Medicare vs Medicaid: How to Tell the Difference

Medicare and Medicaid are two federal health programs that are constantly confused for one another, and honestly, the names do not help. They were both created in 1965, both administered by the Centers for Medicare and Medicaid Services, and both provide healthcare coverage to people who might otherwise struggle to afford it. But they are fundamentally different programs that serve different populations in different ways.

Medicare: Based on Age and Work History

Medicare is a federal health insurance program primarily for people 65 and older. It is also available to people under 65 who have certain disabilities and have received Social Security Disability Insurance (SSDI) for at least 24 months, as well as people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant) or ALS (Lou Gehrig's disease).

Eligibility for Medicare is based on your age and work history -- not your income or assets. A retired millionaire qualifies for Medicare at 65. A retired minimum-wage worker qualifies at 65. Your financial situation does not change whether you can get Medicare. What it does affect is whether you pay more for your premiums (through IRMAA for higher earners) and whether you qualify for additional assistance programs.

Medicare is financed through payroll taxes (the 1.45% you and your employer each pay), monthly premiums, and general tax revenue.

Medicaid: Based on Income and Assets

Medicaid is a joint federal-state program that provides health coverage to people with low income and limited assets. Unlike Medicare, Medicaid eligibility is means-tested -- you have to qualify financially.

The income and asset limits vary by state because states administer Medicaid within federal guidelines and have flexibility to expand or restrict eligibility. Under the Affordable Care Act, states were given the option to expand Medicaid to cover adults with incomes up to 138% of the federal poverty level. Most states have expanded, but not all.

Medicaid serves a wide range of people: low-income adults, children, pregnant women, people with disabilities, and elderly people who have limited financial resources. It is not just a program for people of working age -- Medicaid pays for a significant portion of nursing home care in the United States.

The Big Differences Side by Side

Who qualifies: Medicare is for people 65 and older (and some younger people with disabilities). Medicaid is for people with low income and limited assets, at any age.

How it is funded: Medicare is primarily funded through payroll taxes and premiums. Medicaid is funded jointly by federal and state governments.

Who runs it: Medicare is a federal program with uniform national rules. Medicaid is run by individual states within federal guidelines, so benefits and eligibility vary significantly by state.

Premiums: Medicare typically has monthly premiums (though Part A is free for most people and some plans have $0 premiums). Medicaid typically has no premiums or very small ones for eligible enrollees.

Coverage scope: Both provide broad health coverage, but Medicaid often includes benefits Medicare does not, including long-term care services, personal care assistance, and dental and vision for covered populations.

Dual Eligibility: When You Have Both

About 12 million Americans qualify for both Medicare and Medicaid -- these people are called "dual eligibles." This typically happens for elderly or disabled individuals who have Medicare based on age or disability but also have very low income and assets.

Being dual-eligible is actually a significant benefit. Medicaid can help pay for Medicare premiums, deductibles, and cost-sharing, dramatically reducing what these individuals pay out of pocket. There are several programs specifically designed for dual-eligible beneficiaries, including Medicare Savings Programs that help pay Part B premiums.

Medicare Savings Programs: A Bridge Between the Two

Even if you do not qualify for full Medicaid, you may qualify for a Medicare Savings Program that helps cover your Medicare costs. These programs are funded through Medicaid and help pay for Part B premiums (and sometimes Part A premiums, deductibles, and coinsurance) for people with Medicare who have limited income.

There are four types: Qualified Medicare Beneficiary (QMB), Specified Low-Income Medicare Beneficiary (SLMB), Qualifying Individual (QI), and Qualified Disabled Working Individual (QDWI). Income limits vary by state, but in 2026, individuals earning up to about $1,500 per month may qualify for some level of assistance.

To apply, contact your state's Medicaid office or Social Security Administration. Many people who qualify never apply because they do not know these programs exist.