What’s the Difference Between Medicare and Medicaid?

Medicare and Medicaid both provide healthcare coverage via government programs, but they have some important differences. This article will explain how the two programs differ, including the populations they cover, the way they're administered and funded, and the benefits they provide to enrollees.

Essentially, Medicare is for people who are at least age 65 or have a disability, while Medicaid is for people with low incomes. Some people are eligible for both.

However, the differences between Medicare and Medicaid are larger than that. They differ in:

  • Who can enroll
  • Who runs them
  • How they work
  • How they're funded
  • What benefits they provide
Grandmother sitting near window holding a baby and near a young child
Thanasis Zovoilis / Getty Images

Who Gets Medicare vs Medicaid?

Older and disabled people get Medicare; people with a low income get Medicaid. If you’re both elderly or disabled and have a low income, you can potentially get both.


As of 2022, Medicare covers nearly 65 million Americans. Most Medicare beneficiaries are 65 or older. However, as of 2022, about 8 million people—roughly 12% of the Medicare population—with Medicare coverage were younger than 65.

These people are eligible for Medicare because they have a disability. In most cases, you have to receive Social Security disability benefits for two years before you become eligible for Medicare. But there are exceptions for people with end-stage renal disease and amyotrophic lateral sclerosis. 

You’re eligible for premium-free Medicare Part A if:

  • You’re at least 65 years old or disabled (as described above)
  • AND you or your spouse paid Medicare payroll taxes for at least 10 years

Whether you're rich or poor doesn't matter; if you paid your payroll taxes and you're old enough (or you have a long-term disability), you'll get Medicare Part A without having to pay any monthly premiums for it.

For most people, Medicare Part B premiums are $170.10 a month in 2022. However, you'll pay higher premiums for Medicare Part B and Part D if your income is higher than $91,000 per year for a single person, or $182,000 per year for a married couple (note that those amounts are for 2022 coverage; the income threshold for higher Part D and Part B premiums will increase in 2023).

If you’re at least 65 but didn’t pay Medicare payroll taxes while you were younger, you may still be eligible for Medicare, but Part A isn't free. You’ll pay higher total premiums—the regular premium for Part B in addition to a premium for Part A.

In 2022, the Part A premium for people who don't have enough work history is as high as $499 a month. Very few Medicare beneficiaries pay a premium for Part A, though, as most people have a work history (or a spouse's work history) of at least ten years by the time they're eligible for Medicare.


As of 2022, nearly 82 million Americans were covered by Medicaid, plus another 7 million people who are covered by the Children's Health Insurance Program (CHIP).

Under the Affordable Care Act, adults under the age of 65 are eligible for Medicaid if their household income is less than 138% of the federal poverty level.

However, some states have rejected this provision, and have kept their Medicaid eligibility as it was prior to the ACA, which generally means that in addition to being low income, you also have to be:

  • A child
  • Pregnant
  • A very low-income parent of minor children
  • 65 or older (asset tests also apply, in addition to income limits)
  • Blind or disabled (asset limits also apply, in addition to income limits)

Twelve states haven't expanded Medicaid to people earning up to 138% of the poverty level. In 11 states, there's a coverage gap (i.e., no realistic coverage options) for childless adults living below the poverty level.

In addition to income-based Medicaid eligibility, 32 states and the District of Columbia automatically provide Medicaid benefits to aged, blind, or disabled people who are deemed eligible for Supplemental Security Income.

Who Runs Medicare and Medicaid?

The federal government runs the Medicare program. Each state runs its own Medicaid program. That’s why Medicare is basically the same all over the country, but Medicaid programs differ from state to state.

The Centers for Medicare and Medicaid Services, part of the federal government, runs the Medicare program. It also oversees each state’s Medicaid program to make sure it meets minimum federal standards.

Although each state designs and runs its own Medicaid program, all Medicaid programs must meet standards set by the federal government in order to get federal funds (Medicaid is jointly funded by the state and federal government, with a matching rate that varies by state).

In order to make significant adjustments to their Medicaid programs, states must seek permission from the federal government via a waiver process.

How the Programs Differ

Medicare is an insurance program while Medicaid is a social welfare program.

Medicare recipients get Medicare because they paid for it through payroll taxes while they were working, and through monthly premiums once they’re enrolled.

Medicaid recipients need never have paid taxes and most don’t pay premiums for their Medicaid coverage—although some states require those on the higher end of the eligible income scale to pay nominal premiums.

Taxpayer funding provides Medicaid to eligible needy people in a manner similar to other social welfare programs like Temporary Assistance for Needy Families; Women, Infants and Children; and the Supplemental Nutrition Assistance Program.

Different Options

The Medicare program is designed to give Medicare recipients multiple coverage options. It's composed of several different sub-parts, each of which provides insurance for a different type of healthcare service.

  • Medicare Part A is hospitalization insurance.
  • Medicare Part B is insurance for outpatient care and doctors’ services.
  • Medicare Part D is prescription drug insurance.
  • Original Medicare is A and B combined, with an option to add D. Many beneficiaries also add Medigap coverage.
  • Medicare Part C, also called Medicare Advantage, combines A, B, and usually D into one plan.

Opting for Part A Only

Some people choose only to have Medicare Part A coverage so that they don’t have to pay the monthly premiums for Medicare Parts B and D. If you still have insurance through a current employer (yours or your spouse's), you can add the other parts later with no penalty.

However, if you decline Parts B and D and don't have another insurance plan in place, you'll face a late enrollment penalty when you add the other parts later, and you'll be limited in terms of when you can enroll in them.

In the past, Medicaid programs typically didn't offer a lot of choice in terms of plan design. But today, most states utilize Medicaid managed care organizations (MCOs). If there's more than one MCO option in your area of the state, you will likely be given the option to select the one you prefer.

Medicare and Medicaid Funding

Medicare is funded:

  • In part by the Medicare payroll tax (part of the Federal Insurance Contributions Act or FICA)
  • In part by Medicare recipients’ premiums
  • In part by general federal taxes

The Medicare payroll taxes and premiums go into the Medicare Trust Fund. Bills for healthcare services to Medicare recipients are paid from that fund.

Medicaid is:

  • Partially funded by the federal government
  • Partially funded by each state

The federal government pays an average of about 60% of total Medicaid costs, but the percentage per state ranges from 50% to about 78%, depending on the average income of the state's residents (wealthier states pay more of their own Medicaid costs, whereas poorer states get more federal help).

Under the ACA's expansion of Medicaid, however, the federal government pays a much larger share.

For people who are newly eligible for Medicaid due to the ACA (i.e., adults under age 65 with income up to 138% of the poverty level, who would not be eligible for Medicaid without the ACA's expanded eligibility rules), the federal government pays 90% of the cost, while the states pay just 10% of the cost.

How Benefits Differ

Medicare and Medicaid don’t necessarily cover the same healthcare services.

For example, Medicare doesn’t pay for long-term custodial care like permanently living in a nursing home, but Medicaid does pay for long-term care. The majority of nursing home residents in the U.S. are enrolled in Medicaid.

Medicaid benefits vary from state to state, but each state’s Medicaid program must provide certain minimum benefits.

Medicare benefits are the same across the entire country, although people who purchase private Medicare Advantage plans will find that there's some variation from plan to plan, and some areas don't have any Medicare Advantage plans available at all.

Medicare Advantage plans are provided by private insurers, and although they have to cover all of the basic benefits that Part A and Part B would cover, insurers are free to add additional benefits, which aren't standardized.

You can learn more about what benefits Medicare provides, as well as what to expect for out-of-pocket expenses in the "Medicare and You" handbook, published each year by the federal government.


Medicare and Medicaid are important government-run health coverage programs. Together, they cover well over a third of the American population, including some people who qualify for both programs. Medicare covers people who are 65 or older as well as about 8 million people who are disabled. Medicaid covers people with low incomes. Medicare is run by the federal government, while Medicaid is administered by each state, and jointly funded with state and federal money.

A Word From Verywell

Medicare and Medicaid both provide crucial health coverage to millions of Americans. And Medicaid becomes increasingly important for older people who end up needing long-term care services, as Medicare does not provide that coverage (the majority of nursing home residents have both Medicare and Medicaid coverage). Nearly all Americans will eventually rely on Medicare. And millions of Americans rely on Medicaid at some point in their lives. Fortunately, these two programs provide a good safety net.

14 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
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  2. Norris, L. Medicareresources.org. Medicare eligibility for ALS and ESRD patients.

  3. Social Security Administration. Medicare premiums: Rules for higher-income beneficiaries.

  4. Medicare.gov. Part A costs and Part B costs.

  5. Medicaid.gov. May 2022 Medicaid and CHIP Enrollment Data Highlights.

  6. Kaiser Family Foundation. Status of state action on the Medicaid expansion decision.

  7. Social Security Administration. What is supplemental security income?

  8. Kaiser Family Foundation. Federal Medical Assistance Percentage (FMAP) for Medicaid and Multiplier.

  9. Medicaid.gov. About Section 1115 demonstrations.

  10. Kaiser Family Foundation. Total Medicaid MCOs.

  11. The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. 2022 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.

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  13. Kaiser Family Foundation. Medicaid’s role in nursing home care.

  14. Fuglesten Biniek, Jeannie; Freed, Meredith; Damico, Anthony; Neuman, Tricia; Kaiser Family Foundation. Medicare Advantage 2021 Spotlight: First Look.

Additional Reading

By Elizabeth Davis, RN
Elizabeth Davis, RN, is a health insurance expert and patient liaison. She's held board certifications in emergency nursing and infusion nursing.