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 specific illness.
- You’re eligible for Medicaid If your income is below a certain level depending on your state.
You don’t choose between Medicare and Medicaid and it’s not a question as to which one is better: Medicare vs. Medicaid. 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.
Let’s take a look at the two programs, how they differ and who’s eligible for each.
- Medicare is a federal health insurance program available to those over 65 and younger people with specific illnesses.
- Medicaid is a federal/state health insurance program for people with low income.
- You could be eligible for both Medicare and Medicaid if you meet age and income requirements for each program.
- Open enrollment for Medicare runs from Oct. 15 to Dec. 7. On the other hand, Medicaid doesn’t have an open enrollment period, you can sign up any time of the year.
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 (doctors) — The second part of what’s called Original Medicare, Part B handles your outpatient care, such as doctor appointments.
- Part D (prescription drug coverage) — Offered by a private company, Part D helps pay for prescription drugs. Part D is only available for people with Parts A and/or B. It’s not offered to those with Medicare Advantage. Part C often has its own prescription drug coverage.
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. An estimated 42% of Medicare beneficiaries are expected to have a Medicare Advantage plan in 2021.
The Centers for Medicare and Medicaid Services said there will be more than 4,100 Medicare Advantage plans in 2021 that will cover nearly 27 million people. 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 combine the coverage you’d get from Parts A, B and D. Medicare Advantage also provides 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. For 2021, CMS said about 2,900 Medicare Advantage plans will be available in rural areas.
The vast majority of the country has multiple Medicare Advantage alternatives. In fact, the average county is expected to have 47 Medicare Advantage plans in 2021 — an incresae from 39 alternatives in 2020.
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.
|Federal poverty level guidelines|
|Persons in Household||Federal poverty level for continental U.S.||138% of federal poverty level|
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.
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 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, Medicaid and the Children’s Health Insurance Program covers more than 45 million children.
Medicare open enrollment is from Oct. 15 to Dec. 7. During open enrollment, you can make changes to your plan. You also have three months after you turn 65 to sign up for a Medicare plan. There’s also a more limiited open enrollment from Jan. 1 to March 31.
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 each cost.
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
|Type of plan||What is covered||Who’s eligible||When you can apply||Average monthly premium||Out-of-pocket/deductible|
|Medicare Part A||Hospitalization||People 65 and over and younger people with specific disabilities and people on SSDI||During open enrollment and when you turn 65||Most people pay $0||$1,484 annual deductible|
|Medicare Part B||Physicians/outpatient||People 65 and over and younger people with specific disabilities and people on SSDI||During open enrollment and when you turn 65||$148.50*||$212 annual deductible and then pay 20% of Part B costs*|
|Medicare Part C (Medicare Advantage)||All health care, including supplemental benefits||People 65 and over and younger people with specific disabilities and people on SSDI||During open enrollment and when you turn 65||$21, but many plans have $0 premiums||Out-of-pocket max is $7,550 for in-network and $10,000 for out-of-network|
|Medicare Part D||Prescription drug coverage for people with Parts A and B plans||People with Parts A and/or B||During open enrollment and when you turn 65||$30.50||Can’t exceed $445 deductible.|
|Medigap||Supplemental coverage to help pay for out-of-pocket costs||People with Parts A and/or B||During open enrollment and when you turn 65||Varies, can be less than $100||Varies by plan|
|Medicaid||All health care||Based on income, which varies by state||Anytime||Depends on income and can be as low as $0||Minimal if any|
*For Part B premiums, people who file individual tax returns with income above $87,000 or joint tax returns more than $174,000 pay higher premiums.
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.
Signing up for Medicare and Medicaid
You can sign up 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. 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 open enrollment period if you don’t sign up when you become eligible.
Meanwhile, if you need to sign up for Medicaid, you can check out our Medicaid page. Just choose your state on the tool on that page and we’ll tell you the name of Medicaid in your state, where you can sign up and whether you’re eligible for Medicaid in your state.