Medicare and Medicaid: Two Different Government Programs

Medicare and Medicaid: Two Different Government ProgramsWhile Medicare and Medicaid may seem similar, these two government programs are actually very different. Each offers different benefits at varying costs to two diverse segments of the United States population.

Medicare and Medicaid are two federally funded programs that help eligible individuals pay for their health care. Generally, Medicare is offered to individuals age 65 and older, or younger people with certain disabilities or illnesses, while Medicaid is offered to those who have limited income and resources. Although both provide health and medical coverage to specific demographics in the United States, eligibility requirements, coverage benefits, and associated costs vary between the two government programs.

Who administers each program?

Both programs are managed by the Centers for Medicare and Medicaid Services (CMS).

Medicare rules are the same across the country as it is run by the federal government. This program accounts for about 13% of the federal budget.

Conversely, Medicaid is run by both the federal government and individual state governments, and rules for this program may vary by state. This program accounts for about 7% of the federal budget and 16.8% of state budgets. On average, over half of the expenses incurred by this program are paid for by the federal government.

Who is eligible for Medicare and/or Medicaid?

Generally, Medicare covers all U.S. citizens and permanent residents of five or more years who are age 65 and older, certain individuals collecting disability benefits, and others will specific illnesses, such as permanent kidney failure.

On the other hand, the Medicaid program is offered to certain individuals and families who have limited income and resources as well as certain disabilities. Since the program is state-run, additional eligibility requirements may exist and will vary by state.

Some individuals, also known as “dual-eligibles” may qualify for both the Medicare and Medicaid programs. Being enrolled in both programs can allow eligibility to enroll in Medicare Savings Programs (MSPs) and the Part D Extra Help program, which can help with out-of-pocket costs not covered by Part A and Part B.

What does each program cover?

Medicare is composed of many different parts, and beneficiaries have the option to decide which plans they want to enroll in. Many eligible beneficiaries are automatically enrolled in Part A, which covers hospital care, and Part B, which covers certain medical services. Once enrolled, beneficiaries can opt to enroll in Medicare-approved private insurance plans to cover out-of-pocket costs not already covered and/or provide additional benefits. All individuals who are eligible for this program are also offered prescription drug coverage, which can be attained through a stand-alone Part D Prescription Drug Plan (PDP) or a Medicare Advantage plan with medication coverage.

Medicaid provides a wider range of benefits compared to Medicare. Although coverage varies by state, the government requires each state to offer at least the mandatory set of benefits. Mandatory benefits include, but are not limited to, coverage for inpatient and outpatient care, home health services, and nursing facility services. Optional benefits may include coverage for prescription drugs, physical therapy, and optometry services.

What are the costs associated with Medicare and Medicaid coverage?

The cost for Medicare coverage depends on the plans in which a beneficiary is enrolled. Although many individuals qualify for premium-free Part A coverage, Part B coverage comes with a monthly premium, and both Part A and Part B comes with annual deductible, coinsurance, and copayments. Additionally, enrolling in private insurance plans, such as PDPs, MA plans or Medicare Supplement (Medigap) plans, will come with monthly premiums and other out-of-pocket costs which will vary by plan.

The Medicaid program was designed to be affordable to all eligible enrollees. While Medicaid costs vary by state, cost-sharing is typically limited for most individuals enrolled in this program.  Depending on an individual’s income and resources, states can impose deductibles, copayments, coinsurance, and other out-of-pocket costs for the services provided.

Where can I get more information and enroll?

For information about the Medicaid program, individuals can visit the website or contact their local State Medical Assistance (Medicaid) offices to find out whether they qualify and how to enroll in the program. To get the phone number for a local Medicaid office, call CMS at 1-800-633-4227 (TTY, 1-877-486-2048).

Individuals interested in getting further information about the Medicare program can visit the Social Security website or by contacting their local Social Security office.


Medicare has neither reviewed nor endorsed this information.

About Angela Chen

Angela Chen is a contributor and editor of the eHealth Medicare Blog and the PlanPrescriber Blog.
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