Takeaways
- Medicare is a federal health insurance program for people age 65 and older and some younger people with disabilities, end-stage renal disease, or ALS. Medicaid is a joint federal-state program for people who meet financial and other eligibility requirements.
- Medicare rules are generally consistent nationwide, while Medicaid eligibility and benefits vary by state.
- Medicare may cover hospital care, doctor visits, prescription drugs, short-term skilled nursing care, and hospice care, but it usually does not cover long-term care.
- Medicaid may help pay for long-term care, including nursing home care, for people who qualify. Some individuals qualify for both programs, with Medicare generally covering Medicare services and Medicaid helping with long-term care or other costs.
Although Medicaid and Medicare are both public health insurance programs, they have essential differences.
Medicare is a federal program for older adults, people with disabilities, and individuals with end-stage renal failure. Medicaid is federal-state assistance for those with limited incomes.
| Medicaid | Medicare | |
|---|---|---|
| Who administers it? | Each state administers its own Medicaid program within federal requirements. Medicaid is jointly funded by the states and the federal government. | The federal government administers Medicare and establishes national rules for the program. Some coverage decisions are also made through Medicare contractors that operate in specific regions. |
| Who is eligible? | Eligibility varies by state and may depend on income, household circumstances, age, disability, pregnancy, or other factors. | Medicare generally covers people age 65 or older who meet citizenship or residency requirements. Some younger people may qualify because of a disability, end-stage renal disease, or ALS. Basic eligibility generally does not depend on income. |
| How much does it cost? | Many beneficiaries pay little or nothing for coverage, but states may charge premiums, copayments, or other limited cost sharing depending on the person’s eligibility category and the services received. | Costs may include premiums, deductibles, coinsurance, and copayments. The amount depends on the type of Medicare coverage, income, and whether the person has supplemental insurance or qualifies for financial assistance. |
| What does it cover? | Medicaid can cover hospital and physician services, prescription drug, nursing facility care, home- and community-based services, medical equipment, or other health services. Dental, vision, and other optional benefits vary by state. | Medicare covers medically necessary hospital care, physician services, preventive services, certain medical equipment, and prescription drugs through Part D or another Medicare drug plan. Original Medicare generally does not cover ongoing custodial long-term care, routine dental care, or eyeglasses |
History of Medicare and Medicaid
Congress amended the Social Security Act in 1965, creating health care programs for older adults and those receiving public assistance.
- Providing health care aid for people with limited income, Title XIX formed Medicaid.
- Title XVII established Medicare. This program offers public health insurance for people aged 65 and older. In 1973, the legislature widened the scope of Medicare to help certain disabled persons and individuals with kidney disease. Note that Medicare has four main parts that cover health care needs, such as hospital stays and doctor’s visits (Original Medicare) and prescription drug coverage (Medicare Part D).
Roles of States and the Federal Government
The states and federal government play different roles in managing Medicare and Medicaid.
Medicare
Medicare is a federal program that the Centers for Medicare & Medicaid Services runs, so it is consistent across states.
Funding for Medicare comes from general federal revenues, payroll tax revenues, and enrollees’ premiums.
Medicaid
Medicaid is a joint federal-state program. Although the federal government sets the general rules for Medicaid, states administer their own Medicaid programs, leading to variations across jurisdictions. In part, this means that being eligible for Medicaid in one state may not make you eligible in another. States can establish different requirements within federal guidelines.
States and the federal government jointly subsidize Medicaid, per Medicaid.gov. Federal Medical Assistance Percentages determine how much money the federal government matches each state in support of Medicaid.
Qualifying for Medicare
Generally, after paying income taxes for 10 years, a person and their spouse can enroll in Medicare upon turning 65.
Qualifying individuals with disabilities do not have to wait until retirement age to enroll in Medicare. For example, people eligible for Social Security Disability Insurance can also receive Medicare after a two-year waiting period. Those with end-stage renal disease can obtain Medicare at any age if they, their spouse, or their parent if they are a dependent child, have worked the required amount.
Qualifying for Medicaid
Medicaid primarily benefits people with limited earnings. As states run Medicaid, the enrollment requirements can vary by state. Review your state's requirements for qualifying using Medicaid.gov’s state overview feature.
Multiple pathways to Medicaid are available, as the Kaiser Family Foundation explains. States must allow low-income parents, children, and those who are pregnant to qualify for Medicaid if their income falls below a certain threshold. This threshold is calculated using the Modified Adjusted Gross Income (MAGI) financial method. Those who received foster care as children can get Medicaid regardless of income.
The basis for being eligible can stem from enrollment in other programs, such as Supplemental Security Income. States can also allow older people and individuals with disabilities to qualify for Medicaid, but income and asset limits usually apply.
In some states, people with medical expenses greatly diminishing their net incomes can qualify for Medicaid through a Medically Needy Program. These programs help people whose income is above the usua Medicaid limit but whose medical bills leave them unable to afford necessary care.
Do Medicaid or Medicare Fund Long-Term Care?
While Medicare covers time in the hospital, short-term care in a skilled nursing facility, and hospice care, it does not fund long-term care. Medicaid covers long-term care in nursing homes, according to the American Council on Aging.
Some older adults can enroll in both Medicare and Medicaid for greater coverage of their health care needs. For instance, one might have Medicare covering hospital care and Medicaid covering long-term care.
To learn more about qualifying for Medicare or Medicaid, speak to an elder law attorney.
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