Medicare and Medicaid: What Is the Difference?

How They Work Together

Aid helping senior woman with walker
Joselito Briones/Stocksy United

Medicare and Medicaid sound a lot alike. They even look alike, minus the last two letters in their names. It is not surprising that the programs often get confused in the public eye. To make the most of these programs, you need to understand what makes Medicare and Medicaid the same and different.

3 Ways Medicare and Medicaid Are the Same

  1. Both are health insurance programs. Health is a basic need, but not everyone can afford private health insurance to get the care they need. On July 30, 1965, Lyndon B. Johnson signed Medicare and Medicaid into law to offer coverage to those with the greatest need.
  2. Both are run by the federal government. The Centers for Medicare and Medicaid Services (CMS) is the agency within the United States Department of Health and Human Services that oversees these programs. CMS sets guidelines for eligibility and what medical services should be covered.
  3. Both offer medical coverage to the disabled. Medicare is targeted to those over 65 years old and Medicaid to Americans with low incomes. However, both programs extend eligibility to people with disabilities. Medicare has a set of disability eligibility requirements that is used nationwide, but each state may have different criteria when it comes to Medicaid eligibility.

4 Ways Medicare and Medicaid Are Different

  1. Medicaid is a state-run program, but Medicare is not. The federal government establishes guidelines for Medicaid, but each state actually runs its own program. For this reason, access to Medicaid varies from state to state. Medicare, on the other hand, is solely run by the federal government. This leads to more uniform Medicare access no matter where you live in the country.
  2. Medicaid is open to all ages, but Medicare is not. Medicaid covers low-income individuals across all ages — newborns, children, adults, seniors — regardless of any underlying disability. Medicare, however, limits eligibility to those 65 years and older unless there is also a disability that meets specific eligibility criteria.
  3. Medicare has different parts, but Medicaid does not. Medicare is broken down into four parts: A, B, C, and D. Each part covers a different aspect of medical care (inpatient, outpatient, or prescription drug costs) and has its own set of rules and costs. You must sign up for each part separately. Medicaid is more simple and is not broken down into different parts. You apply for the one program to receive all benefits.
  1. Medicaid helps you pay for Medicare, but not vice versa. If you are one of the 8.3 million Americans who are eligible for both Medicare and Medicaid, your dual eligibility could put you at an advantage. Medicaid may help you to pay off premiums, deductibles, and coinsurance costs that Medicare has billed to you. Medicare will not do the same for any Medicaid costs. Medicare only pays for Medicare. 

Together, Medicare and Medicaid help millions of Americans access affordable health care. The programs have different eligibility criteria but offer a needed service for those in need. Find out more to see how these programs can benefit you.

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