Medicare and Medicaid sound similar, but they’re completely different programs. Medicare is for people 65 and older (plus some younger people with disabilities). Medicaid is for people with limited income, regardless of age. About 12.3 million Americans qualify for both. Understanding which program you’re in—or whether you qualify for both—can save you thousands in medical bills.
1. Quick comparison: Medicare vs Medicaid
| Feature | Medicare | Medicaid |
|---|---|---|
| Who it’s for | 65+, disabled, ESRD | Low-income individuals and families |
| Run by | Federal government (CMS) | States (with federal funding/rules) |
| Eligibility basis | Age or disability | Income and household size |
| Monthly premium | $0 (Part A) + $185 (Part B) + $35–55 (Part D) | $0 in most states |
| Deductibles | $1,676 (Part A), $257 (Part B) | $0 or minimal |
| Copays | 20% coinsurance typical | $0–$4 for most services |
| Dental/vision | Not covered (basic Medicare) | Covered in most states |
| Long-term care | Limited (100 days max) | Covered |
| Enrollment | Initial enrollment at 65, annual open enrollment Oct–Dec | Year-round |
| Number enrolled | ~67 million | ~92 million |
2. Medicare explained: Parts A, B, C, and D
Medicare has four parts, each covering different services:
Part A — Hospital insurance
Covers inpatient hospital stays, skilled nursing facility care (up to 100 days), hospice, and some home health. Most people pay $0 in premiums if they or their spouse paid Medicare taxes for 10+ years. The 2026 deductible is $1,676 per benefit period.
Part B — Medical insurance
Covers doctor visits, outpatient care, preventive services, durable medical equipment, and lab tests. The 2026 premium is $185/month (higher for incomes above $106,000). The annual deductible is $257, then you pay 20% coinsurance.
Part C — Medicare Advantage
Private insurance plans that bundle Parts A, B, and usually D. Often include dental, vision, and hearing. May have lower out-of-pocket costs but restrict you to a provider network. About 54% of Medicare beneficiaries now choose Medicare Advantage. See our Medicare Advantage billing guide for details on how MA plans bill differently.
Part D — Prescription drugs
Covers prescription medications through private plans. Premiums average $35–55/month. The 2026 out-of-pocket cap is $2,000/year thanks to the Inflation Reduction Act.
3. Medicaid explained: coverage and eligibility
Medicaid is the largest health insurance program in the U.S., covering about 92 million people. Unlike Medicare, Medicaid is run by each state individually, so coverage and eligibility vary significantly.
Income eligibility (2026)
| Household Size | Expansion States (138% FPL) | Non-Expansion States (typical) |
|---|---|---|
| 1 person | $20,783/year | Varies; often no coverage for childless adults |
| 2 people | $28,208/year | Varies by state |
| 3 people | $35,633/year | Varies by state |
| 4 people | $42,900/year | Varies by state |
40 states + DC have expanded Medicaid. The 10 non-expansion states (as of 2026) are: Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming. In these states, many low-income adults fall into the “coverage gap”—earning too much for Medicaid but too little for marketplace subsidies.
What Medicaid covers
Federal law requires all state Medicaid programs to cover: hospital stays, doctor visits, lab and X-ray services, nursing facility care, home health, prenatal care, and vaccines for children. Most states also cover dental, vision, prescription drugs, and mental health services.
For a step-by-step walkthrough of the application process, see our how to apply for Medicaid guide.
4. Dual eligibility: when you qualify for both
About 12.3 million Americans are “dual eligible”—they qualify for both Medicare and Medicaid. This typically includes:
- Seniors 65+ with income below Medicaid thresholds
- People under 65 with disabilities who have limited income
- Medicare beneficiaries who qualify for Medicaid “spend down” after high medical costs
How dual coverage works
Medicare pays first (primary payer), then Medicaid picks up remaining costs:
| Cost Type | Medicare Pays | Medicaid Covers |
|---|---|---|
| Part B premium ($185/mo) | — | Yes, Medicaid pays it |
| Hospital deductible ($1,676) | — | Yes |
| 20% coinsurance | 80% | Remaining 20% |
| Dental/vision | Not covered | Covered |
| Long-term nursing care | 100 days max | Unlimited |
| Prescription drugs | Part D with $2K cap | Often $0–$4 copays |
5. How each program handles hospital bills
Medicare billing
Hospitals bill Medicare using DRG (Diagnosis Related Group) codes for inpatient stays and APC (Ambulatory Payment Classification) codes for outpatient. Medicare sets the rates—hospitals cannot charge more than the Medicare-approved amount. However, you still owe your deductible and coinsurance. For details on how Medicare hospital billing works, see our Medicare billing guide.
The observation status trap: If a hospital places you under “observation status” instead of admitting you as an inpatient, your stay is billed under Part B (outpatient) instead of Part A. This can cost you significantly more and disqualify you from Medicare-covered skilled nursing facility care. See our observation status guide.
Medicaid billing
Medicaid reimburses hospitals at the lowest rates of any major payer—typically 60–70% of what Medicare pays. Patients owe little to nothing. However, not all providers accept Medicaid due to the low reimbursement rates. In some areas, finding a Medicaid-accepting specialist can be challenging.
Same hospital stay, different programs
A 3-day hospital stay for pneumonia at a community hospital in Ohio:
- Medicare patient: Hospital receives ~$7,200 from Medicare. Patient owes $1,676 deductible = $1,676 out of pocket.
- Medicaid patient: Hospital receives ~$4,800 from Medicaid. Patient owes $0–$3 copay = ~$0 out of pocket.
- Dual eligible: Medicare pays ~$7,200, Medicaid covers the $1,676 deductible = $0 out of pocket.
- Uninsured: Hospital chargemaster price = $22,000+.
6. Common billing problems by program
Medicare billing issues
| Issue | What Happens | What to Do |
|---|---|---|
| Observation status surprise | Stay billed as outpatient; higher copays, no SNF coverage | Ask admission status within 24 hours; appeal if misclassified |
| Excess charges from non-participating providers | Provider charges up to 15% above Medicare rate | Confirm provider participation before procedures |
| Part D coverage gap | Drug costs in the “donut hole” phase | 2026 cap is $2,000; use manufacturer discounts |
| Denied skilled nursing after observation | Medicare requires 3-day inpatient stay for SNF coverage | Appeal observation status retroactively |
Medicaid billing issues
| Issue | What Happens | What to Do |
|---|---|---|
| Balance billing | Provider bills you for amount above Medicaid rate | Illegal in all states; report to your state Medicaid office |
| Provider won’t accept Medicaid | Limited access to specialists | Contact your Medicaid managed care plan for referrals |
| Retroactive eligibility not applied | Bills from before your Medicaid start date | Medicaid covers 3 months retroactively; resubmit claims |
| Wrongful copay charges | Charged copays above Medicaid limits | Medicaid copays cannot exceed $4 for most services |
7. How to check your eligibility
Medicare eligibility
- Age 65+: You’re eligible if you (or your spouse) paid Medicare taxes for at least 10 years (40 quarters)
- Under 65: You qualify if you’ve received Social Security Disability Insurance (SSDI) for 24 months, or have ALS or end-stage renal disease
- Check online: Visit ssa.gov/medicare or call 1-800-772-1213
Medicaid eligibility
- Expansion states: Income at or below 138% FPL (see table above)
- Non-expansion states: Typically limited to children, pregnant women, elderly, and disabled individuals
- Check online: Visit HealthCare.gov/medicaid-chip or your state Medicaid website
- For a full walkthrough, see our Medicaid application guide
Medicare Savings Programs (if you have Medicare but limited income)
Even if you don’t qualify for full Medicaid, you may qualify for a Medicare Savings Program that pays your Medicare premiums and cost-sharing:
| Program | Income Limit (2026, individual) | What It Covers |
|---|---|---|
| QMB (Qualified Medicare Beneficiary) | ~$1,275/month | Part A & B premiums, deductibles, copays |
| SLMB (Specified Low-Income Beneficiary) | ~$1,528/month | Part B premium only |
| QI (Qualifying Individual) | ~$1,715/month | Part B premium only |
Frequently asked questions
What is the main difference between Medicare and Medicaid?
Medicare is a federal program for people 65+ and those with certain disabilities. Medicaid is a joint federal-state program for people with limited income. Medicare eligibility is based on age or disability; Medicaid is based on income and varies by state.
Can you have both Medicare and Medicaid at the same time?
Yes. About 12.3 million Americans are “dual eligible.” Medicare pays first, then Medicaid covers remaining costs like copays, deductibles, and services Medicare doesn’t cover. Dual eligibles pay little to nothing out of pocket for healthcare.
Does Medicare cover long-term nursing home care?
No. Medicare only covers up to 100 days of skilled nursing care after a qualifying 3-day hospital stay. Long-term custodial care is covered by Medicaid, not Medicare. This is one of the most important differences between the programs.
How much does Medicare cost per month in 2026?
Part A is $0 for most people. Part B is $185/month. Part D averages $35–55/month. You also pay deductibles ($1,676 for Part A, $257 for Part B) and 20% coinsurance on most Part B services. Total annual out-of-pocket costs average $6,000–$8,000 for Original Medicare without supplemental coverage.
What income level qualifies for Medicaid?
In the 40 expansion states, adults earning up to 138% of the federal poverty level qualify ($20,783/year for an individual in 2026). In the 10 non-expansion states, eligibility is much more restrictive. Children qualify at higher income levels in all states through Medicaid and CHIP.