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What's the Difference Between Medicare and Medicaid?

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It's time for Medicare Annual Enrollment: Make sure you're getting the most coverage for your buck in 2023.

As we age, health and wellness play a starring role in our overall well-being. Since 1965, both Medicare and Medicaid have provided health care coverage to ensure older adults and other beneficiaries receive the care they need. However, Medicare and Medicaid are not the same. To help you understand the differences between Medicare and Medicaid, we'll explore how each health care plan works. We'll also take an in-depth look at Medicare and Medicaid eligibility, costs, and how to apply. Let's dive into these two important health care resources to help you determine if you qualify for Medicare, Medicaid, or both!

Table of Contents

What Is Medicare?

Sixty-three million Americans are enrolled in Medicare, our country's federal health insurance program1. Seniors, along with disabled individuals under the age of 65 and those with end-stage renal disease may also qualify. Medicare is made up of different parts, and each part covers specific benefits.

Original Medicare: Medicare Part A and Part B

Medicare Part A is the hospital insurance portion of Original Medicare that helps cover inpatient care in a hospital (including meals, supplies, and services) and short-term care at a skilled nursing facility following a hospital stay. Part A also covers a portion of home health care and hospice care costs.

Medicare Part B is the medical insurance portion of Original Medicare that helps cover preventative services like wellness visits and vaccines, medically-necessary services like outpatient care (including physical and occupational therapy), and durable medical equipment (DME).

Other Parts of Medicare

Original Medicare is fee-for-service health care. This means it covers some, not all, of your hospital and medical needs. The good news is there are other parts of Medicare to help combat costly out-of-pocket expenses. These options are offered through private insurance companies, so be sure to shop around as insurance company plans, pricing, and perks will vary.

Medicare Supplemental Insurance, also known as Medigap insurance, helps pay Original Medicare's out-of-pocket copayments, coinsurance, and deductible expenses. There are 10 federally standardized Medigap insurance plan options. If you became eligible for Medicare after January 1, 2020, you'll have eight to choose from, and each plan offers its own combination of benefits.

Medicare Advantage Plans, often called Medicare Part C, includes Medicare Part A and Part B in one plan. Medicare Advantage plans may also come with prescription drug coverage. Some Part C plans offer extra benefits such as dental, vision, hearing, and wellness programs.

Medicare prescription drug coverage, known as Medicare Part D, helps cover the cost of prescription drugs. Original Medicare does not include prescription coverage, leaving you (and your wallet) susceptible to an expensive visit to the pharmacy. Prescription drug coverage can be added onto Original Medicare or through Medicare Part C.

Medicare, and all of its parts, can undoubtedly be confusing! It's crucial to make sure you're cashing in on all of Medicare's benefits. Watch the video below with Jeff Hoyt, our editor-in-chief, as he covers how to optimize your Medicare coverage.

What you don't know about Medicare could hurt you:

What Is Medicaid?

Medicaid is a joint federal and state assistance program that provides health coverage to over 81.1 million Americans, including seniors and individuals with disabilities.2 Medicaid is the largest source of health coverage in the U.S. Older adults on a limited income or living solely on Social Security often struggle to pay for health insurance. Medicaid is designed to aid low-income individuals who cannot afford the health care they need. Medicaid helps cover Medicare costs for older adults and provides coverage for services Medicare does not cover (like memory care).

Under federal law, Medicaid must provide certain mandatory benefits. States have the option to provide additional benefits. While the mandatory benefits will be the same across the U.S., optional benefits will vary from state to state. All 50 states, the District of Columbia, and the U.S. territories have Medicaid programs that provide health coverage to those who are low-income.3

Mandatory Medicaid benefits include inpatient and outpatient hospital services, nursing facility, physician, and home health services, laboratory and X-ray services, and transportation to medical care.

Optional Medicaid benefits include prescription drugs, dentures and dental services, physical and occupational therapy, podiatry and optometry services, and hospice care.

From The Experts: Our comprehensive Medicare and Medicaid guide walks you through how these government programs can help you live a longer, healthier life.

Eligibility: Medicare vs. Medicaid

Medicare Eligibility Requirements

In order to be eligible for Original Medicare (Part A and Part B), you must be a U.S. citizen or a legal permanent resident for at least five years. You must also meet one or more of the following criteria.

  • You are aged 65 or older.
  • You are disabled.
  • You have end-stage renal disease (ESRD).
  • You have been diagnosed with Lou Gehrig's disease.

Everyone with Original Medicare, regardless of income, health status, or prescription drug usage, has access to Medicare Part D prescription drug coverage.4

Medicaid Eligibility Requirements

To be eligible for Medicaid, you must be a resident of the state where you receive Medicaid benefits. You must also be a citizen of the United States or a lawful permanent resident.

Individuals may be eligible for Medicaid if they are 65 and older, or are blind, or have a disability that is determined by the Social Security Administration's Supplemental Security Income (SSI) guidelines. Qualifying for Medicaid depends on several factors, including:

  • Your age
  • Your finances
  • The number of people in your family
  • If you have a disability or are blind

Unfortunately, not everyone will be eligible for Medicaid. If you have been denied Medicaid and have health care services you can't pay for, check to see if your state has a “medically needy program.” This program is for individuals whose income or assets fall above Medicaid's limits.

Learn more about Social Security and Supplemental Security Income in our guide to Social Security for seniors.

The Costs: Medicare vs. Medicaid

Medicare is not free. It comes with cost-sharing expenses. For example, Part B of Original Medicare has a $170.10 monthly premium, a $233 deductible, and a 20 percent coinsurance in 2022.5 Before signing up for Medicare, find out what Medicare Part A and Part B costs and covers. You may pay a higher monthly premium if your annual gross income is above a certain amount.

Medicaid is free or low-cost for individuals in need. Recipients usually pay no part of costs for covered medical expenses (a small co-payment is sometimes required).6 If you qualify for Medicaid, you may also qualify for Extra Help. The Extra Help program helps pay for your Medicare prescription drug coverage (Part D) to lower out-of-pocket drug costs.

Did You Know? Additional assistance may be available for low-income older adults struggling to pay their Medicare Part A and Part B premiums, deductibles, and copays. For more details and how to apply, visit our Medicare Savings Programs guide.

The Funding: Medicare vs. Medicaid

A key difference between Medicare and Medicaid is how they are funded. Sources of Medicare funding include payroll taxes (paid by employees, employers, and self-employed people), income taxes paid on Social Security benefits, and funds authorized by the government.7 Medicare's funding is funneled into two U.S. Treasury trust funds: the Hospital Insurance (HI) Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund.

Medicaid is jointly funded and administered by the federal government and states. Through the Medicaid Federal Medical Assistance Percentage (FMAP), the federal government pays states for a specified percentage of Medicare program costs. Each state must make certain they can fund their portion of Medicaid expenditures for the care and services available under their state plan.8 According to Pew Research, Medicaid makes up the most substantial portion of federal grants to states.

How to Get Medicare

Step one is to mark your calendar! Your initial Medicare enrollment clock starts ticking three months before you turn 65 and ends three months after the month you turn 65. In addition to initial enrollment, there are other times during the year to sign up, including Medicare's annual enrollment and Medigap open enrollment. Pay close attention to Medicare enrollment dates. If you miss the enrollment window, you may incur late enrollment fees.

Pro Tip: Head over to our step-by-step Medicare enrollment guide for everything you need to know about Medicare coverage, eligibility, costs, and how to avoid and how to avoid late enrollment penalties.

Ready to enroll in Medicare? Power up your computer and get started with Medicare's online application. To begin, you'll need a my Social Security account from the U.S. Social Security Administration (SSA). If you don't have one, check out my Social Security account set-up instructions. If you'd prefer not to apply online, you always have the option to apply by phone or in person at any Social Security office. Medicare representatives are available by phone Monday through Friday from 7 a.m. to 7 p.m.

How to Get Medicaid

Unlike Medicare's specific enrollment periods (and potential late enrollment fees if you miss those dates), you can enroll for Medicaid at any time! Your coverage will begin immediately if you meet Medicaid's qualifications and are approved.

There are two ways to apply for Medicaid.

  1. Complete the Medicaid application on's Health Insurance Marketplace. You can start the process by creating an account.
  2. Apply for Medicaid directly through your state's Medicaid agency.

Did you know Medicaid covers long-term nursing home care for eligible seniors? In the video below, Jeff Hoyt, editor-in-chief of, shares important information and resources on senior living options for low-income individuals.

Can You Have Medicare and Medicaid?

Yes! According to the Centers for Medicare & Medicaid Services, 12 million people are dually eligible and enrolled in both Medicaid and Medicare.9 For dually eligible individuals, Medicare pays first, while Medicaid pays second.

Don't miss out on essential benefits; contact your State Medicaid Agency to find out if you qualify. Even if you've been denied Medicaid in past years, state requirements can change in your favor. A number of states have expanded Medicaid eligibility to cover more low-income individuals.

How Do I Contact Medicare and Medicaid?

Navigating the Medicare and Medicaid websites can be confusing (especially for older adults who aren't tech-savvy). Or you may simply want to speak to a representative over the phone. Before calling Medicare or Medicaid, be sure to make a list of questions you need answered and have a notepad handy to write down the answers.

Toll-Free: (800) 633-4227; TTY: (877) 486-2048
Medicare website

Toll-Free: (877) 267-2323; TTY: (800) 877-8339
Medicaid website Marketplace
Toll-Free: (800) 318-2596; TTY: (855) 889-4325
Health Insurance Marketplace website

Don't Leave Your Hard-Earned Benefits Behind. Call to get connected with a licensed sales agent.

Senior Living is an online lead generator that helps connect consumers with licensed insurance agents. MEDICARE ADVANTAGE AND PDP: This site provides referrals to representatives of Medicare Advantage organizations and stand-alone PDP prescription drug plans that have Medicare contracts. Enrollment in any plan depends on contract renewal. The plans represented do not discriminate on the basis of race, color, national origin, age, disability, or sex. To learn more about a plan's nondiscrimination policy, please contact the plan. For a complete list of available plans please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult Generally, Medicare is available for people age 65 or older, younger people with disabilities and people with End Stage Renal Disease. You must have both Part A and B to enroll in a Medicare Advantage plan. Members may enroll in the plan only during specific times of the year. Some Medicare plans are not available in all areas, and costs, coverage, and benefits vary by location. MEDICARE SUPPLEMENT: Medicare Supplement insurance is available to those age 65 and older enrolled in Medicare Parts A and B and, in some states, to those under age 65 eligible for Medicare due to disability or End-Stage Renal disease. Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. PRIVATE SITE: This is a non-government website, and is not endorsed by the Centers for Medicare & Medicaid Services (CMS), the Department of Health and Human Services (DHHS), or any other government agency. The purpose of this communication is to connect individuals with a licensed insurance agent. Contact will be made by an insurance agent or a phone representative who can connect you to a licensed insurance agent. AGREEMENT TO TERMS: If you use submit your information through this website, you agree to the Privacy Policy and Terms & Conditions linked below, and to be contacted by a licensed insurance agent or a phone representative who can help connect you to a licensed insurance agent in your area to help review your coverage and options. NOT ALL PLANS OFFERED: The licensed agent to whom you are connected may not offer all plans in your area. Any information provided is limited to those plans the licensed agent does offer in your area. To explore all plans, please contact or 1-800-MEDICARE.


Written By

Maureen Stanley

Writer & Editor

Maureen joined with more than 10 years of experience writing in health, lifestyle, and nutrition for premium brands like General Mills, Westinghouse, and Bristol Myers Squibb. Her passion for empowering older adults is evident in coverage of topics like retirement, health… Learn More About Maureen Stanley

  1. Centers for Medicare & Medicaid Services. (2021). CMS Releases Latest Enrollment Figures for Medicare, Medicaid, and Children’s Health Insurance Program (CHIP).

  2. (2022). April 2022 Medicaid & CHIP Enrollment Data Highlights.

  3. Program History.

  4. U.S. Department of Health & Human Services. (2014). Who is eligible for Medicare?

  5. (2022). Costs.

  6. U.S. Department of Health & Human Services. (2015). What is the difference between Medicare and Medicaid?

  7. (2022). How is Medicare funded?

  8. Financial Management.

  9. (2022). Seniors & Medicare and Medicaid Enrollees.