Medicare is health insurance based on age (65 and older, plus some younger people with disabilities). Medicaid is health insurance based on income (for people with limited financial resources). They're both government programs, they sound almost identical, and millions of Americans mix them up — but they work very differently.
The confusion is understandable. Both programs were created in 1965, both help people pay for healthcare, and both have "Medi-" in the name. But they're run by different agencies, have different eligibility rules, cover different things, and cost different amounts out of pocket. Some people even qualify for both at the same time.
This guide walks through each program side by side: who qualifies, what's covered, what you'll pay, and how enrollment works. By the end, you'll know exactly which one applies to you — or whether you might be eligible for something else entirely, like ACA marketplace insurance with subsidies.
Here's the essential difference between the two programs at a glance:
| Feature | Medicare | Medicaid |
|---|---|---|
| Who it's for | People 65+, some younger people with disabilities | Low-income individuals and families |
| Based on | Age (or disability status) | Income (and sometimes assets) |
| Run by | Federal government (CMS) | States (with federal funding and guidelines) |
| Premiums | Most people pay $0 for Part A; Part B is ~$185/mo | Usually $0 or very low |
| Out-of-pocket costs | Deductibles, copays, coinsurance | Minimal to none |
| Coverage varies by state? | No — same nationwide | Yes — each state sets its own rules |
| Enrollment | Automatic at 65 (if receiving Social Security) | Apply through your state Medicaid agency |
| Can you have both? | Yes — called "dual eligible" (roughly 12 million Americans) | |
The simplest way to remember it: Medicare = age. Medicaid = income. Medicare is the same everywhere. Medicaid varies by state.
Medicare is a federal health insurance program primarily for Americans aged 65 and older. It's run by the Centers for Medicare & Medicaid Services (CMS), a federal agency, and the rules are the same whether you live in California or Maine.
You qualify for Medicare if you meet any of these criteria:
Notice that income doesn't matter for Medicare eligibility. A retired person making $200,000 a year from investments qualifies for the same Medicare benefits as someone living on $20,000 in Social Security income. (Higher-income beneficiaries do pay higher premiums for Part B and Part D, but the coverage itself is the same.)
Medicare is divided into four distinct parts, each covering different services:
| Part | What It Covers | Typical Cost |
|---|---|---|
| Part A | Hospital stays, skilled nursing, hospice | $0 premium for most people; $1,632 deductible per benefit period |
| Part B | Doctor visits, outpatient care, preventive services | ~$185/month premium; $257 annual deductible; 20% coinsurance |
| Part C | Medicare Advantage — bundles A + B (often includes vision, dental) | Varies by plan ($0-$200+/month on top of Part B premium) |
| Part D | Prescription drugs | ~$35-$100/month; varies by plan |
Most people get Part A automatically when they turn 65 (if they're already receiving Social Security). Part B is optional but almost everyone signs up for it. Parts C and D are additional coverage you choose to buy from private insurance companies that contract with Medicare.
Even with all four parts, Medicare has notable gaps. It generally does not cover:
These gaps are why many Medicare beneficiaries also buy supplemental coverage (called Medigap) or choose a Medicare Advantage plan that bundles extra benefits.
If you're under 65, check whether you qualify for ACA marketplace subsidies based on your income.
Check Your SubsidyMedicaid is a joint federal-state program that provides health coverage to people with limited income. Unlike Medicare, which is the same everywhere, Medicaid rules vary significantly from state to state. Each state runs its own Medicaid program within broad federal guidelines, which means eligibility thresholds, covered services, and application processes differ depending on where you live.
Medicaid eligibility is based primarily on income, measured as a percentage of the Federal Poverty Level (FPL). The general categories of people who can qualify include:
The Affordable Care Act gave states the option to expand Medicaid to cover all adults earning up to 138% of FPL. As of early 2026, 40 states plus Washington, D.C. have expanded Medicaid. The remaining 10 states have not.
This creates a major difference in who can get covered:
This is why we wrote our Medicaid vs. marketplace insurance guide — if you don't qualify for Medicaid in your state, the ACA marketplace with premium subsidies is likely your next-best option.
Medicaid is actually more comprehensive than Medicare in several important ways. Every state Medicaid program must cover these "mandatory" services:
Many states also cover "optional" services like dental care, vision, physical therapy, and mental health services. The coverage tends to be quite broad, and out-of-pocket costs are minimal — most Medicaid beneficiaries pay nothing or just a few dollars per visit.
Heads up: Medicaid eligibility is re-evaluated periodically. If your income changes, you may lose Medicaid coverage and need to switch to marketplace insurance. Check your state's renewal schedule so you're not caught without coverage.
One of the biggest practical differences between Medicare and Medicaid is how much you'll pay out of pocket. Medicaid is designed for people with limited resources, so it has minimal cost-sharing. Medicare, while subsidized by the government, still requires significant premiums, deductibles, and copays.
| Cost Type | Medicare | Medicaid |
|---|---|---|
| Monthly premium | Part A: $0 (most people); Part B: ~$185/mo; Part D: ~$35-100/mo | $0 in most states (some charge $1-$5/mo) |
| Annual deductible | Part A: $1,632; Part B: $257 | $0 in most states |
| Doctor visit copay | 20% of Medicare-approved amount | $0-$4 per visit |
| Hospital stay | $0 for first 60 days (after deductible); $408/day for days 61-90 | $0 in most states |
| Prescription drugs | Varies by plan; copays of $1-$100+ per fill | $0-$4 per prescription |
| Out-of-pocket max | No cap on Original Medicare (Medicare Advantage plans have caps) | 5% of household income (federal cap) |
| Long-term care | Not covered beyond 100 days | Covered (largest payer of nursing home care in the US) |
The cost difference is striking. A Medicare beneficiary with Original Medicare (Parts A + B) and a Part D drug plan might spend $4,000-$7,000 or more per year in premiums, deductibles, and copays. A Medicaid beneficiary typically spends under $200 per year total.
This is why the roughly 12 million Americans who qualify for both programs — called "dual eligibles" — benefit so significantly. Medicaid picks up the costs that Medicare doesn't cover, including Medicare premiums, deductibles, and copays.
Walk through these questions to figure out which program fits your situation:
Yes → You almost certainly qualify for Medicare. If your income is also low, you may qualify for Medicaid too (dual eligible), which would help cover Medicare's out-of-pocket costs.
Yes → If you've been receiving SSDI for 24 months, you qualify for Medicare. If you receive SSI, you likely qualify for Medicaid. You may qualify for both.
Yes → Check your state's Medicaid eligibility. In expansion states, individuals earning up to about $20,800/year qualify. If you earn too much for Medicaid but less than 400% of FPL (about $60,200 for an individual), you likely qualify for ACA marketplace subsidies to reduce your premium costs.
Yes → You don't qualify for either Medicare or Medicaid. Your options are employer-sponsored insurance, ACA marketplace insurance (potentially with premium subsidies), or an individual plan.
Key point: If your income falls between Medicaid eligibility and 400% of FPL, the ACA marketplace with premium tax credits is likely your most affordable option. Our calculator can show you exactly how much you'd pay.
Medicare enrollment follows specific timelines tied to your 65th birthday or disability status:
Heads up: Missing your Medicare enrollment window can result in permanent premium increases. The Part B late enrollment penalty is 10% added to your premium for every 12-month period you could have had Part B but didn't sign up. This penalty lasts as long as you have Part B — it never goes away.
Medicaid has no annual enrollment period — you can apply at any time of year. The process varies by state, but generally works like this:
If you apply through HealthCare.gov and your income is too high for Medicaid, the system automatically checks whether you qualify for ACA marketplace subsidies instead. So applying through the marketplace is a good starting point if you're not sure which program you're eligible for.
Yes. About 12 million Americans — roughly 1 in 5 Medicare beneficiaries — qualify for both programs. These "dual eligible" individuals are typically seniors or people with disabilities who also have very low incomes.
If you qualify for both, you get significant financial benefits:
Even if you don't qualify for full Medicaid benefits, you may qualify for a Medicare Savings Program (MSP) that helps pay Medicare premiums and cost-sharing. There are four levels of MSPs, each with slightly different income limits and benefits.
Enter your income and household size to see if you're eligible for ACA subsidies, Medicaid, or other assistance.
Check Your SubsidyBoth. At 65, they'll automatically qualify for Medicare (assuming they or their spouse worked enough quarters). If their income is low enough, they should also apply for Medicaid in their state. Being dual eligible means Medicaid covers the costs that Medicare doesn't — including Medicare premiums, copays, dental, vision, and long-term care. There's no downside to having both.
You'll transition to Medicare as your primary insurance, but you may keep Medicaid as secondary coverage if your income is still low enough to qualify. Contact your state Medicaid office and make sure to sign up for Medicare during your Initial Enrollment Period to avoid penalties.
Yes — and this is one of the most important practical differences. Medicare only covers skilled nursing facility stays for up to 100 days after a qualifying hospital stay. Medicaid is the primary payer for long-term nursing home care in the United States, covering the vast majority of nursing home residents. However, Medicaid has strict income and asset limits for long-term care eligibility, and states may look at asset transfers made in the previous five years.
ACA marketplace insurance with premium tax credits is likely your best option. If your income is between 100% and 400% of the Federal Poverty Level, you qualify for subsidies that lower your monthly premium — sometimes significantly. Our state-by-state premium guide shows what you'd pay before and after subsidies.
Medicare and Medicaid serve different populations through different mechanisms. Medicare is age-based federal insurance with standardized benefits and meaningful out-of-pocket costs. Medicaid is income-based state-administered coverage with comprehensive benefits and minimal costs to the patient.
If you're 65 or older, Medicare is your primary program — and if your income is low, Medicaid can fill in the gaps. If you're under 65 and your income is limited, Medicaid is your first stop. And if you fall somewhere in between — too much income for Medicaid, too young for Medicare — the ACA marketplace with premium subsidies is designed exactly for your situation.
The most important thing is to know which programs you qualify for and to enroll on time. Missing a Medicare enrollment window leads to permanent penalties. Letting a Medicaid renewal lapse can leave you without coverage. And failing to check for marketplace subsidies might mean paying far more for insurance than you need to.