Medicare vs. Obamacare

Key Differences Between Medicare vs. Obamacare

Though they might sound similar, Medicare and Obamacare are two distinct programs, and they differ in significant ways. Medicare serves older adults and people with disabilities, and some people are automatically enrolled when they become eligible. Obamacare, conversely, ensures that anyone who isn’t eligible for Medicare or Medicaid can purchase health insurance.

Individuals and families can enroll in an ACA plan — another name for Obamacare — through the Health Insurance Marketplace. The Marketplace offers subsidies, tax breaks, and cost-sharing reductions for those eligible for financial support. The ACA also prohibits insurance companies from denying coverage or charging more for pre-existing conditions.

It’s common for people to have an Obamacare plan before enrolling in Medicare, whether through an employer, a spouse’s insurance plan, or directly purchasing it through the Marketplace.

Eligibility

Most people become eligible for Medicare when they turn 65, but people with disabilities or end-stage renal disease can also enroll. Beneficiaries can opt for the standard federal program or purchase a Medicare-approved private insurance plan. Those plans have the same eligibility requirements.

Obamacare plans offer health insurance options for those not yet eligible for Medicare. Anyone looking for health insurance can enroll through the Marketplace as long as they meet the following requirements:

• Be a legal U.S. resident
• Live in the U.S.
• Not be incarcerated

People who aren’t eligible for Medicaid may receive subsidies for enrolling in an ACA plan, which can help lower their health insurance costs. However, options vary by location.

It is possible to be eligible for both Medicare and an ACA plan at the same time. For example, you might have an Obamacare plan through your employer, but you just turned 65. In this case, you can dually enroll or enroll in just one part of Medicare. However, you cannot enroll in a new ACA plan if you already have Medicare.

Coverage Structure

Medicare splits its coverage into four components:

• Part A (hospital insurance): This covers inpatient care at a hospital, skilled nursing facility, or hospice.
• Part B (medical insurance): Part B covers outpatient services, preventative care, and medically necessary equipment. Together, Part A and Part B make up Original Medicare.
• Part C (Medicare Advantage): In lieu of Original Medicare, beneficiaries can enroll in private insurance plans that meet Medicare’s coverage requirements. These bundle Part A and Part B, and often have more benefits than Original Medicare. For example, Medicare Advantage Prescription Drug plans include Part D benefits. This plan type is the most similar to ACA plans in that it also utilizes care networks.
• Part D (prescription drug coverage): Part D pays for prescription medication and vaccines. This plan must be purchased separately from Original Medicare and is offered by private insurance companies.

ACA plans are split into 4 categories, which indicate how much you’ll pay for care:

• Bronze
• Silver
• Gold
• Platinum

Bronze plans typically have lower premiums, but you’ll pay a higher cost-sharing percentage and have a higher deductible. On the other side of the spectrum, Platinum plans have a low deductible and pay 90% of the cost of your care but also have higher monthly premiums. These tiers don’t impact the quality of care you receive.

Costs

Medicare maintains a standard cost structure across the country. Your total cost for Medicare includes:

• Premiums. Most people qualify for premium-free Part A by working and paying Medicare taxes. If not, Part A costs $285 or $518 per month in 2025. Part B costs $185 per month, but high earners may pay more.
• Deductibles. You must meet your deductible before Medicare starts to pay. For Part A, this is $1,676 per benefit period in 2025, and you may have multiple benefit periods per year. The Part B deductible is $257 per year for 2025.
• Cost-sharing. Medicare commonly pays for 80% of your covered care. Your portion of the cost, called coinsurance, would be 20%. You might also pay a copay for doctor’s appointments.
• Maximum out of pocket. Original Medicare does not have an out-of-pocket maximum, but Medicare Advantage caps your costs at $9,350 for covered care in 2025.

A Medicare Advantage plan can set its own premiums, deductibles, and cost-sharing percentages as long as it meets Medicare’s minimum coverage requirements.

Similarly, ACA plans have different costs depending on your location, your chosen plan tier, and whether you qualify for additional subsidies or cost-sharing reductions. People who enroll in Obamacare may also receive a tax break to help pay their premiums.

Enrollment and Enrollment Penalties

You can only enroll in Medicare or Obamacare during specific periods. Medicare has multiple enrollment periods throughout the year:

• Initial Enrollment Period (IEP): This is the easiest time to enroll in Medicare. If you qualify based on age, the one-time IEP for 7 months surrounding your 65th birthday.
• Annual Enrollment Period (AEP): From October 15 to December 7, Medicare beneficiaries can change their coverage, switch between Original Medicare and Medicare Advantage, and add or drop Part D coverage. Changes take effect January 1.
• Medicare Advantage Open Enrollment Period: From January 1 to March 31, people with Medicare Advantage can change insurers, change plans, or switch back to Original Medicare.

If you miss your initial enrollment period for any part of Medicare, you may have to pay a penalty. Enrollment penalties differ by Medicare part:

• Delayed enrollment in Part A: If you are not eligible for free Part A and do not enroll during your IEP, you incur a 10% penalty. This lasts for twice the number of years you were eligible for Part A and didn’t have coverage. For example, if you delayed enrollment in Part A for a year, you will pay the 10% penalty for two years.
• Delayed enrollment in Part B: You’ll pay an extra 10% per year that you were eligible but didn’t sign up for Part B. This is a permanent penalty. For example, if you delay enrollment in Part B for three years, you will pay a 30% penalty for as long as you have Part B.
• Delayed enrollment in Part D: You’ll pay an extra 1% for each month without qualifying Part D coverage. For example, if you delay enrollment in Part D for a year, you will pay a 12% penalty for as long as you have Part D.

ACA Open Enrollment lasts from November 1 to January 15 each year. Depending on when you enroll, your coverage starts on January 1 or February 1. There are no longer federal penalties for not having health insurance, but some states may have penalties if you do not enroll in health coverage.

However, you’ll avoid penalties for Medicare or Obamacare if you qualify for a Special Enrollment Period. Significant life events like moving, losing a job, or a change in income may result in a Special Enrollment Period.