Medicare vs. Medicaid: What's the Difference?

Although the names sound similar, these programs serve different purposes.

Medicare

Medicare is federal health insurance primarily for:

• Adults age 65 and older
• People under 65 with certain disabilities
• Individuals with End-Stage Renal Disease (ESRD)
• Individuals diagnosed with ALS (Lou Gehrig's Disease)

Medicare includes several parts:

Part A

Covers:

• Hospital stays
• Skilled nursing facilities
• Hospice care
• Home health services

Part B

Covers:

• Doctor visits
• Outpatient care
• Preventive screenings
• Vaccines
• Durable medical equipment like walkers and wheelchairs

Part D

Helps pay for prescription medications.

Medicare beneficiaries can choose Original Medicare or enroll in a Medicare Advantage Plan offered by private insurers approved by Medicare.

Medicaid

Medicaid is a joint federal and state program for people with limited income and, in many cases, limited resources.

Unlike Medicare, Medicaid eligibility depends largely on your state's rules.

Medicaid may cover services Medicare usually doesn't, including:

• Nursing home care
• Personal care assistance
• Long-term care services

Many people who qualify for Medicaid also automatically qualify for Extra Help, a program that reduces Medicare Part D prescription drug costs.

Can You Have Both Medicare and Medicaid?

Yes. This is called being dually eligible.

If you qualify for both:

• Medicare pays first.
• Medicaid helps cover many remaining costs.
• Prescription drugs are generally covered through a Medicare Part D plan.
• Medicaid may pay for medications Medicare does not cover.

This combination often reduces out-of-pocket healthcare expenses significantly.

7 Ways Low-Income Individuals Can Use Medicare and Medicaid to Save Money

1. Take Advantage of Free Preventive Care

Many preventive services are covered under Medicare Part B.

These may include:

• Annual Wellness Visits
• Diabetes screenings
• Mammograms
• Colon cancer screenings
• Flu shots
• COVID-19 vaccines
• Pneumonia vaccines

Example

Mary, age 69

Mary schedules her yearly wellness visit and receives recommended screenings without paying the full cost of each service. Detecting health issues early may also help her avoid more expensive treatments later.

2. Reduce Prescription Drug Costs

Prescription medications can become one of the biggest expenses during retirement.

If you have limited income, Medicaid eligibility often means you automatically qualify for Extra Help, which lowers Medicare Part D costs.

Example

James, age 72

James takes five prescription medications every month.

After qualifying for Medicaid, he also qualifies for Extra Help, reducing his prescription costs from hundreds of dollars each month to a much smaller amount.

3. Get Help Paying Medicare Costs

Many people think Medicare is free.

It isn't.

There are still:

• Premiums
• Deductibles
• Coinsurance
• Copayments

Depending on your eligibility, Medicaid may help pay many of these expenses.

Example

Linda, age 67

Linda receives Social Security retirement benefits but has a limited monthly income.

After qualifying for Medicaid, many of her Medicare cost-sharing expenses are reduced, making it easier to budget for other essentials like food and housing.

4. Receive Home Health Services

If medically necessary, Medicare may cover home health care.

This can include:

• Skilled nursing
• Physical therapy
• Occupational therapy
• Speech therapy

Example

Robert, age 76

Following hip replacement surgery, Robert receives therapy at home instead of traveling several times each week for treatment.

5. Get Durable Medical Equipment

Medicare Part B helps cover medically necessary equipment, including:

• Walkers
• Wheelchairs
• Hospital beds
• Oxygen equipment

Example

Helen, age 81

Helen's doctor prescribes a walker after she experiences frequent falls. Medicare helps cover the cost, making her home safer and helping her remain independent.

6. Access Long-Term Care Through Medicaid

One of Medicaid's most valuable benefits is coverage for services that Medicare usually does not cover.

These may include:

• Nursing home care
• Long-term personal care
• Assistance with bathing, dressing, and daily living activities

Example

Frank, age 83

After developing advanced mobility issues, Frank requires nursing home care. Medicaid helps cover services that would otherwise be financially out of reach.

7. Explore Medicare Advantage Plans Carefully

Some Medicare Advantage plans offer additional benefits beyond Original Medicare, such as:

• Dental care
• Vision care
• Hearing services
• Fitness memberships
• Transportation assistance

However, these plans typically use provider networks and may require prior approval for certain services. Compare costs, provider access, and benefits before enrolling.

Example

Susan, age 70

Susan enrolls in a Medicare Advantage plan that includes routine dental cleanings and eyeglasses, helping her reduce expenses not covered by Original Medicare.

Don't Assume You Earn Too Much

Many people never apply for Medicaid because they believe their income is too high.

Some states offer a "spend down" option.

This means medical expenses may reduce your countable income enough to qualify for Medicaid benefits. Because eligibility rules vary by state, it's worth contacting your state Medicaid office even if you think you may not qualify.

Where to Get Free Help

You don't have to figure everything out on your own.

Several trusted resources provide free assistance:

• Medicare.gov for plan comparisons and coverage information.
• 1-800-MEDICARE (1-800-633-4227) for questions about Medicare.
• State Health Insurance Assistance Program (SHIP) for free, unbiased counseling on Medicare options.
• Your State Medicaid Office for eligibility, applications, and benefits.
• Eldercare Locator to connect with local aging services and long-term care resources.

Final Thoughts

For many low-income Americans, Medicare and Medicaid work best together. Medicare provides broad health coverage for eligible older adults and certain younger people with disabilities, while Medicaid can help pay remaining healthcare costs and provide services that Medicare generally doesn't cover, such as long-term care.

If your income is limited, don't assume you won't qualify for extra assistance. Applying for Medicaid, checking your eligibility for Medicare Savings Programs or Extra Help, and reviewing your Medicare coverage each year can lead to meaningful savings and better access to care.

A few hours spent exploring your options today could make your healthcare more affordable for years to come.