What Is the Difference Between Medicaid and Medicare?

Although Medicaid and Medicare are both public health insurance programs, they have essential differences.

Posted on December 7, 2022

Medicare is a federal program for older adults, people with disabilities, and individuals with end-stage renal failure. Medicaid is federal-state assistance for those with limited incomes.

History of Medicaid and Medicare

Congress amended the Social Security Act in 1965, creating health care programs for older adults and those receiving public assistance.

  • Providing health care aid for low-income people, Title XIX formed Medicaid.
  • Title XVII established Medicare, offering public health insurance for people aged 65 and older In 1973, the legislature widened the scope of Medicare to help certain disabled persons and individuals with kidney disease.

Roles of States and the Federal Government

The states and federal government play different roles in administering Medicare and Medicaid, according to the U.S. Department of Health and Human Services.


Medicare is a federal program that the Centers for Medicare & Medicaid Services runs, so it is consistent across states.

Funding for Medicare comes from general federal revenues, payroll tax revenues, and beneficiaries’ premiums.


Although the federal government sets the general rules for Medicaid, states administer the program, leading to variability across jurisdictions. For Medicaid, states can establish different qualification requirements within federal guidelines.

States and the federal government jointly subsidize Medicaid, per Medicaid.gov. Federal Medical Assistance Percentages determine how much money the federal government matches each state in support of Medicaid.

Qualifying for Medicare

Generally, after paying income taxes for 10 years, a person and their spouse can enroll in Medicare upon turning 65.

Qualifying individuals with disabilities do not have to wait until retirement age to enroll in Medicare. For example, people eligible for Social Security Disability Insurance can also receive Medicare after a two-year waiting period. Those with end-stage renal disease can obtain Medicare at any age if they, their spouse, or their parent if they are a dependent child, have worked the required amount.

Qualifying for Medicaid

Medicaid primarily benefits people with limited earnings. As states run Medicaid, the enrollment requirements can vary by state. Review the eligibility requirements for your state using Medicaid.gov’s state overview feature.

There are multiple pathways to Medicaid, as the Kaiser Family Foundation explains. States must allow low-income parents, children, and those who are pregnant to qualify for Medicaid if their income falls below a certain threshold. This threshold is calculated using the Modified Adjusted Gross Income (MAGI) financial method. Those who received foster care as children can get Medicaid regardless of income.

The basis for eligibility can stem from enrollment in other programs, such as Supplemental Security Income or the Breast and Cervical Cancer Treatment and Prevention Program. States can also allow older people and individuals with disabilities to qualify for Medicaid, imposing both income and asset limits.

In some states, those with medical expenses greatly diminishing their net incomes can qualify for Medicaid under the Medically Needy Program. People with income exceeding the threshold for Medicaid but with medical expenses that reduce their net income below Medicaid’s limit can receive coverage for the costs they cannot afford.

Do Medicaid or Medicare Fund Long-Term Care?

While Medicare covers hospitalizations, short-term care in a skilled nursing facility, and hospice care, it does not fund long-term care. Medicaid covers long-term care in nursing homes, according to the American Council on Aging.

Some older adults can enroll in both Medicare and Medicaid for greater coverage of their health care needs. For instance, one might have Medicare covering hospitalizations and Medicaid covering long-term care.

To learn more about qualifying for Medicare or Medicaid, speak to an elder law attorney.

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