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October 30, 2023
Understanding the Differences Between Medicare and Medicaid: Eligibility, Benefits, and Funding.
Is Medicare the same as Medicaid?

Medicare and Medicaid may seem similar, but they serve different populations with distinct coverage. Learn more about eligibility, benefits, and financing.

Medicare and Medicaid are two government programs in the United States that provide healthcare coverage, but they serve different populations and have distinct eligibility criteria and benefits. Understanding the differences between the two is essential for individuals seeking healthcare coverage and for those working in the healthcare industry.


Medicare is a federal health insurance program primarily designed for individuals aged 65 and older, although it also covers certain individuals with disabilities and those with end-stage renal disease. It consists of four parts: Part A, Part B, Part C (Medicare Advantage), and Part D.

Medicare Part A covers hospital stays, skilled nursing facility care, hospice care, and limited home health services. Most people do not pay a premium for Part A because they have paid into the program through payroll taxes. Part B covers physician services, outpatient care, medical supplies, and preventive services. Part B requires payment of a monthly premium, which can vary based on income. Medicare Part C, also known as Medicare Advantage, allows individuals to receive Part A and Part B coverage through private insurance companies approved by Medicare. These plans often include additional benefits such as dental, vision, and prescription drugs. Finally, Part D provides prescription drug coverage through private insurance companies. Part D plans are also available as standalone plans for those with original Medicare or as part of the Medicare Advantage plans.


On the other hand, Medicaid is a joint federal and state program that provides free or low-cost health coverage to individuals with limited income and resources. Medicaid eligibility is determined by income level and other factors such as age, disability status, and family composition. Unlike Medicare, Medicaid does not have an age requirement, which means it covers individuals of all ages who meet the eligibility criteria.

Medicaid benefits vary across states as each state has some flexibility in designing and managing its Medicaid program. However, there are mandatory services that all states must provide, such as doctor's visits, hospital services, lab tests, and preventive care. Additionally, states can choose to offer optional services, such as prescription drugs, dental care, and physical therapy. Medicaid also covers long-term care services and supports, including nursing home care and home health services, which Medicare does not typically cover.




Anyone who meets income eligibility requirements regardless of age.

Age 65 years and older, regardless of income. Under 65 with certain disabilities .


Jointly financed by federal and state governments

Paid for by the Federal government through two US Treasury-held trust fund accounts, funded with payroll taxes, enrollee premiums, and payments authorized by Congress


Administered by individual states according to federal requirements,: monitored by federal agency, Centers for Medicare and Medicaid Services (CMS)

Administered by Federal Agency CMS

Out-of-pocket Costs

Generally, no out-of-pocket cost, sometimes a nominal co-pay

Deductibles and co-pays for hospital and other health costs.


Varies by state, Federally mandated; hospital, physician, lab, x-ray, home health services, early and periodic screening, diagnostic, and treatment benefit. prescription drugs, case management, physical therapy, occupational therapy

Uniform across states, Hospital services (Part A), Medical care (Part B), Prescription Drugs (Part D)

What is Difference Between Medicare and Medicaid?

One of the key differences between Medicare and Medicaid is the way they are financed. Medicare is primarily funded through federal taxes and the premiums paid by beneficiaries, while Medicaid is jointly funded by the federal government and the states. The federal government matches the states' Medicaid spending based on a predetermined formula. This means that states have some discretion in determining eligibility requirements, benefits, and cost-sharing arrangements within federal guidelines.

Another important distinction is that while Medicare coverage is generally not based on financial need, Medicaid is specifically designed to help individuals with limited income and resources. Medicaid provides a crucial safety net for those who cannot afford private health insurance or have gaps in their coverage.

It is also worth noting that individuals can be eligible for both Medicare and Medicaid, often referred to as "dual eligibles." In these cases, Medicare is usually the primary payer, and Medicaid helps cover some of the costs that Medicare does not, such as premiums, deductibles, and copayments.

Medicaid and Medicare Advantage (Part C)

For older Americans on Medicaid, the Medicare Advantage plan serves as a much-needed lifeline, providing them with comprehensive healthcare coverage. Medicaid only covers basic services, leaving seniors without access to crucial services like dental, vision, and hearing care. In comparison, Medicare Advantage plans provide access to an expansive range of benefits, including prescription drug coverage, preventive care, wellness programs, transportation services, and more. Consequently, seniors enrolled in MA plans can access a more extensive network of healthcare professionals and facilities, providing them with access to high-quality care that would have otherwise been unavailable.

Moreover, MA plans provide an integrated approach to healthcare, where doctors, nurses, and other healthcare professionals work collaboratively to ensure that seniors receive coordinated care that considers their unique healthcare needs. They take into account the individual's social determinants of health, such as their living situation, food security, and overall health, to provide them with tailored care plans. By providing access to numerous healthcare services, delivering coordinated care, and taking a holistic approach to health, the Medicare Advantage plan benefits older Americans on Medicaid, empowering them to receive optimal healthcare and improve their overall well-being.

Find out if a Medicare Advantage plan might be right for you: Medicare Coverage Worksheet

FACT: Medicaid, alongside the Children's Health Insurance Program (CHIP), holds the distinction of being the largest health insurance program in the US. It covers nearly half of all of births nationwide and provides health coverage for a substantial portion of children nationwide.

In summary, Medicare and Medicaid are two government programs in the United States that provide healthcare coverage, but they serve different populations and have distinct eligibility criteria and benefits. Medicare primarily covers individuals aged 65 and older or those with certain disabilities, while Medicaid is designed to assist individuals with limited income and resources. Understanding the differences between the two programs is crucial for individuals seeking healthcare coverage and for healthcare providers navigating the complexities of the healthcare system.

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