pay for it. Medicare covers skilled nursing care only for short recovery periods after a hospital stay, typically up to 100 days, and only under specific conditions.
What Medicaid Covers
Medicaid tends to be more comprehensive than Medicare for the services it does cover, and enrollees typically pay little or nothing out of pocket. Every state Medicaid program must cover a core set of services: hospital care, doctor visits, lab work, home health services, and nursing facility care. Many states also cover dental care, vision, prescription drugs, and other services that Medicare either doesn’t include or charges extra for.
The biggest distinction is long-term care. Medicaid is the primary payer for nursing home care in the United States. Most nursing homes accept Medicaid, and many states have higher income limits specifically for people who need nursing facility care. That means someone who didn’t previously qualify for Medicaid might become eligible when they need a nursing home. States can also offer home and community-based services as an alternative to institutional care, helping people remain in their homes with support.
Qualifying for Medicaid’s Long-Term Care
For older adults and people with disabilities, Medicaid eligibility often involves both income and asset tests. These rules generally follow the same methodology used by the SSI program. States that have a “medically needy” program offer another path: if your income is slightly too high, you can become eligible by “spending down,” which means incurring medical expenses that bring your countable income below the state’s threshold. Once your out-of-pocket medical costs close that gap, Medicaid kicks in and covers the rest.
For most other adults and children, eligibility is based on income alone, with no asset test. This applies in expansion states for adults under 65 who don’t qualify through a disability or age-based category.
When You Qualify for Both
About 12 million Americans are “dual eligible,” meaning they’re enrolled in both Medicare and Medicaid simultaneously. This typically happens when someone is 65 or older (or has a qualifying disability) and also has limited income and resources.
For dual-eligible individuals, Medicare serves as the primary insurer, covering hospital stays, doctor visits, and prescription drugs first. Medicaid then fills in the gaps, covering long-term care, additional services the state offers, and helping pay Medicare premiums, deductibles, and copays. The federal Medicare-Medicaid Coordination Office works to align the two programs so that people entitled to both aren’t stuck navigating conflicting rules.
If your income is low but slightly above standard Medicaid thresholds, you may still qualify for programs that help with Medicare costs specifically. For example, the Qualified Medicare Beneficiary program covers Medicare premiums and cost-sharing for individuals earning up to $1,350 per month (in most states, as of 2026 standards), with asset limits of $9,950 for an individual or $14,910 for a couple. Other tiers of assistance exist for people with somewhat higher incomes, covering Part B premiums only.
Medicare for Younger People With Specific Conditions
Two conditions grant Medicare access before age 65 without the standard 24-month disability waiting period. People diagnosed with ALS become eligible for Medicare as soon as their disability benefits begin. People with end-stage renal disease can qualify at any age if they need regular dialysis or have had a kidney transplant, provided they or a family member have sufficient work history under Social Security.
For kidney failure, Medicare coverage typically starts on the first day of the fourth month of dialysis. That waiting period can be shortened or eliminated in certain situations: if you train for home dialysis during your first three months of treatment, coverage can start in month one. If you’re admitted to a hospital for a kidney transplant, coverage can begin the month of admission, as long as the transplant happens within two months. After becoming eligible through kidney failure, there’s also a 30-month coordination period during which any employer or union health plan you have continues to pay first, with Medicare acting as secondary coverage.
Quick Comparison
- Based on: Medicare is based on age or disability. Medicaid is based on income.
- Run by: Medicare is federally managed with uniform rules. Medicaid is state-managed with wide variation.
- Cost to you: Medicare charges premiums, deductibles, and copays. Medicaid has minimal or no cost-sharing.
- Long-term care: Medicare does not cover it. Medicaid is the main source of nursing home coverage in the U.S.
- Prescription drugs: Medicare covers them through Part D plans (separate premium). Medicaid typically includes drug coverage at little or no cost.
- Overlap: People who meet both programs’ criteria can enroll in both, with Medicaid covering what Medicare doesn’t.