Medicare is a federal health insurance program for adults aged 65 and up and people living with certain disabilities.
People typically receive Medicare in one of two main ways: Original Medicare (Parts A and B) or Medicare Advantage (Part C).
Medicaid is a state and federal program that’s administered by individual states.
Medicaid provides healthcare services for people based on disability who may not qualify for Medicare; in some states, Medicaid can be based on income.
It is possible to qualify for both Medicare and Medicaid.
If you or a loved one is looking for healthcare, you may be weighing Medicare vs Medicaid. If so, you’ll want to know some key facts about the programs. What is the difference between Medicare and Medicaid ? When do they work together, and how?
As a starting point, both Medicare and Medicaid are public health insurance programs. Medicare is operated and funded by the federal government for people aged 65 and older and those with certain conditions. Medicaid is also a federal program, but funding and administration is shared with the individual states. Because of this, Medicaid’s rules and qualifications can vary greatly based on where you live. Medicare, however, is standardized across the country.
Find a local Medicare plan that fits your needs
Medicare refers to the federal public health insurance program run by the Centers for Medicare and Medicaid Services. Medicare helps certain people pay for their healthcare services. However, those who are eligible for Medicare can receive it in several ways. The two main forms are Original Medicare (Parts A and B) and Medicare Advantage (Part C). Original Medicare beneficiaries can add standalone Medicare prescription drug (Part D) and Medicare Supplement Insurance (Medigap) plans. Medicare Advantage often includes prescription drug coverage.
Medicare Advantage plans, Medicare Part D plans and Medicare Supplement Insurance (Medigap) are private health insurance policies offered under Medicare that must meet specific criteria set by the federal government.
Original Medicare eligibility
To be eligible for Medicare, you must be a U.S. citizen or legal resident (for a minimum of five years). One of the following must also apply:
- You’re age 65 or older.
- You’ve drawn disability-based Social Security Administration (SSA) benefits for more than 24 months.
- You’re younger than 65 but are living with end stage renal disease (ESRD).
- You’re younger than 65 but living with Amyotrophic Lateral Sclerosis (ALS), or Lou Gehrig’s disease.
Original Medicare costs
What you pay for Original Medicare depends on several factors, including how long you worked and paid Medicare taxes, and your income level.
Most people qualify for premium-free Medicare Part A, which is the portion of Original Medicare that covers inpatient care. If you or your spouse worked and paid taxes for 10 or more years, you don’t have to pay a Part A premium. If you do have to pay a monthly Medicare Part A premium, your costs could be either $274 or $499 per month in 2022. The Part A premium is based on how many months in your lifetime you worked and paid Medicare taxes.
In addition to the Part A premium — if you have one — you will also have to pay:
- A $1,556 deductible for each benefit period. This total must be paid before Medicare will help cover your inpatient costs.
- Coinsurance for hospitalizations that last longer than 60 days in a benefit period.
You will typically pay a premium for Medicare Part B, which covers outpatient and preventive care. The standard premium for Medicare Part B in 2022 is $170.10 per month for people with an income of up to $91,000 per year (or $182,000 when filed jointly). The Part B premium increases based on your earnings and can cost as much as $578.30 each month for the highest earners.
In addition to a monthly premium, you will pay the following for care under Medicare Part B:
- An annual deductible, which is $233 for 2022. Medicare will not help cover your Part B costs (except for preventive services) until your deductible is paid.
- 20% coinsurance for Medicare-approved services and durable medical equipment. Medicare pays the initial 80%.
Unlike Original Medicare, Medicare Advantage (Part C) plans are sold by private health insurance companies. Medicare Advantage replaces Original Medicare (Part A and B) but must offer at least the same Part A and B benefits and coverages as Original Medicare. Along with receiving Part A and B benefits, Medicare Part C coverage often includes additional services, such as dental, hearing, vision and prescription drug coverage.
Medicare Advantage costs
The costs of a Medicare Advantage plan will depend on the plan you choose and what services you want to have covered. Insurers can set their own prices for Medicare Advantage plans as long as they meet certain criteria set by the federal government. Because of this, Part C costs can vary greatly. Some plans require you to pay the standard Part B premium and their own premium, while others offer premium-free Part C plans. Some plans may even help pay your Part B premium for you. You may even have the option of paying higher premiums and deductibles in exchange for lower out-of-pocket costs.
With Medicare Advantage plans, you may also be limited to where you can receive care or even which doctors you can see. In other words, the cheapest plan is not always the right plan. When choosing a Medicare Advantage plan, be sure to consider your individual health issues and how much care you require.
Medicaid is a public health program that is administered by each state with specific guidelines from the federal government. Unlike Medicare, Medicaid funding is shared by both the federal and state governments.
The federal government requires a number of services to be included in each state’s Medicaid plans. These include:
- Inpatient hospital care
- Outpatient care
- Health screenings
- Diagnostic and treatment services
- Nursing facility services
- Physician services
- Rural and federal health clinic services
- Laboratory tests
- Family planning
- Nurse midwife services
- Pediatric and family nurse practitioner care
- Transportation to medical services
- Tobacco cessation for pregnant women
Each state may choose what additional services their Medicaid plans can cover, such as:
- Prescription medications
- Occupational therapy
- Physical therapy
- Speech, hearing, and language services
- Dental care
- Respiratory care
- Chiropractic care
Eligibility for Medicaid depends largely on which state you live in. Some states strictly award Medicaid eligibility based on disability, income and other factors; other states allow residents to qualify based on income alone.
People who may qualify for Medicaid include:
- Low-income individuals who earn below a certain level determined by their state
- Pregnant women
- People with certain medical conditions
Depending on your income or needs, Medicaid may pay most or all of your healthcare costs if you qualify. Medicaid sets maximum rates for certain services, but exact costs depend on the state, your income, and what additional costs your state passes on to enrollees.
Medicaid does not allow enrollees to be charged out-of-pocket costs for the following services:
- Emergency care
- Family planning
- Pregnancy services
- Pediatric preventive care
Are you eligible for cost-saving Medicare subsidies?
The main differences between Medicare and Medicaid are who runs the programs and who is eligible. If you are older or disabled, you will likely qualify for Medicare. If you have certain health and financial needs but don’t qualify for Medicare, you may be able to receive services through Medicaid. The federal government sets rules for both programs, but states have control over the specifics of their Medicaid plans and what additional services they may offer.
At this point you might be asking, “Can you have Medicare and Medicaid at the same time?” Yes — under certain circumstances, you may qualify for both programs. This is known as dual eligibility.
Who is eligible for Medicare and Medicaid at the same time? Generally those living with disabilities or chronic medical needs who also have limited income may qualify for dual eligibility. If you’re dual eligible, Medicare is the primary payer for most of your services, and Medicaid pays most or all of the rest.
If you’re dual eligible, you’ll typically fall into one of several categories of Medicare Savings Programs. These can include:
- Qualified Medicare Beneficiary (QMB) Program — Receive help paying premiums for Medicare Part A and Medicare Part B.
- Specified Low-Income Medicare Beneficiary (SLMB) Program — Receive help paying your Part B premium if you’re between 100 and 120 percent of the Federal Poverty Level.
- Qualifying Individual (QI) Program — QIs have higher income limits than SLMB and can help pay for Part B premiums.
- Qualified Disabled Working Individual (QDWI) Program — Certain disabled and working beneficiaries may get help paying the Part A premium.
Do you need supplemental insurance if you are dual eligible for Medicare and Medicaid?
If you qualify for both Medicare and Medicaid, chances are most or all of your healthcare costs will be covered. Dual-eligible individuals usually qualify for their healthcare plus Extra Help programs that help pay their out-of-pocket drug costs.
Are you still asking “What’s the difference between Medicare and Medicaid?” GoHealth can provide the answers you’re looking for. Our licensed insurance agents can break down the different types of healthcare you may be eligible for, and offer impartial guidance to help you choose the plan that’s right for you. We’ll shop for plans, explain the finer points and make sure you get the coverage you need.
What extra benefits and savings do you qualify for?
Yes — despite a misconception by some that Medicare is free, you’ll generally have to pay different costs for your coverage. Medicare does pay a portion of Medicare-approved charges, you will pay a share of your healthcare costs under Medicare. This includes premiums, deductibles and copayments. Also note that there are often different charges between Original Medicare and Medicare Advantage.
What you pay for Medicaid will depend on your state and your income. Most states have caps on what can be charged for certain services. For the most part, Medicaid is designed to provide low- or no-cost healthcare, and also qualifies you for other cost-saving programs like Medicare Savings Programs and Extra Help.
If you have extensive medical and financial needs, you may qualify for dual eligibility, meaning that you could receive services from Medicare and Medicaid. In these cases, you may receive all your healthcare services at no charge.