Alyssa Lane
Medicare and Medicaid are both health insurance programs, but they differ in terms of eligibility and coverage. Medicare is a federal insurance program for US citizens aged 65 and above and younger people with disabilities, whereas Medicaid is a joint federal and state program that offers health coverage to people with limited income and resources, including families, children, pregnant women, the elderly, and people with disabilities. While Medicare is available nationwide, Medicaid eligibility and benefits vary from state to state. Both programs can work together to provide comprehensive coverage, with Medicare as the primary payer and Medicaid as the secondary payer for additional benefits not covered by Medicare, such as nursing home care and personal care services.
| Characteristics | Values |
|---|---|
| Number of people covered | Medicaid: 83 million; Medicare: 60 million |
| Income of beneficiaries | Medicaid: Low-income; Medicare: In 2016, half had incomes below $26,200 per person and savings below $74,450 |
| Beneficiaries by age | Medicaid: All ages; Medicare: 15% under 65, 12% 85 and over |
| Beneficiaries by disability status | Medicaid: All disability statuses; Medicare: 15% under 65 with long-term disability |
| Beneficiaries by race | Medicaid: Higher share of Black, Hispanic, and American Indian or Alaska Native (AIAN) beneficiaries compared to White beneficiaries; Medicare: No data |
| Type of insurance | Medicaid: Joint federal and state program; Medicare: Federal program |
| Cost to beneficiary | Medicaid: Usually free, may owe a small co-payment; Medicare: Deductible of $1,364 per benefit period in 2019, 20% coinsurance, extra insurance available to cover share of costs |
| Coverage | Medicaid: Comprehensive coverage of health and long-term care, including nursing home care and personal care services; Medicare: Hospital stays, physician services, prescription drugs, preventive services, skilled nursing facility and home health care, and hospice care |
| Spending | Medicaid: Accounts for one-fifth of healthcare spending, more than half of spending for long-term care; Medicare: Accounted for 15% of total federal spending and 20% of total national health spending in 2017 |
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What You'll Learn
Medicare and Medicaid eligibility
Medicare is a federal health insurance program for individuals aged 65 and above and younger people with disabilities or end-stage renal disease. The Social Security Administration manages Medicare eligibility and enrolment. Medicare is divided into four parts, each covering specific services:
- Part A: Covers inpatient care in hospitals, critical access hospitals, and skilled nursing facilities (not custodial or long-term care). It also covers hospice care and some home health care. Most people don't pay a monthly premium for Part A.
- Part B: Covers medical services like doctors' services, outpatient care, and other services not covered by Part A. The standard monthly premium for this part is $148.50 (or higher depending on income).
- Part C: Medicare Advantage Plan, offered by private companies approved by Medicare.
- Part D: Prescription Drug Coverage, which everyone with Medicare can access regardless of income or health status.
Medicaid, on the other hand, is a joint federal and state program that provides health coverage to individuals with limited income and resources, including low-income families and children, pregnant women, the elderly, and people with disabilities. The eligibility rules for Medicaid vary across states, generally requiring individuals to meet income and resource limits and be state residents.
Individuals can be dually eligible for both Medicare and Medicaid, receiving benefits from both programs. In such cases, Medicare typically serves as the primary payer, with Medicaid covering additional costs or services not covered by Medicare, such as long-term nursing home care, prescription drugs, eyeglasses, and hearing aids. Medicaid may also help pay for Medicare premiums and out-of-pocket medical expenses for low-income enrollees.
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Medicare and Medicaid costs
Medicare is administered by the Centers for Medicare & Medicaid Services (CMS), a component of the Department of Health and Human Services. CMS works with the Department of Labor (DOL) and the U.S. Treasury to enact insurance reform. The Social Security Administration (SSA) determines eligibility and coverage levels.
Medicare costs vary based on the coverage and services availed, and the providers visited. There is generally a monthly premium for Medicare coverage, and beneficiaries must pay a part of the costs each time they use a covered service. There is no yearly limit on out-of-pocket expenses unless there is supplemental coverage, like a Medicare Supplement Insurance (Medigap) policy, or the beneficiary joins a Medicare Advantage Plan. The monthly premium also varies based on the plan, where the beneficiary lives, and other factors. The amount changes every year.
Medicare Part A inpatient hospital deductible, which beneficiaries pay if admitted to the hospital, was $1,632 in 2024. This covers the beneficiary's share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period. In 2024, beneficiaries had to pay a coinsurance amount of $408 per day for the 61st through the 90th day of a hospitalization. For beneficiaries in skilled nursing facilities, the daily coinsurance for days 21 through 100 of extended care services in a benefit period was $204 in 2024.
Medicare Part B covers physicians' services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A. The standard monthly premium for Medicare Part B enrollees was $174.70 in 2024 and increased to $185.00 in 2025. The annual deductible for all Medicare Part B beneficiaries was $240 in 2024 and increased to $257 in 2025.
Medicaid is a joint federal and state program that helps cover medical costs for certain low-income people, families and children, pregnant women, the elderly, and people with disabilities. The federal government pays states a share of program expenditures, called the Federal Medical Assistance Percentage (FMAP). Each state has its own FMAP based on per capita income and other criteria. The average state FMAP is 57%, with wealthier states having a lower FMAP of around 50%, and states with lower per capita incomes having an FMAP of up to 75%.
Medicaid offers benefits not normally covered by Medicare, like nursing home care and personal care services. If an individual has both Medicare and qualifies for full Medicaid coverage, their state will pay their Medicare Part B monthly premiums. Depending on the level of Medicaid coverage, the state might also pay for the beneficiary's share of Medicare costs, like deductibles, coinsurance, and copayments.
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Medicaid coverage
Medicaid is a federal and state program that provides health care coverage to eligible low-income adults, families and children, pregnant women, the elderly, and people with disabilities. Each state has its own Medicaid program, but they must follow broad federal guidelines. States establish and administer their Medicaid programs and decide on the type, amount, duration, and scope of services provided.
Medicaid programs must adhere to certain mandatory benefits and services, including inpatient and outpatient hospital services, physician services, laboratory and x-ray services, and home health services. Beyond these mandatory benefits, states have the option to include additional services, such as prescription drugs, case management, physical therapy, and occupational therapy.
Medicaid work requirements have been a subject of debate, with proposals suggesting that able-bodied working-age adults should be subject to specific work requirements to maintain their coverage. Critics argue that these requirements could result in the loss of coverage for thousands of people, even though the majority of them are already working or qualify for an exemption.
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Medicare and private insurance
Medicare is a public health insurance program, funded by the government. It is generally available to those aged 65 or older, but it is also accessible to those with disabilities or ALS, and those with End-Stage Renal Disease (ESRD).
Private health insurance, on the other hand, is offered by private companies. Many people obtain private insurance through their employer, or through their spouse's employer.
It is possible to have both Medicare and private insurance at the same time. When an individual has both, a process called "coordination of benefits" determines which insurance provider pays first. This is called the "primary payer". The primary payer covers any costs until its limit is reached, after which the "secondary payer" covers any remaining costs, although it may not cover everything. The primary payer can depend on the type of private insurance and the individual's situation.
If an individual has Medicare and qualifies for full Medicaid coverage, they are considered "dually eligible". In this case, Medicare is the primary payer, and Medicaid pays last, after any other insurance.
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Medicaid and private insurance
Medicaid is a federal-state programme that assists specific low-income people, families, children, pregnant women, the elderly, and people with disabilities in covering their medical expenses. The eligibility requirements for Medicaid vary by state, and candidates must typically meet income and resource criteria as well as be state residents. Medicaid provides benefits that Medicare does not, such as nursing home care and personal care services. People with Medicaid usually don't pay for covered medical costs but may be liable for a small co-payment for some services.
Private insurance is one of the other sources that are legally liable for the payment of medical costs for Medicaid beneficiaries. When Medicaid benefits supplement another coverage source, such as private insurance, it is often referred to as wrap-around coverage. Medicaid enrollees with private health insurance or Medicare coverage are excluded from enrollment in Medicaid Managed Care Organizations (MCOs). Third-party liability (TPL) refers to the legal obligation of third parties, such as insurers, to pay for medical assistance provided under a Medicaid state plan. States are required to ascertain the legal liability of third parties to pay for care and services available under the Medicaid state plan.
In certain cases, state Medicaid programs may arrange for another entity to pay for Medicaid-covered services through managed care contracts or premium assistance programs. For example, some states may pay for private market coverage designed for a non-Medicaid population, or they may enter into data matching agreements with third parties to identify Medicaid enrollees with additional coverage. Additionally, the majority of Medicaid enrollees receive at least some of their benefits through managed care plans, which contract directly with states and must comply with Medicaid-specific requirements.
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Frequently asked questions
Medicare is federal health insurance for anyone aged 65 and older and some people under 65 with certain disabilities or conditions.
Medicaid is a joint federal and state program that helps cover medical costs for certain low-income people, families and children, pregnant women, the elderly, and people with disabilities.
Medicare is federal insurance for people over 65 or with certain disabilities. Medicaid is a joint federal and state program that covers medical costs for low-income individuals and families. Medicaid also covers benefits that Medicare doesn't, like nursing home care.
Yes, if you have both Medicare and full Medicaid coverage, you are considered "dually eligible". Medicare is the "primary payer" and will pay up to the limits of its coverage, then Medicaid pays for the rest.
Medicare is available for people aged 65 or older, younger people with disabilities, and people with End Stage Renal Disease. For Medicaid, eligibility and benefits vary from state to state, but generally, it is for individuals and families with low incomes and resources.
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