The biggest difference between Medicare and Medicaid is who’s eligible. Medicare is based on age or disability. Medicaid is based on income:

• You’re eligible for Medicare if you’re 65 or over or have a qualifying disability, such as end-stage renal disease or ALS.
• You’re eligible for Medicaid If your income is below a certain level depending on your state.

You cannot choose between Medicare and Medicaid because it depends on your age and income. There are times when you might be eligible for both  Medicare and  Medicaid. One example is if you’re elderly and receive care in a nursing home. However, most people have either coverage depending on their age and income. 

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Let’s take a look at the two programs, how they differ and who’s eligible for each.

What is Medicare?

Medicare is a federal health insurance program available for people when they reach 65. The program is also for younger people with specific illnesses, such as end-stage renal disease (ESRD) and amyotrophic lateral sclerosis (ALS), also called Lou Gehrig’s Disease.

As you near 65, Medicare will send you information about signing up. You can choose between Original Medicare (Parts A and B) with prescription drug coverage (Part D) or Medicare Advantage (Part C).

Here’s what Parts A, B, and D cover:

• Part A (hospitals) — This coverage protects you if you’re hospitalized.
• Part B — This covers doctor office visits, outpatient surgical procedures, ambulance services, lab work, mental health services, and more.
• Part D (prescription drug coverage) — Offered by private companies, Part D helps pay for prescription drugs. Part D is optional and is available to those with Part A and/or B. Most Medicare Advantage (Part C) plans include prescription drug coverage, so you are not allowed to add a standalone Part D plan unless the MA plan you selected is a Private Fee-for-Service (PFFS) Medicare Advantage plan without drug coverage, a Medicare Medical Savings Account (MSA) plan, or a Medicare Cost plan.

Another part of Medicare that’s an option for beneficiaries with Parts A and B is Medigap. Medigap is a supplemental plan that helps you pay for your out-of-pocket Medicare services.

You have many Medigap options that vary by premium, deductible and out-of-pocket costs.

A bonus to Medigap is that it may pay for international health care. If you travel to foreign countries and wind up needing health care, your Medicare plan won’t cover it, but Medigap may pay up to 80% of the care costs.

Meanwhile, Medicare Advantage is increasingly becoming a popular choice for Medicare beneficiaries. More than 26 million Medicare beneficiaries had a Medicare Advantage plan in 2021.

“For 2022, the average Medicare beneficiary has access to 39 Medicare Advantage plans, more than double the number of plans per person in 2017, and the largest number of options available in more than a decade,” according to the Kaiser Family Foundation.

A benefit of Medicare Advantage is it offers everything under one plan:

• Part C (Medicare Advantage) — Private insurance companies provide Medicare Advantage plans. These plans usually combine the coverage you’d get from Parts A, B and D. Some Medicare Advantage plans may also provide supplemental benefits, such as vision, dental and even population health initiatives, including transportation costs to doctors’ appointments. The Centers for Medicare and Medicaid Services (CMS) rates each plan. CMS gives the plan a quality rating of up to five stars, so you can compare plans.

In previous years, one potential drawback has been that some rural areas don’t have many Medicare Advantage plan options.

What is Medicaid?

Medicaid is a federal/state health insurance program for low-income Americans. You have the same protections found in most employer-sponsored health plans.

Medicaid coverage can be provided by the state or a private insurance company. Medicaid managed care, which is offered by a private insurer, has become increasingly common.

Even if you enroll in a Medicaid plan offered by an insurance company, you need to sign up through your state.

Source: Office of the Assistant Secretary for Planning and Evaluation

Regardless of the plan, the federal government requires Medicaid plans cover hospitalizations, home health care, physician appointments, labs and x-rays, maternity and pediatric and preventive care. Medicaid also covers child dental care.

Typically, Medicaid is available to anyone with an income below 100% of the federal poverty level. Thirty-eight states have also expanded Medicaid eligibility. The Affordable Care Act allows states to expand Medicaid eligibility for up to 138% of the federal poverty level, so it’s easier for people in those states to get Medicaid. 

Additionally, you may be eligible if your income is below 200% of the federal poverty level and you’re pregnant, disabled, elderly, or a parent or caregiver.

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Disability can make you dual eligible

You could be eligible for Medicare and Medicaid if you’re on disability:

• You’re eligible for Medicare if you’re on Social Security Disability insurance (SSDI). However, you have to receive two years’ worth of SSDI payments before becoming eligible.
• You’re eligible for Medicaid if you’re approved for Supplemental Security Income (SSI). There’s no waiting period, so you can get Medicaid immediately.

What is the difference between Medicare and Medicaid

Medicare and Medicaid are public health insurance programs, but they differ in multiple ways. Here are some differences:

Eligibility

Eligibility is the major difference between Medicare and Medicaid.

Medicare is based on age or disability. Medicaid is based on income. You could be eligible for both if you meet income and age requirements for each program.

Medicare doesn’t have family plans

Medicare doesn’t provide family coverage. So, if you’re on Medicare and you have a dependent, that person can’t get on your plan.

Meanwhile, Medicaid covers dependents. In fact, the Children’s Health Insurance Program covers nearly seven million children.

Open enrollment

Medicare Annual Enrollment is from October 15 to December 7. Once you are enrolled in Medicare, you make changes to your plan during Annual Enrollment. You also have an initial enrollment period to sign up for a Medicare plan that starts three months before the month you turn 65, includes the month you turn 65 and ends three months after the month you turn 65. There’s also a more limited open enrollment for Medicare Advantage from January 1 to March 31. Those who already have a Medicare Advantage plan can make one change during this time period.

Medicaid, on the other hand, doesn’t have an open enrollment period. Instead, you can sign up for a Medicaid plan any time of the year if you’re eligible.

Medicare gives many options

Medicare offers a wealth of choices. Once you decide whether you want a Medicare Advantage or Original Medicare plus Part D, you’re able to narrow your focus and select the best Medicare plan for you.

Premiums, deductibles and out-of-pocket costs can vary greatly, so make sure you compare.

Medicaid, on the other hand, will likely give you one or very few choices. That plan could be through the state, or it could be a managed care plan offered by a private insurer.

Differences aren’t just between Medicare and Medicaid. The different types of Medicare plans also vary. Here’s how Medicare and Medicaid plans compare:

Medicare vs. Medicaid

*For Part B premiums, people who file individual tax returns with income above $97,000 or joint tax returns more than $194,000 pay higher premiums. .*Copayments may be required for doctors’ visits, specialist visits, labs, etc.

How Medicaid works with Medicare

If you have both Medicare and Medicaid, you don’t have to worry about which one pays first. There’s a system called coordination of benefits (COB) that decides the insurer that pays first.

If you have both Medicare and Medicaid, Medicare pays for care first. Medicaid is considered the secondary payer. Just make sure to get care from providers who accept both plans. Otherwise, you could pay more out-of-network costs if the provider doesn’t take both.

How to sign up for Medicare and Medicaid

You can sign up for Medicare by going to Medicare.gov.

One option is to just get Part A, which covers hospitalizations and is free to nearly all Americans 65 and over. The only people who pay premiums for Part A are those who didn’t pay 10 years’ worth of Medicare taxes.

So, if you decide to get Original Medicare or have other coverage and want to delay paying for Medicare, you could sign up for only Medicare Part A initially.

If you’re still working or on your spouse’s insurance, you may decide to stay on that plan for physician services and wait to sign up for Part B until later. You can do that, but beware that you may pay higher premiums once you sign up for Part B. CMS will charge you a 10% premium penalty for every 12 months that you don’t enroll in Part B unless you qualify for and enroll during a Special Enrollment Period. That penalty will get added to your premiums once you get Part B.

Here’s another reason to sign up for Medicare when you turn 65. You may have to wait until the General Enrollment Period if you don’t sign up when you become eligible.

Disclaimer:

Insure.com is not affiliated with or endorsed by the government or Federal Medicare program. Plans are insured or covered by a Medicare Advantage organization with a Medicare contract and/or a Medicare approved Part D sponsor. Enrollment in the plan depends on the plan’s contract renewal with Medicare. We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE (TTY 1-877-486-2048), 24 hours a day/7 days a week, to get information on all of your options. Not all plans offer all of these benefits. Benefits and availability may vary by carrier and location. Limitations and exclusions may apply. Every year, Medicare evaluates plans based on a 5-star rating system. Part B Premium give-back is not available with all plans. Actual Part B premium reduction could be lower. Deductibles, copays and coinsurance may apply.

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