Medicare vs. Medicaid: The Important Differences to Know
Medicare generally covers seniors, while Medicaid covers people or families with low incomes.
Medicare gets money solely from the federal government, while Medicaid receives both federal and state funding. This lets each state partially decide who qualifies and what is covered under their individual Medicaid program. You can get coverage from both programs if you qualify.
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What's the difference between Medicare and Medicaid?
The biggest difference between Medicare and Medicaid is who is eligible for each. Medicare is generally for people ages 65 and over, while Medicaid covers people with low incomes.
| Who is eligible? | Seniors or those with a disability (all income levels) | People with low incomes (all ages) |
| What does it cover? | Hospitals, doctors and usually medications | Hospitals, doctors and medications, plus some added benefits |
| What affects coverage? | The plans you buy | The state you live in |
| What does it cost? | At least $185 per month | Usually free or cheap |
| Who funds the program? | Federal government | Federal and state governments |
Coverage with Medicare vs. Medicaid
Both Medicare and Medicaid cover doctor visits and hospital stays.
Overall, Medicaid gives you better coverage. Medicaid covers prescription medications automatically, whereas you have to have Medicare Advantage or Part D plan to get prescription drug coverage with Medicare.
Medicaid also sometimes covers dental care and vision care. Original Medicare doesn't cover dental or vision care in most cases, but most Medicare Advantage plans cover both.
Another big difference between Medicare and Medicaid is nursing home coverage. Medicaid covers nursing homes and long-term care for qualified individuals. Medicare doesn't. Medicare only pays for what's called "skilled nursing care," which is short-term care that's needed to help you after an injury or illness.
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Can you have both Medicare and Medicaid?
You can have both Medicare and Medicaid if you're eligible for both programs.
This usually means you're a senior who has a low income. Being able to get coverage from both Medicare and Medicaid is called being dual-eligible.
When you're dual-eligible, you can have either Original Medicare (Parts A and B) along with Medicaid or a type of Medicare Advantage plan called a Dual-Eligible Special Needs Plan (D-SNP), which is designed to coordinate coverage between both Medicare and Medicaid.
Other ways to save if you have Medicare and Medicaid
If you have Medicare and are only eligible for partial Medicaid benefits, you can also apply for other ways to save, such as the Medicare Savings Programs or the Extra Help program.
These programs are especially useful if you live in one of the 10 states where it's difficult to qualify for Medicaid because they haven't expanded eligibility.
Annual income limits for other ways to reduce Medicare costs
Program | Single person limit | Couple limit |
|---|---|---|
| Qualified Medicare Beneficiary (QMB) | $15,900 | $21,396 |
| Specified Low-Income Medicare Beneficiary (SLMB) | $19,020 | $25,620 |
| Qualifying Individual (QI) | $21,372 | $28,800 |
| Qualified Disabled and Working Individual (QDWI) | $63,624 | $85,620 |
The programs also typically have limits on how much money you can have in the bank, investments or a retirement account.
What is Medicare?
Medicare is health insurance from the federal government for people who are ages 65 and over.
You might also be able to get Medicare if you’re younger than age 65, but have a disability or illness like Lou Gehrig's disease (ALS) or kidney failure ESRD). Eligibility for Medicare is not based on your income.
Medicare has several different areas of coverage, called "parts."
- Part A covers you when you have to go to or stay in the hospital. Part A is one-half of "Original Medicare."
- Part B pays for things like regular doctor visits, specialist care and medical equipment like wheelchairs. Part B is the second half of Original Medicare.
- Part D is optional coverage that you can add for prescription drugs. If you have Original Medicare and you don't get a Part D plan, you don't have coverage for prescription medications you take at home.
You also have the option to not get the different parts of Medicare and instead get a Medicare Advantage plan, which rolls Parts A, B and usually D into one plan.
But if you want more coverage, it’s better to stick with Original Medicare and Part D, and then add a Medicare Supplement plan. These plans cover most of the costs that Original Medicare won’t, which means you'll often pay very little for your medical care.
It's almost always cheaper to get Medicare than to buy a typical health insurance plan because health insurance is more expensive the older you are.
With Medicare, you'll get free hospital insurance through Medicare Part A. This is because you paid into the Medicare program when you were working through the Medicare tax. It’s likely you’ll only pay $185 per month for Part B, which covers doctor visits. But if you earn more than $106,000 as a single person or $212,000 as a couple in 2025, you'll have to pay more.
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What is Medicaid?
Medicaid is government health insurance for those who have a low income.
Medicaid coverage comes from both the federal government and state governments. The federal government sets core rules about Medicaid, like requiring benefits to cover children, pregnant women, parents and seniors with low incomes. Otherwise, states have some freedom to set their own Medicaid rules, which means that Medicaid eligibility varies by state.
Most states have expanded their Medicaid programs to cover people who make up to $21,597 and a family of four with an income up to $44,367. However, 10 states haven't expanded their Medicaid programs. In these states, it's very hard to get Medicaid.
Medicaid income limit in most states
Household size | Max. income to qualify |
|---|---|
| 1 | $21,597 |
| 2 | $29,187 |
| 3 | $36,777 |
| 4 | $44,367 |
| 5 | $51,957 |
Income limits are higher in Alaska and Hawaii, and they're lower in states that haven't expanded Medicaid (Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin and Wyoming).
The more people you have in your household, the more you can earn and still qualify for Medicaid.
Medicaid income limits can also be different based on your health, such as having a disability or being pregnant. If you have high medical expenses, you may qualify through the Medicaid spend down program.
Medicaid is usually free or very cheap for those who are enrolled.
Find out if you qualify for Medicaid by using the Medicaid calculator on HealthCare.gov or by applying directly through your state.
Frequently asked questions
Which one is better, Medicaid or Medicare?
It depends on your needs. If you have a very low income and can't afford health insurance, Medicaid is the best option. If you're 65 or older, you can get great coverage with Medicare. But you don't have to choose between the two programs. If you are a senior with a low income, you're probably "dual-eligible" and can get coverage through both Medicare and Medicaid.
What is the highest income to be eligible for Medicaid?
If you're single, you have to make less than $21,597 per year to get Medicaid in 2025. If you're part of a family of four, your household income can't be more than $44,367 per year.
Do I still need Medicare if I have Medicaid?
Not necessarily, but you may still want to sign up. If you qualify for both Medicare and Medicaid, you can get coverage from both programs. But if you are going to sign up for Medicare, do it when you're first eligible. If you don’t, you'll pay higher rates later on. That means if you rely solely on Medicaid and delay Medicare, it will be more expensive and could be harder to get coverage if your income ever changes and you no longer qualify for Medicaid in the future.
Sources
Insurance Writer
Cate Deventer is a ValuePenguin writer who specializes in health insurance, Medicare, auto and home insurance. She's been a licensed insurance agent since 2011.
She started her insurance career working as a customer service agent for State Farm. She later moved to an independent agency, where she worked with several insurance companies and hundreds of clients. She quoted policies, filed claims and answered insurance questions. In 2021, she pivoted her career and began writing about insurance for Bankrate. She moved to ValuePenguin in 2023 and began writing about health insurance and Medicare.
Cate has a passion for helping readers choose insurance to fit their needs. She enjoys knowing that her research and knowledge help people choose insurance products that make a positive difference in their lives.
How insurance helped Cate
Cate used her health insurance knowledge to navigate a surgery in 2023. Understanding how her policy worked let her focus on recovery instead of worrying about bills.
Expertise
- Health insurance
- Medicare
- Auto insurance
- Home insurance
- Life insurance
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- Licensed Life, Accident and Health Insurance Agent
- Licensed Property & Casualty Insurance Agent
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- BA, Theatre, Purdue University
- BA, English, Indiana University
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