| Tue, Mar 11, 2014 @ 09:00 AM

Medicare vs. Medicaid: What’s the Difference?

Posted by Medicare Made Clear

medicare and medicaid

Before we get into the differences between Medicare and Medicaid, let’s consider their similarities.

  • Medicare and Medicaid are both government-run programs.
  • They were created in 1965 to address the same problem: how difficult it was for certain people to purchase private health insurance.
  • They were both a part of President Lyndon B. Johnson’s “Great Society” vision. Great Society social reforms were focused on eliminating disparities in society caused by poverty and racial injustice.

However, there are a few important differences as well.

What kind of program is it?

  • Medicare is an insurance program. Those who are covered by Medicare pay into trust funds, and the bills are paid from those funds.
  • Medicaid is an assistance program. Medical bills are paid from federal, state and local tax funds. The Medicaid program is jointly funded by the federal government and states. The federal government pays states for a certain percentage of program expenditures.

Who runs it?

  • Medicare is a federal program. It’s run by the Centers for Medicare & Medicaid Services (CMS). The rules for how Medicare is administered stay basically the same no matter where you are in the U.S.
  • Medicaid is a federal-state program. It’s run by state and local governments operating within federal guidelines. Unlike Medicare, the way Medicaid is administered varies from state to state.

Who’s served by the program?

  • Medicare is for U.S. citizens and legal residents. It’s designed to provide health care coverage to people 65 and older. Most people become eligible when they turn 65 because they contributed to the Medicare fund by paying taxes when working.Medicare also provides coverage for people younger than 65 who have a qualifying disability, which means a medical or physical condition lasting longer than 12 months that prevents them from working. People with End Stage Renal Disease qualify for Medicare.People on Medicare usually pay a portion of their health care costs. They may pay monthly premiums, as well as co-pays, deductibles and other methods of cost-sharing.
  • Medicaid is designed to provide health care coverage to individuals and families with limited income and resources. Different programs under the Medicaid umbrella are designed to help people from different groups. People on Medicaid usually pay little or no part of the cost for covered health care expenses.As noted above, Medicaid programs differ from state to state. That means the qualifications for Medicaid depend on the state you live in. If you’re interested in learning more about state-specific conditions, check out the Medicaid qualifications page on HealthCare.gov.

A final note: It’s possible to be eligible for both Medicare and Medicaid. This is called being “dual eligible.” It may be possible for you to enroll in a dual-eligible Special Needs Plan, or “D-SNP.” A D-SNP is set up to help coordinate all your health care coverage needs in a single plan. Medicare and Medicaid benefits are also coordinated within the plan.

You can use contact your local Medicaid/Medical Assistance office for more information on D-SNPs and other dual-eligible programs. Medicaid.gov’s page “State Medicaid & CHIP Policies for 2014” can get you to the correct website for your state.

For more information, explore MedicareMadeClear.com or contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048.


Medicare.gov: The official U.S. government website for Medicare.

Medicaid.gov: The official U.S. government website for federal policy and program information on Medicaid.

Medicare Made Clear: More information about Medicare vs. Medicaid.


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