What is the difference between Medicare and Medicaid?

Medicare and Medicaid

What is the difference between Medicare and Medicaid?

Working for 11 years in community health it was quite common for clients to confuse the Medicare and Medicaid programs with each other. Maybe you get the two programs also. While the names may sound similar, but these programs are fundamentally different. 

In this article, I will explain some of the differences between the two, but before discussing how these plans differ, let’s take a quick look at the similarities. 

Similarities Between Medicare and Medicaid

Below are some of the ways that these programs are different. 

  • Both are health insurance plans – Both government programs are insurance plans although the populations they serve will differ. 
  • Both are government programs – Medicare and Medicaid are both health insurance plans that are funded by taxpayers and managed by the government. We’ll describe those governing bodies in the differences section. 
  • Your income determines your coverage – In Medicaid your income will determine if you can qualify for the program. With Medicare, you will qualify if you meet eligibility requirements, however, the monthly premium you pay is based on your income.

Medicare vs Medicaid And Their Differences

As aforementioned, both plans are government-managed health insurance plans, however, they differ in the following ways. 

Eligibility for Medicare vs Medicaid 

To be eligible for Medicare you must be 65 years old or have a disability. There are other conditions that will qualify you for Medicare, however, these are the most common eligibility requirements. 

Medicaid eligibility will be determined by your income. Medicaid is a health insurance plan that covers low-income families, children, pregnant women, and seniors. 

Who Manages Medicare vs Medicaid?

Medicare is managed by the federal government, while Medicaid is run by the state that you live in. 

Who Funds Medicare vs Medicaid?

Medicare is mostly funded by the payroll taxes that you pay at your job.  Withholdings on your check for Social Security, FICA, Federal Income Tax, and Federal Medicare go toward funding Medicare.  

It’s also funded by income taxes paid on Social Security benefits, interest earned on trust fund investments, and Medicare Part A premiums paid by individuals who do not receive premium-free Medicare Part A. 

Medicaid is funded by both the federal government and the states. Most of the federal funds for Medicaid come from the Federal Medical Assistance Percentages or FMAP. Essentially every $1 that the state pays for Medicaid is matched by the FMAP. 

Applying for Medicare vs Medicaid

To apply for Medicare you must go through the Social Security Administration. You have 3 options to apply for Medicare which include visiting the Social Security Administration website, applying by calling them at 800.772.1213, or visiting the nearest Social Security office

Applying for Medicaid starts with your state’s Health and Human Services Department. 

Conclusion

There are lots of differences between Medicare and Medicaid but the main takeaway should be this: 

  • Medicare is health coverage for seniors 65+ and those with disabilities 
  • Medicaid is health coverage for individuals who are low-income

If you need to apply for Medicare see our guide titled How To Apply For Medicare. To apply for Medicaid contact the Medicaid agency in your state

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