Medicare and Medicaid help millions pay for their healthcare. And although these programs sound similar, they are very much different.
If you want to decide which one is best for your situation, you should know each program’s basics: eligibility criteria, purposes, and benefits.
In this blog, we’ll break down the key distinctions between Medicare and Medicaid.
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What Are Medicare and Medicaid?
Let’s explain the basics: what Medicare and Medicaid are and who they serve.
Medicare
Medicare is a federal health insurance program primarily aimed at individuals aged 65 and older. It also covers certain younger individuals who have specific disabilities or medical conditions, such as end-stage renal disease.
The program is divided into parts that cover specific healthcare needs:
- Part A: Hospital stays, skilled nursing facility care, and some home healthcare services
- Part B: Outpatient care, including doctor visits, preventive services, and medical supplies
- Part C: Additional benefits like vision or dental care
- Part D: Prescription drug costs
Medicaid
Medicaid is a program funded by both the federal and state governments. It helps people and families with limited incomes get the healthcare they need. Medicaid offers a range of health services, often at little or no cost for those who qualify.
This program supports individuals and families who might otherwise struggle to afford healthcare, including:
- Low-income adults
- Pregnant women
- Children
- Elderly individuals in need of long-term care
Medicaid doesn’t just cover basic healthcare, like doctor visits and hospital stays. It also provides services that Medicare often doesn’t, such as long-term nursing home care, mental health support, and personal assistance services.
Medicare vs. Medicaid: Key Differences
Both programs provide healthcare coverage, but their eligibility criteria and costs differ.
Eligibility Requirements
Medicare is mainly for people aged 65 and older, and your income doesn’t affect whether you qualify. It also covers younger individuals with specific disabilities or health conditions like ALS or end-stage renal disease.
Medicare eligibility is usually based on your age or health. In some cases, your work history plays a role too. For example, if you’ve paid Medicare taxes for at least 10 years, you can typically get Part A without paying a premium.
Medicaid works differently—it’s based on income. It’s designed to help individuals and families with limited income and resources access essential healthcare services. Since both federal and state governments fund Medicaid, the income requirements can vary depending on where you live.
Some states have expanded Medicaid under the Affordable Care Act, making it available to even more people.
Costs
Here’s a concise overview of the costs for both programs in 2025:
Medicare Costs in 2025
Part A (Hospital Insurance):
- Premium: Most people receive Part A premium-free if they or their spouse paid Medicare taxes for at least 10 years. If not, the monthly premium can be up to $518.
- Deductible: $1,676 per benefit period.
- Inpatient hospital stay:
- Days 1–60: $0 after deductible.
- Days 61–90: $419 per day.
- Beyond 90 days: $838 per lifetime reserve day (up to 60 days).
- After lifetime reserve days: All costs.
Part B (Medical Insurance):
- Premium: Standard premium is $185 per month. Higher-income beneficiaries may pay more.
- Deductible: $257 annually.
- Coinsurance: After the deductible, typically 20% of the Medicare-approved amount for most services.
Plan C (Medicare Advantage Plans):
- Premium: Varies by plan.
Part D (Prescription Drug Coverage):
- Premium: Varies by plan.
- Out-of-pocket cap: Starting in 2025, there’s a $2,000 limit on how much you’ll have to pay out-of-pocket for prescriptions.
Medicaid Costs in 2025
Since it’s a joint federal and state program, the costs of Medicaid depend on the state you live in. Here’s a general idea of what you can expect:
- Premiums: Most Medicaid beneficiaries don’t pay premiums (some states might charge small amounts).
- Copayments: States may require small copayments for services, typically $4 for outpatient care or $8 for non-emergency visits to the emergency room.
- Cost-sharing limits: Total cost-sharing cannot exceed 5% of the family’s income.
For the most accurate and state-specific information, it’s best to consult your state’s Medicaid office or official website.
When Do You Need Medicare?
Medicare provides health coverage during specific stages of life or for those with certain medical conditions. Knowing when Medicare is the right choice for you can help you plan your healthcare needs.
For example, if you retire at the age of 65, Medicare is your best option. Even if you continue working, you can enroll in Medicare Part A (hospital insurance) without paying a premium if you’ve contributed to Medicare taxes for at least 10 years.
If you’re under 65 but receive Social Security Disability Insurance (SSDI) for at least 24 months, you may qualify for Medicare.
Certain conditions, such as end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS), can qualify you for Medicare regardless of age.
If you’re transitioning away from an employer-provided health plan, Medicare can step in to make sure there’s no gap in your coverage.
Enrollment
Medicare enrollment happens during specific periods, and it’s important not to miss them. Missing these windows could result in penalties or interruptions in your coverage. Knowing your Medicare enrollment deadline will help you avoid any unnecessary complications.
- Initial Enrollment Period (IEP): This is the seven-month window that starts three months before your 65th birthday, includes your birthday month, and ends three months after. If you sign up during this period, you can avoid late enrollment penalties.
- Special Enrollment Period (SEP): If you’re covered by an employer’s plan after age 65, you can enroll during a special period after that coverage ends.
- General Enrollment Period (GEP): If you miss the initial period, you can sign up between January 1 and March 31 each year. However, coverage begins in July, and you might face penalties for late enrollment.
To enroll, visit the Social Security Administration’s website or contact your local Social Security office. If you’re already receiving Social Security benefits, you’ll typically be enrolled automatically in Medicare Parts A and B when you turn 65.
When Do You Need Medicaid?
Medicaid is designed for individuals and families who meet specific income and resource requirements. It offers comprehensive healthcare coverage, especially for those who might not have access to affordable insurance otherwise.
If you or your family have limited income, Medicaid can help cover essential healthcare services that might otherwise be out of reach. For families with children, it provides extensive support, including access to pediatric care, vaccinations, and preventive services.
In some states, Medicaid also offers additional coverage for pregnant women and postpartum care.
For seniors needing long-term care or individuals with disabilities who don’t qualify for Medicare, Medicaid can cover nursing home care or personal assistance services.
If you’ve recently lost your job or health insurance, Medicaid might be able to help. Depending on your income and family size, it can provide either temporary or long-term coverage to ensure you have access to the care you need.
How to Apply
Applying for Medicaid is straightforward, but keep in mind that the process and eligibility requirements can differ from state to state:
- Start by finding out if you meet your state’s income and resource requirements. Many states offer online tools or calculators to help you figure this out.
- Collect the documents you’ll need, like proof of income, Social Security numbers, proof of residence, and identification for everyone in your household who’s applying.
- You can apply online through your state’s Medicaid website, over the phone, or in person at your local Medicaid office. Applications are also often accepted at healthcare facilities like hospitals or community health centers.
- Once your application is submitted, you’ll be notified if additional information is required. Approval times differ, but you’ll receive a decision explaining your coverage and benefits.
For state-specific information, visit Medicaid.gov or your state’s Medicaid website. These are the best resources to guide you through the process and provide tools to check your eligibility or locate local offices for assistance.
Bottom Line
And there you have it–the basics of Medicare and Medicaid. To sum up, Medicare is great for seniors and those with certain health conditions. Medicaid is a lifeline for people and families with lower incomes.
Think about what you need, explore your options, and don’t hesitate to ask for help if you’re unsure. The right program is out there, it’s just about finding the best fit for you.
