What’s the difference between Medicare and Medicaid ?

Key Summary

Many people in the United States often ask, “Is Medicare and Medicaid the same?” The answer is no. While both are government programs that help Americans pay for healthcare, they are entirely different in purpose, eligibility, and funding. Medicare is a federal health insurance program for people aged 65 and older or those with certain disabilities, while Medicaid is a joint federal and state program that provides medical assistance to individuals and families with low income. This article explains in detail how the two programs differ, who qualifies, what each covers, and how they sometimes work together.

For providers and agency owners: If you operate or plan to start a home care or home health agency that bills Medicaid or coordinates with Medicare, see our Medicare & Medicaid consultation.

What Is Medicare?

Medicare is a national health insurance program run by the U.S. federal government through the Centers for Medicare & Medicaid Services (CMS). It mainly serves:

• People aged 65 or older, regardless of income
• People under 65 with certain disabilities
• People with End-Stage Renal Disease (ESRD) or ALS (Lou Gehrig’s disease)

Because Medicare is a federal program, its rules and benefits are the same across all 50 states.

The Four Parts of Medicare

Medicare helps reduce medical costs for older adults and people with disabilities, but it does not cover everything. Routine dental care, vision exams, hearing aids, and long-term nursing home stays are typically excluded.

What Is Medicaid?

Medicaid is a joint federal and state assistance program that provides healthcare coverage for low-income individuals and families. It’s designed to ensure that people who can’t afford private insurance still receive medical care.

Unlike Medicare, Medicaid is run by individual states, meaning that eligibility rules, benefits, and costs can vary depending on where you live.

Who Qualifies for Medicaid

Medicaid eligibility is based primarily on income and financial resources, though each state has its own specific rules. Generally, Medicaid covers:

• Low-income adults
• Children and pregnant women
• Seniors with limited income
• People with disabilities

Since the Affordable Care Act (ACA), many states have expanded Medicaid coverage to include adults earning up to 138% of the federal poverty level (FPL). However, not every state has opted into this expansion.

What Medicaid Covers

While coverage varies by state, all Medicaid programs are required to include certain mandatory benefits, such as:

• Inpatient and outpatient hospital services
• Physician services
• Laboratory and X-ray services
• Home health services
• Nursing facility care for adults

Many states also offer optional benefits, such as:

• Prescription drugs
• Vision and dental care
• Physical and occupational therapy
• Transportation to medical appointments
• Home and community-based care

A major distinction between the two programs is that Medicaid covers long-term care services, including nursing home care, which Medicare does not.

For agency owners: Preparing for Medicaid billing and audits starts with compliant operations. Review our Home Care Agency Operational Form Pack and the Non-Medical Home Care Agency Policy & Procedure Manual (Any State).

What’s the difference between Medicare and Medicaid?

In short, Medicare helps older adults and people with disabilities, while Medicaid assists people of all ages with limited income.

How Medicare and Medicaid Are Funded

Both programs are supported by government funds, but in very different ways:

• Medicare is funded through federal payroll taxes, monthly premiums, and general federal revenue.
• Medicaid is funded jointly by the federal government and individual states. The federal government pays a percentage of each state’s Medicaid costs, called the Federal Medical Assistance Percentage (FMAP), which varies by state income level.

Can You Have Both Medicare and Medicaid?

Yes. Some Americans qualify for both programs at the same time. These individuals are known as dual-eligible beneficiaries.

Here’s how dual coverage works:

• Medicare pays first for covered medical services like hospital stays, doctor visits, and lab work.
• Medicaid pays for costs that Medicare doesn’t cover—like premiums, deductibles, and long-term care.

This combination provides the broadest and most affordable coverage, especially for seniors with limited income or those living in nursing homes.

Why It Matters to Know the Difference

Understanding that Medicare and Medicaid are not the same can help you:

• Avoid confusion when applying for healthcare coverage
• Maximize your benefits if you qualify for both programs
• Plan ahead financially for medical or long-term care needs
• Prevent gaps in care, especially during retirement or disability

If you’re unsure which program applies to you, check your eligibility at Medicare.gov or your state’s Medicaid office website.

Starting or growing an agency? Build payer-ready operations with a Home Care Business Plan (Any State) and a Home Care Employee Handbook.

Common Misconceptions

Myth 1: Medicare and Medicaid are the same thing.
Fact: They are two separate programs with different purposes and eligibility criteria.

Myth 2: Medicare is only for low-income people.
Fact: Medicare is available to everyone who meets age or disability requirements, regardless of income.

Myth 3: Medicaid is the same nationwide.
Fact: Medicaid varies by state, and each state decides who qualifies and what benefits are offered.

Myth 4: Medicare covers long-term care.
Fact: It does not. Only Medicaid covers long-term custodial care in most cases.

Myth 5: You can’t have both.
Fact: Many people qualify for both Medicare and Medicaid, especially older adults with low income.

How to Apply for Medicare and Medicaid

Applying for Medicare

You can apply through the Social Security Administration (SSA):

• Website: www.ssa.gov/medicare
• By phone: 1-800-772-1213
• Or visit your local Social Security office