What’s the Difference Between Medicare and Medicaid?

Difference Between Medicare and Medicaid get mixed up constantly, and honestly, I get why. The names look almost identical, they’re both government-run health programs, and people usually bring them up in the same breath like they’re a matching set. But once you actually dig into what each one does, they’re pretty different—like, almost nothing alike once you get past the similar spelling.

Medicare is mainly built for older adults and for certain people with disabilities. It’s kind of like the government version of a retirement-age insurance plan. Medicaid, on the other hand, is designed for people who simply don’t have the income or resources to pay for regular health insurance—so it works more like a safety net. And there’s a pretty big gap between the two when it comes to who qualifies, what’s covered, and who’s footing the bill.

So if you’ve ever looked at these programs and thought, “Okay wait… which one am I supposed to use?” you’re not alone. Like, at all. Most people need the breakdown explained in plain English. So let’s go through the basics without slipping into that weird, dry insurance-brochure tone.

🏥 What Is Medicare?

Medicare is basically the default health insurance you get from the government once you hit age 65. You don’t have to “earn” it by having a certain income. If you’re 65 or older, or younger but with a specific disability, you’re in.

The short list:

• People 65+
• Some younger folks with disabilities
• People with ESRD or ALS

Medicare is run by CMS (Centers for Medicare & Medicaid Services), and it’s funded through payroll taxes, premiums, and all that federal budget stuff nobody wants to read about unless they absolutely have to.

One important thing: income does not determine eligibility. It’s not “poor = Medicaid, middle class = Medicare.” It’s really just an age/disability thing.

✅ The Four Parts of Medicare

Medicare is divided into four pieces. Think of it like a puzzle with four corners. They fit together, but each one does its own thing.

Part A – Hospital Insurance

Part A is what pays for your hospital stays and that whole world of care.

It helps cover:

• Inpatient hospital stays
• Skilled nursing facility care (short-term, not permanent living)
• Hospice
• Some home health care

If you or your spouse worked and paid Medicare taxes for about 10 years, you usually don’t pay a monthly premium for Part A. That part sounds nice, but you still have deductibles and coinsurance when you actually use services. “Free” isn’t exactly free in Medicare land.

Part B – Medical Insurance

Part B is the stuff you probably use more often:

• Doctor visits
• Specialist appointments
• Preventive care (flu shots, screenings)
• Outpatient stuff
• Wheelchairs and other durable equipment
• Tests, scans, labs, etc.

2025 Standard Premium: $185/month
Deductible: $257
After that? Medicare covers about 80%, and you cover the remaining 20%.

If your income is on the higher end, Medicare charges you more. (This is called IRMAA, which is a terrible name but what can you do.)

A lot of people buy “Medigap” plans to cover the leftover 20% and the random bills Original Medicare leaves hanging. But Medigap only works with Original Medicare—not Medicare Advantage.

Part C – Medicare Advantage (Private Plans)

Part C is when private insurance companies step into the chat.

Instead of sticking with Original Medicare (Parts A and B), you can sign up for a Medicare Advantage plan. These usually package:

• Part A
• Part B
• Part D (drugs)

…into one single plan.

They sometimes throw in extra stuff like:

• Vision
• Dental
• Hearing aids
• Transportation
• Fitness programs

Advantage plans sound great because it’s a one-stop shop, but the catch is you now have to deal with networks, referrals, and approvals. If you’re a person who doesn’t like “You need prior authorization” messages, keep that in mind.

Part D – Prescription Drug Coverage

Part D is basically your prescription plan. Without it, medication costs can get scary.

You can buy a standalone Part D plan or get it included in a Medicare Advantage plan.

Expect:

• A monthly premium
• A deductible
• Copays for drugs

Every plan has its own list of covered medications (its formulary), and these change more than you’d expect. So checking your plan every year during the fall enrollment period is pretty important—even though it’s boring.

Also Read: How do I Insure Elderly Parents Under My Plan?

💵 2025 Medicare Cost Snapshot

Coverage Type	Monthly Premium	Deductible	Notes
Part A	Free (if eligible) / Up to $518	$1,676 per benefit period	Hospital stays
Part B	$185	$257	Outpatient medical
Part C	Varies	Varies	Private plans
Part D	Varies	Varies	Prescription drugs

And of course, the word “varies” does a lot of heavy lifting in Medicare.

🏛 What Is Medicaid?

Medicaid is the other side of the coin. Instead of focusing on age or disability, Medicaid is for people who don’t have the income or resources to buy insurance on their own. It’s a joint program—partly federal money, partly state money—so states have their own rules.

Medicaid typically covers:

• Low-income adults
• Children (a big portion of Medicaid is actually kids)
• Pregnant women
• People with disabilities
• Seniors who need long-term care

A huge thing people don’t always know: Medicaid is by far the biggest payer of long-term care in the country. That’s nursing homes, personal care, long-term home health—stuff Medicare only barely covers.

📋 Medicaid Eligibility (2025)

Eligibility changes depending on where you live, which can be frustrating. But the general rule is:

• You must be a U.S. citizen or legal resident
• Your income has to fall below your state’s limits

Most states (thanks to ACA expansion) use around 138%–150% of the federal poverty level for adults, but some states still haven’t expanded Medicaid, so it can get messy.

Costs? Usually almost nothing. Most Medicaid enrollees pay no premiums, and copays—if a state uses them at all—are usually just a couple of dollars.

Also Read: How do Insurance Premiums Work?

👵 Medicaid After Age 65

If you already have Medicaid and then hit 65 and qualify for Medicare, you become dual eligible.

Here’s how that plays out:

• Medicare pays first
• Medicaid fills in the gaps
• Medicaid covers your Medicare premiums (in many cases)
• Medicaid covers what Medicare won’t, like long-term care

This combo is surprisingly powerful for older adults with low income. It can be the difference between manageable medical bills and total financial disaster.

Every state must offer the following:

• Hospital care
• Doctor visits
• Nursing facility services
• Home health care
• Lab tests
• X-rays
• Maternity care
• Pediatric services
• Midwife services
• Family planning
• Non-emergency medical transportation (yes, rides)

This is the Medicaid “starter pack.” States can’t get out of offering these.

🌟 Optional (State-Added) Medicaid Benefits

States can add extra stuff, and many do:

• Prescription drugs
• Dental
• Vision
• Mental health care
• Substance use treatment
• PT/OT/speech therapy
• Hospice care
• Long-term services beyond the basics
• Telehealth

Some states get pretty generous, others… not so much.

⚖️ Medicare vs. Medicaid: Side-by-Side Comparison

Feature	Medicare	Medicaid
Purpose	Seniors + some disabilities	Low-income individuals & families
Administered by	Federal	State + federal
Eligibility	Age/disability	Income
Costs	Premiums + deductibles	Usually low/no cost
Long-term care	Very limited	Extensive
Enrollment timing	Mostly age-based	Year-round
Funding	Payroll taxes	State + federal taxes

🧠 Real-World Example

Here’s a simple real-life-ish example to make things clearer:

Maria, age 67, lives on a tiny fixed income. She qualifies for both programs.

This is what that looks like:

• Medicare handles her doctor visits and hospital stays
• Medicaid pays her Medicare premium
• Medicaid covers her drug copays
• If she ever needs long-term nursing home care, Medicaid pays most of it

Without Medicaid, Maria would be drowning in medical bills. With both programs together, she’s actually covered pretty well.

🔍 Expert Tip: How to Choose Between Medicare and Medicaid

You don’t really “choose.” They’re not competing products.

• If you’re 65+ → Medicare
• If you’re low income → Medicaid
• If you qualify for both → Definitely use both

The combination (dual coverage) gives you more benefits than either one alone.

If you want to check eligibility, use:

• SHIP (free counseling)
• Medicare.gov
• Medicaid.gov
• Your state Medicaid website

🩺 Conclusion

Getting the hang of Medicare vs. Medicaid isn’t fun, but it’s honestly one of the smartest things you can understand about health coverage in the U.S.

Medicare is basically your age-based coverage—super important once you hit 65, even if you feel perfectly healthy. Medicaid is the financial safety net for people who need care but don’t have the income to pay for it. And if you qualify for both, you get some of the strongest protection available.

Whether you’re looking ahead for yourself or helping someone in your family, knowing who covers what will save you headaches (and probably money).

📚 FAQs: Medicare vs. Medicaid