Medicare vs. Medicaid: What’s The Difference?

• Medicare is a federal health insurance program run by the United States federal government to provide healthcare for older Americans, younger Americans with certain disabilities, and Americans with ESRD. Medicaid is a joint federal and state program for those with limited income and resources.

• Certain Americans are eligible for both Medicare and Medicaid, a program known as Dual Eligibles.

Medicare and Medicaid are government health insurance programs. Despite the similar-sounding names, Medicare and Medicaid are quite different in each program’s eligibility requirements, benefits, costs, and more. This article will explain everything there is to know about Medicare and Medicaid, including the main differences between the two programs.

Medicare is a federal government health insurance program that provides health insurance for people age 65 and older, younger Americans with certain disabilities, or those with end-stage renal disease (ESRD). There are two main ways for eligible Americans to enroll in Medicare, either through Original Medicare or Medicare Advantage.

What Is Original Medicare?

Original Medicare coverage is made up of Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). Neither Part A nor Part B provides coverage for prescription drugs. Original Medicare beneficiaries would need to enroll in a Medicare Part D plan in order to receive prescription drug coverage.

What Is Medicare Advantage?

Medicare Advantage plans, also known as MA plans or Medicare Part C, are supplemental Medicare insurance plans that aim to ​“fill in the gaps” of Original Medicare coverage. MA plans are offered by private insurance companies and bundle Part A and B into one healthcare plan. Many Medicare Advantage plans also include prescription drug coverage within its policies, as well as additional benefits such as hearing, dental, vision, and more.

Medicaid is a joint state and federal program that provides health coverage for over 76 million Americans. The Medicaid program was designed to be an assistance program for those with limited income, thus cutting health care costs for those with low-income backgrounds. Medicaid cuts health care costs while still providing comprehensive coverage.

Medicaid is run by The Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS). Medicaid functions as a partnership between the federal government and U.S. state governments. This means that all Medicaid programs must adhere to federal standards. That said, states are allowed to expand their eligibility and benefit offerings. For this reason, Medicaid programs vary widely state by state.

Medicare Coverage

Again, Original Medicare benefits consist of Part A (hospital insurance) and Part B (medical insurance). Medicare Advantage bundles Part A and Part B into one healthcare plan. Specifics of each Medicare Part are laid out below along with their various Medicare-covered services:

Part A Coverage:

Part A covers hospital costs associated with inpatient care. Some covered services include:

• Inpatient hospital care

• Skilled nursing facility care

• Nursing home care (non-custodial or long-term care)

• Hospice care

• Home health care

Note: Learn more about Part A coverage at this resource.

Part B Coverage: 

Part B Provides coverage for a few main types of outpatient services:

• Medically-necessary outpatient care (i.e. doctor visits) 

• Preventive services (i.e. vaccinations)

• Durable medical equipment (DME)

Medicaid Coverage

While Medicaid benefits vary by state, the United States Government mandates that the following services are covered: 

• Inpatient hospital services

• Outpatient hospital services

• EPSDT: 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

• Transportation to medical care

There are also optional Medicaid benefits states can include within their Medicaid coverage such as prescription drugs, eyeglasses, physical therapy, dental services, and others. 

Medicare Eligibility

Eligible persons for Medicare include:

• Americans 65 and older

• Younger Americans with disabilities

• Americans with end-stage renal disease (ESRD)

• Spouses

Note: To learn more about Medicare eligibility, visit this source.

Medicaid Eligibility

Americans eligible for Medicaid include low-income adults, children, pregnant women, elderly adults, people with disabilities, and those receiving Supplemental Security Income (SSI). Each of these groups is referred to as a mandatory eligibility group. According to federal law, these groups are entitled to Medicaid coverage.

Individual states can choose to cover additional groups, such as Americans receiving home and community-based care. 

Original Medicare Costs

Most Americans will be eligible to get Part A without needing to pay monthly premiums, so long as they’ve worked for at least 10 years and paid Medicare taxes. Those ineligible for Premium-Free Part A are still able to purchase this Medicare Part, however.

Part B requires its beneficiaries to pay a monthly premium payment. In 2022, the standard monthly premium is $170.10.

Most Part D drug plans will charge a monthly premium. For Original Medicare beneficiaries, this is in addition to the Part B premium payment. For those enrolled in a Medicare Advantage (Part C) or a Medicare Cost Plan that includes drug coverage, the monthly premium for those health plans may already include an amount for drug coverage. 

Part D premiums and additional fees are dictated by income. Learn more about premiums costs for Part D at this resource.

Note: Learn more about picking the best Part D plan by visiting this resource.

Medicare Advantage Costs

The cost of a Medicare Advantage plan will depend on the specific health insurance plan chosen. However, regardless of the MA chosen, one will still need to pay the Part B monthly premium. 

Medicaid Costs

Medicaid healthcare costs will differ from state to state. Interested persons should contact their state’s Medicaid office for more information. Visit this resource for contact information for Medicaid enrollees. 

Yes, some Americans are dual eligible and will qualify for both Medicare and Medicaid. This program is known as Dual Eligibles. In the Dual Eligibles program, Medicare acts as the primary insurance while Medicaid is secondary. For example, Medicaid may help pay for Medicare premiums, copayments, coinsurances, or other final medical costs that Original Medicare doesn’t cover. 

The Dual Eligibles Program creates more comprehensive medical coverage and helps cover medical costs that Medicare doesn’t. Learn more about it at this source.

Insurance is complicated and can be very hard to make a decision on. Not to mention, there are so many options available to choose from that have their own unique pros and cons. Here are some tips for narrowing down your options and picking the best insurance plan possible for your needs:

• List Your Goals: Write down your needs and wants when it comes to healthcare. You want to make sure the insurance you choose is aligned with these desires.

• Assess Your Current Routine: Take a look at your current list of providers, medications, practices, etc. and evaluate what’s working and what’s not; what do you want to change and what do you want to remain the same. Take these notes and consider them when sifting through options.

• Consider Cost: Which option is best for your budget?

Can someone help me apply for Medicare and/or Medicaid?

Of course, for assistance with Medicare applications call 1-800-MEDICARE. For guidance with Medicaid enrollment, contact your local Medicaid office found here.