Medicare vs. Medicaid

Medicare is an insurance program, while Medicaid is an assistance program. Medicare primarily serves people 65 and older, regardless of income. Medicaid serves low-income Americans of all ages. But some people may qualify for benefits from Medicare and Medicaid.

What Is the Difference Between Medicare and Medicaid?

Medicare and Medicaid are two separate, government-run health benefits programs. Each one generally serves a different group of Americans, though some people may qualify for both.

Each is funded by different elements of the government, but both are administered by the U.S. Centers for Medicare & Medicaid Services.

Medicare
A federal health insurance program that provides coverage to people 65 and older and to those under 65 who have a disability, regardless of income.
Medicaid
A state and federal assistance program that provides health coverage to people who have very low incomes.
Dual Eligibility
The two programs work together to provide health coverage and lower health costs for people who qualify.

What Does Medicare and Medicaid Cover?

While Medicare eligibility coverage is the same across the United States, eligibility for Medicaid varies from state to state. That’s because Medicaid is jointly funded by the federal government and the various states. Different states set different rules.

Examples of What Medicare and Medicaid Cover
Service Medicare Medicaid
Basic hearing care Only through some Medicare Advantage plans. Varies from state to state.
Basic vision care Only through some Medicare Advantage plans. Varies from state to state.
Dental care Only through some Medicare Advantage plans. Varies from state to state.
Doctor visits
Home health care
Hospice care
Hospital inpatient care
Hospital outpatient care
Long-term care
Prescription drugs Only with a Medicare Part D plan. Varies from state to state.
Preventative care and services
Transportation assistance Generally, no. But it may cover certain nonemergency ambulance transportation to and from your health care provider.

Who Qualifies for Medicaid?

Medicaid provides health care coverage for roughly one in every five Americans — 63.9 million people, according to the U.S. Centers for Medicare & Medicaid Services. Two-thirds of all Medicaid spending is directed for the care of the elderly and disabled.

Because Medicaid is jointly funded by the federal government and the various states, eligibility requirements vary from state to state.

Some states may also allow out-of-pocket fees for such things as copayments if you are on Medicaid. But children and people living in nursing homes or other institutions are usually exempt from these costs.

Examples of Who May Qualify for Medicaid
65 or Older, Blind or Have a Disability
People in these groups are eligible for Medicare. They may apply for both if they have low incomes or opt for Medicaid only if they can’t afford Medicare’s additional costs.
Low Income
Varies from state to state, but you qualify in most states if you make 100 to 200 percent of the federal poverty level (FPL) and meet other criteria — elderly, disabled or have a minor child.
Assets
In most states, you’re limited to $2,000 in countable assets or $3,000 for a married couple. These include stocks, bonds, checking and saving accounts and additional vehicles.

Applying for Medicaid varies from state to state. It can take weeks or months after you apply before you find out if you qualify for benefits. States may also require you to take a medical exam or provide documentation of your past and current financial status.

Income Requirements

The size of your household determines the federal poverty level for your household. The larger your family, the higher your income can be and still qualify.

The federal government sets new federal poverty guidelines each year. The levels are the same for the 48 contiguous states. Alaska and Hawaii each have their own levels.

2020 Federal Poverty Levels
Persons in HouseholdFPL for 48 Contiguous States & D.C.FPL for AlaskaFPL for Hawaii
1$12,760$15,950$14,680
2$17,240$21,550$19,830
3$21,720$27,150$24,980
4$26,200$32,750$30,130
5$30,680$38,350$35,280
6$35,160$43,950$40,430
7$39,640$49,550$45,580
8$44,120$55,150$50,730

For households with more than eight people, the guidelines add a fixed additional amount for each additional member.

FPLs for Households of Eight or More
In the 48 Contiguous States
$4,480 for each household member beyond eight.
Alaska
$5,600 for each additional person.
Hawaii
$5,150 for each additional person.

Medicaid Costs

Medicaid costs can vary from state to state. Since Medicaid is tailored to people with limited ability to pay out-of-pocket costs, for the most part, states are prohibited from charging premiums to anyone whose income is less than 150 percent of the FPL.

States must also limit total out-of-pocket costs to five percent or less of family income. States also may not require certain groups of people to pay a greater share of the costs for certain medical services they receive.

Allowable Cost Sharing Amounts for Adults in Medicaid by Income
Service or ProductLess Than 100% of FPL100% to 150% of FPLGreater Than 150% of FPL
Outpatient servicesUp to $4Up to 10% of the state’s costUp to 20% of the state’s cost
Nonemergency ER useUp to $8Up to $8No limit
Prescription drugsPreferred: Up to $4

Nonpreferred: Up to $8
Preferred: Up to $4

Nonpreferred: Up to $8
Preferred: Up to $4

Nonpreferred: Up to 20% of the state’s cost
Inpatient servicesUp to $75 per stayUp to 10% of the state’s costUp to 20% of the state’s cost

However, the federal government has granted waivers to some states allowing them to charge higher premiums or to require people to pay a greater share of the costs for services.

Medicare and Medicaid Dual Eligibility

The term “dually eligible beneficiaries” usually applies to people enrolled in Medicare and Medicaid at the same time.

You may qualify for dual eligibility if you are eligible for full Medicare and meet the eligibility requirements for Medicaid or for one of four Medicare Savings Programs that provide assistance or cost sharing.

Medicare Savings Programs
Qualified Medicare Beneficiary Program
QMB helps pay premiums for Medicare Part A and Part B.
Specified Low-Income Medicare Beneficiary Program
SLMB helps pay Medicare Part B premiums.
Qualifying Individual Program
QI helps pay Medicare Part B premiums on a first-come, first-served basis.
Qualified Disabled Working Individual Program
QDWI pays Medicare Part A premiums for certain disabled and working beneficiaries under 65, those not receiving Medicaid and those who meet state income and resource limits.

Dual Eligible Special Needs Plans

People who are dual eligible for Medicare and Medicaid may be able to enroll in a Dual Eligible Special Needs plan, also known as D-SNP.

Any D-SNP provides at least the same coverage as Medicare Part A and Part B along with Part D prescription drug coverage. But they usually include more coverage on top of that.

Extra benefits can include dental, hearing and vision coverage, help buying health-related products and transportation assistance to get to and from a health care provider.

A Dual Eligible Special Needs plan will not replace your existing Medicaid plan or change your eligibility for the program.

Last Modified: June 9, 2020

10 Cited Research Articles

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  2. Brooks, T., et al. (2020, March 26). Medicaid and CHIP Eligibility, Enrollment and Cost Sharing Policies as of January 2020: Findings from a 50-State Survey. Retireved from https://www.kff.org/report-section/medicaid-and-chip-eligibility-enrollment-and-cost-sharing-policies-as-of-january-2020-findings-from-a-50-state-survey-premiums-and-cost-sharing/
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