Medicare vs. Medicaid: The Basics

Navigating the financial side of senior care can be overwhelming, especially when it comes to understanding government programs like Medicare and Medicaid. While both programs provide important support for older adults, they are very different in terms of eligibility, coverage, and how they can be used. Families who understand these differences are better equipped to make decisions about healthcare and long-term care options. This guide explains the basics of Medicare and Medicaid, highlights key differences, and clarifies how each program applies to senior care.

What is Medicare?

Medicare is a federal health insurance program primarily for people age 65 and older, though some younger individuals with disabilities or specific conditions may also qualify. It is not based on income or financial need—eligibility is generally tied to age or disability status.

Medicare is divided into different parts:

- Part A: Hospital Insurance – covers inpatient hospital stays, skilled nursing facility care (short-term), hospice, and some home health services.

- Part B: Medical Insurance – covers doctor visits, outpatient care, preventive services, and medical equipment.

- Part C: Medicare Advantage – private plans that bundle Parts A and B, often including prescription coverage and extras like dental or vision.

- Part D: Prescription Drug Coverage – helps pay for medications prescribed by a doctor.

Medicare is designed to cover medical and rehabilitative care but does not generally cover long-term custodial care, such as ongoing assistance with bathing, dressing, or living in an assisted living community.

What is Medicaid?

Medicaid is a joint federal and state program that provides health coverage for individuals and families with low income and limited resources. Unlike Medicare, eligibility for Medicaid is based on financial need, and income and asset limits vary by state.

For seniors, Medicaid can be particularly important because it covers long-term care costs.

- Nursing Home Care: Medicaid is the largest payer of long-term nursing home care in the United States.

- Home and Community-Based Services (HCBS): In many states, Medicaid offers waiver programs that provide in-home or community-based support to help seniors avoid institutional care.

- Medical Services: Like Medicare, Medicaid also covers doctor visits, hospital stays, and other healthcare services.

Because Medicaid is managed by individual states, the specific services and eligibility requirements differ depending on where a senior lives.

Key Differences Between Medicare and Medicaid

Category	Medicare	Medicaid
Eligibility	Age 65+ or disability-based; not income-dependent	Based on financial need; income and asset limits apply
Coverage Focus	Medical care: hospital, doctors, preventive services, short-term rehab	Medical care plus long-term custodial care (nursing homes, in-home support)
Administered By	Federal government	Joint federal and state governments; rules vary by state
Long-Term Care	Generally not covered (except limited skilled nursing/rehab)	Covers long-term nursing home care and often home/community-based care
Cost	Premiums, deductibles, and coinsurance required (though Part A may be premium-free)	Low or no cost for eligible individuals; costs vary by state

When Seniors Use Both Programs

Some seniors qualify for both Medicare and Medicaid, a situation often referred to as being 'dual eligible.' In these cases, Medicare usually covers medical services first, while Medicaid helps pay for costs that Medicare does not cover, such as long-term care and out-of-pocket expenses like premiums and copays.

Being dual eligible can significantly reduce the financial burden on families, but navigating the overlap can be complex. Each state has its own rules for how the programs coordinate.

What Families Should Keep in Mind

- Medicare is primarily health insurance—it covers hospital care, doctor visits, and short-term skilled nursing but not extended custodial care.

- Medicaid provides a safety net for long-term care, especially for those with limited financial resources.

- Each state’s Medicaid program has unique eligibility rules, so it’s essential to check specific requirements in your state.

- Planning ahead—through financial preparation, legal advice, and understanding benefits—can help families make smoother transitions when care needs increase.

Understanding the differences between Medicare and Medicaid is essential for families planning senior care. Medicare provides important health coverage for older adults, while Medicaid offers critical support for long-term care needs. Knowing how these programs work—and how they may complement one another—empowers families to make informed choices that support both health and financial stability.