Medicare vs. Medicaid: What’s the Difference?

Medicare and Medicaid are government health insurance assistance programs designed to provide affordable health care coverage to the elderly, people with disabilities and individuals with low incomes. While Medicare is a federal program typically available to individuals over the age of 65, Medicaid and its eligibility are determined at the state level under federal guidelines.

Keep reading to get a comprehensive look at Medicare versus Medicaid.

On This Page

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  Medicare vs. Medicaid: What Are the Differences?

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  What Is Medicare?

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  What Is Medicaid?

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  Can Both Medicare and Medicaid Cover You?

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  Medicare vs. Medicaid FAQs

Medicare vs. Medicaid: What Are the Differences?

Medicare and Medicaid are both government-run programs designed to help people with medical costs. On the other hand, private insurers offer Medicare Advantage. Here are some of the differences between them:^{[1][2][3][4][5]}

What Is Medicare?

Medicare is a federal program that provides several programs, including hospital insurance (Part A) and medical insurance (Part B). Parts A and B are typically collectively referred to as “Original Medicare.”^[1] Medicare Advantage rolls Parts A and B into a single plan called Part C.

Keep in mind that while any doctor or hospital in the U.S. will accept Original Medicare coverage, those on Medicare Advantage may be limited to in-network providers.^[6]

Below, you will find a breakdown of coverage for Parts A, B, and C.

What Is Part D in Medicare?

Most Medicare Advantage plans also include prescription drugs through a Medicare supplement known as Part D. Medicare Advantage (Part C) and Prescription Drugs (Part D) are sold by private insurers. However, you must qualify for Medicare at the federal level to enroll in these parts. Original Medicare users can purchase Part D separately, seperately.^[1]

To help with prescription costs, Medicare offers a tier system for Part D drug coverage:^[7]

• Tier 1: Lowest copayment, covers most generic prescription drugs
• Tier 2: Medium copayment, covers preferred, brand-name prescription drugs that aren’t necessarily available in a generic form
• Tier 3: Higher copayment, covers non-preferred, brand-name prescription drugs
• Specialty tier: Highest copayment, covers high-cost prescription drugs

It is possible to apply for an exception should there be a name-brand medication your doctor requires you to have, even if there is a similar drug in a lower tier. This exception would lower the copayment for the medication.^[8] Once your annual out-of-pocket costs reach $2,000, the remaining costs for medications are covered for the year.^[9]

What Is Medigap?

Private insurers sell Medigap, also known as Medicare Supplement Insurance, to fill in the gaps left by Original Medicare plans, such as deductibles, copayments and coinsurance. Even medical care while you travel outside of the United States may be covered by Medigap. To be eligible for Medigap, you must have both Medicare Part A and Part B.^[10]

Prescription medication coverage will not be covered by Medigap insurance. You must acquire a prescription drug plan (Part D) in order to cover the cost of prescription drugs; if you purchase both Medigap and Part D coverage, you may have to pay separate premiums for each. Additionally, you cannot have Medicare Advantage and Medigap insurance at the same time.^[10]

What Is Medicaid?

Medicaid is a public insurance program that provides health coverage to low-income families and individuals. This includes adults, children, seniors, and those with disabilities – even people on Medicare.

Medicaid covers hospital care, physician care, lab services and home and nursing services. Prescription drugs are also covered in all states under Medicaid. Other benefits, such as vision care, dental care, personal care services and hearing aids, are typically also covered.^[12][14]

Medicaid is jointly funded by both the state government and the federal government, so it operates differently from state to state. However, all states must still use federal guidelines. Federal guidelines are broad, allowing states flexibility in how their programs are designed and implemented. This means that eligibility and benefits will vary from one state to another.^[11]

For example, some states have expanded Medicaid to families with an income at or below 133% of federal poverty guidelines, regardless of age.^[14]

What Does Medicaid Cover?

While Medicaid is operated at the state level, there are coverages that every state is required to offer through Medicaid. Below is a list of required services:^[12]

• Inpatient hospital services
• Outpatient hospital services
• Early and periodic screening, diagnostic and treatment services
• Nursing facility services
• Home health services
• Physician services
• Rural health clinic services
• Federally qualified health center services
• Laboratory and X-ray services
• Family planning services
• Nurse midwife services
• Certified pediatric and family nurse practitioner services
• Freestanding birth center services (when licensed or otherwise recognized by the state)
• Transportation to medical care
• Tobacco cessation counseling for pregnant women

Optional benefits that may be included as part of your state’s Medicaid program can include:^[12]

• Prescription drugs
• Clinic services
• Physical therapy
• Occupational therapy
• Speech, hearing and language disorder services
• Respiratory care services
• Other diagnostic, screening, preventive and rehabilitative services
• Dental services
• Dentures
• Prosthetics
• Eyeglasses
• Other practitioner services
• Private duty nursing services
• Personal care
• Hospice
• Case management
• Services for individuals aged 65 or older in an institution for mental disease
• Services in an intermediate care facility for Individuals with intellectual disability
• State plan home and community-based services
• Self-directed personal assistance services
• Community first choice option
• Tuberculosis-related services
• Inpatient psychiatric services for individuals under age 21
• Health homes for enrollees with chronic conditions

Can Both Medicare and Medicaid Cover You?

Medicare and Medicaid can cover you if you are eligible, which means both qualifying for your state’s Medicaid program while having an income below a specific portion of the federal poverty level (FPL).

Each coverage type can have varying FPL thresholds and offer different benefits, with Medicaid typically covering portions of Medicare. Additionally, to qualify, your resources can only be up to three times the Supplemental Security Income (SSI) resource limit, which is adjusted annually based on the Consumer Price Index.^[15]

Below is a list of the different dual coverage types:^[15]

• Qualified Medicare Beneficiary (QMB) program: This program helps cover Part A and Part B premiums, as well as deductibles, coinsurance, and copayments. Income can be up to 100% of the FPL to qualify.
• QMB Plus: QMB benefits and full Medicaid benefits are provided. Features the same requirements as QMB, alongside being enrolled in Medicaid.
• Specified Low-Income Medicare Beneficiary (SLMB) program: Supports the payment of Part B premiums for those with an income between 100% and 120% FPL.
• SLMB Plus: SLMB program and full Medicaid benefits are provided. Features the same requirements as SLMB, alongside being enrolled in Medicaid.
• Qualifying Individual (QI) program: Covers the premium of Part B benefits to those who have an income between 120% and 135% FPL.
• Qualified Disabled Working Individual (QDWI) program: Supports those who lost their Medicare Part A coverage after returning to work so they can buy back these benefits while having an income up to 200% FPL.