Key Differences of Medicare and Medicaid

Key Differences of Medicare and Medicaid
Key Differences of Medicare and Medicaid

There are many key differences of Medicare and Medicaid, but both of these government programs are designed to help people offset health care costs. Both programs were created in 1965 by the federal government and are funded tax revenue. It’s easy to confuse Medicare and Medicaid if you’re unfamiliar with the programs—the names do sound similar. However, there are important fundamental differences between the two.

Medicare and Medicaid are separate programs with different eligibility requirements and coverage.1 2 Generally, Medicare is for helping elderly people with health care costs. Medicaid has no age requirements and is intended to cover health care costs for those who cannot afford it due to financial difficulties.


Medicare is an insurance program that covers medical costs. It’s an entitlement program; individuals are entitled to benefits because they or their spouses paid for it through Social Security taxes.

People who are over 65 are served by the Medicare program. There are no income eligibility requirements for those over 65. Younger people who are disabled and meet income requirements may also be eligible for Medicare.

Patients are responsible for some of their health care costs, accounted for through deductibles. Small monthly premiums are required for non-hospital coverage.

Since Medicare is a federally administered program, it’s basically the same everywhere in the U.S. The program is overseen by the Centers for Medicare & Medicaid Services, a federal government agency.


Medicaid is an assistance program serving low-income people of any age, including those over 65 who are also on Medicare. Patients typically pay nothing for covered medical expenses. A small co-payment might be required, based on what type of service is offered.

Federal guidelines set the basic framework for eligibility, and states can apply additional rules.3 Since the program is meant to assist the financially needy, many states set limits on the liquid assets a person can own. Income restrictions also apply.

Medicaid also covers long-term care, which is not covered by Medicare or by most private health care insurance. Medicaid is the largest single provider of long-term care funding in the U.S.4 Individuals must meet liquid asset restrictions to participate in the long-term care program.

Medicaid is a federal program, but it’s administered differently in each state under federal guidelines. The federal government requires mandatory coverage for services it deems medically necessary. States can add benefits to their programs. Many states add benefits such as dental coverage, prescription drug benefits, optometry services, eyeglasses, physical therapy, medical transport and prosthetic devices. Anyone with Medicaid coverage pays nothing for these services. The Medicaid program is also overseen by the Centers for Medicare & Medicaid Services.

Key Differences of Medicare and Medicaid Summary

Medicare and Medicaid programs provide medical coverage to seniors, the disabled and impoverished people in the United States. Medicare is the primary health care coverage provider for those aged 65 and older. Eligibility doesn’t have income level requirements for those 65 and older. Certain types of disabled people younger than 65 may also be eligible for Medicare.

Medicaid is designed for people with low income who often have no access to other resources. Medicaid has income and asset restrictions, but no age requirements.